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Social Security links

Social Security: What's in It for Younger People? an interactive quiz

Una Prueba: ¿Que Le Ofrece El Seguro Social A Las Personas Jovenes?

Social Security: What's In It for Younger People   [pdf]

Social Security Flyers [1] [2]

Facts about Social Security

Packet Introduction--English [April 2008]; Español [August 2001] to be updated

Richard Du Boff, "Social Security Is Not in 'Crisis'"(rev.)

Jean TD Bandler, "Social Security Isn't Just for Seniors,"

National Council of Women's Organizations, "Women and Social Security" See also IWPR's Women and Social Security

Helen Lachs Ginsburg and Gertrude Schaffner Goldberg, "Social Security and Minorities"

How To Fight the Phony Social Security "Crisis"  

SOCIAL SECURITY VS. SOCIAL INSECURITY:
A Social Security Packet: Introduction [rev. 4/08]

With the memory of the Great Depression still fresh, President Franklin Roosevelt in 1944 envisioned a second, Economic Bill of Rights that included: "the right to a useful and remunerative job," "the right to adequate medical care," and "the right to adequate protection from the economic fears of old age and sickness and accident and unemployment." In Roosevelt’s view, the political and civil rights granted by the U. S. Constitution were compromised in the absence of economic rights.

Today, when national resources make it economically possible to move far beyond the visions of that earlier time, Social Security, the government program that has extended modest security to generations of Americans of all ages, is under attack. Unable to destroy a successful and popular program directly, conservatives, who have fought it since its inception in 1935, have shifted to a false claim that Social Security is financially unsustainable.These articles aim to show that it is financially sound without any changes whatsoever, and that it serves a far larger population than only retirees.

The articles in this SOCIAL SECURITY PACKET can be used by individuals and organizations to:

  • Expose the phony Social Security "crisis" by showing that Social Security is fiscally sound and able to support a growing elderly population
  • Explain why privatization--putting our Social Security money into the stock market-- would create social insecurity or a real Social Security "crisis" for tens of millions of Americans. Privatization is also a cover for an attempt to reduce Social Security benefits to irrelevance.
  • Show how Social Security benefits the entire U. S. population, prevents poverty, and is especially important to women, minorities and other lower-wage workers
  • Point out how Social Security can remain fiscally secure

There Is No Social Security "Crisis": Social Security Is Fiscally Sound

The projections used by the Social Security Trustees are based on "very conservative" assumptions about economic growth--in fact rates far slower than those of the past 75 years. [See Irwin Kellner's Economic Report, J/F 2005] Under these "intermediate " assumptions, the Trustees project that the Fund will run out in 2041. Even then, payroll tax collections would be sufficient to pay recipients 78% of higher benefits, according to the Trustees.

If the U.S. economy grows at the Trustees' most optimistic rate, just under 3 percent a year over the next 75 years, below the historical rate of 3.4 percent of the last 40 years, the Social Security Trust Funds will continue to expand indefinitely. [See 2008 Annual Report of the Trustees, Tables V.B2 and VI.F8]

There Is No Demographic "Crisis" [See Social Security Is Not In Crisis]

The ability of a country to support the population who are not of working age--the young and the elderly--depends on its total resources as well as thesize of this dependent population. In 1960, when the United States was shouldering the responsibility for both the baby boomers and the elderly, its Gross Domestic Product (GDP) per capita was only 37% of what it is now [2006; ERP 2008, Table B–31]. Moreover, the baby boomers and the elderly combined were larger in proportion to the working-age population than the comparable group will be later in this century.

At the time when the "crisis" crowd says we’ll have too many dependents to take care of, this nation will be much wealthier than we were during that earlier period of high dependency. We are wealthier because our workers, made more productive by their education and tools, produce more. It is not merely numbers of workers per dependent that count. If it were, countries like Bangladesh would be better able to afford retirees than the US. It is productivity--the output that each worker can produce--that determines our prosperity. It is absurd to think that a nation as rich as the United States cannot provide security to all.

The Social Security Trust Fund Is Safe

President Bush warns future beneficiaries that "there is no Trust Fund; just IOU's" [April 5, 2005 photo op at the Public Debt], implying that the government might renege on its debt. Yet government IOU's, held by the Chinese and other governments, foreign corporations, and foreign investors are funding our enormous trade deficit. Would the President wish to convey to these bond holders that our government is an unreliable debtor? The government has never defaulted--why should it just for the Trust Fund bonds, bought with the taxes of many people too poor to pay income taxes?

Social Security Benefits and Protects the Entire Population [see Social Security Is Not Just for Seniors and Quiz:What's in it for Younger People?

Social Security benefits all age groups--young workers who have insurance for death and disability during all of their working years, retired workers, disabled workers and their dependents, and the survivors of deceased workers. Eleven and a half million Social Security beneficiaries are not elderlythey are workers with disabilities, children of retired, disabled, and deceased workers, and care-taking parents.

  • Before Social Security, the groups that are now covered--working men and women, seniors, widows, orphans, and disabled persons--had neither insurance nor savings. Those were the days of social insecurity.

  • Social Security protects the elderly at all income levels, and for all but the wealthiest one-third of seniors, is their principal income.
  • Social Security relieves adult children of much of the financial strain of supporting their aging parents and gives parents the dignity of an assured income of their own.

Social Security Prevents Poverty

Without Social Security, over half of all seniors would be living below the government’s official poverty level.

  • Without Social Security, 60% of African-American seniors would be in poverty instead of the current 23% [2005] [AARP Fact Sheet, 9/07].
  • In 1959, more than one-third of Americans 65 and over were living below the official poverty level. Seniors were then the poorest age group in the population. Thanks largely to Social Security, the elderly are now the age group with the lowest poverty rate.

Social Security Benefits Women, Minorities and other Low-Wage Workers

  • Because they face discrimination and often lack health care and other resources, groups such as African Americans have lower life expectancies than other groups. Consequently, they are more likely than less-disadvantaged groups to need Survivors’ benefits.
  • Women, minorities, and other lower-wage workers who are less likely to have private pensions or assets, depend more heavily on Social Security than higher-income workers. In fact, higher-wage workers, too, are increasingly likely to be without employer-financed pensions, so Social Security will become even more important for them as well.
  • Owing to more risky jobs, less access to health care, discrimination, and poverty, lower-income and minority workers have higher rates of disability. Consequently, they are more likely to depend on disability benefits than more privileged groups.
  • Lower-income workers benefit from Social Security’s progressive benefit formula which replaces larger proportions of their former earnings than is the case with higher-income workers.
  • Women are less likely to have pensions than men, and if they have pensions, to have smaller ones. So women must rely on Social Security for a larger part of their retirement income. They also live longer, and thus are more likely to outlive their savings.

Why Have Some Politicians Created a Social Security "Crisis" and Proposed Privatization as a Cure? After all, privatization is not a solution to the "crisis" they are describing. On the contrary, it creates a new problem--how to fund current benefits, now paid by payroll taxes, when some of those taxes are diverted to private accounts.

  • Perhaps the worst aspect of the privatization debate is that it obscures the planned benefit cuts, which may mean the end of Social Security as a social insurance program. The intention is to so reduce long-term benefits for all but the poorest retirees that Social Security will effectively disappear as a social program.
  • The poorest 30% of recipients [those currently earning less than $20,000 a year] would continue to receive the benefits of the current law. For those receiving above $90,000 a year, inflation-adjusted Social Security benefits would be frozen forever at the level of the year this procedure is begun. For all other workers, there would be some upward adjustment. However, the benefits of a worker making $60,000 today would be cut by more than 40 percent over the next 70 years.
  • The cuts are sufficiently severe that after the year of the so-called crisis, when the Trust Fund is projected to be gone, benefits would be higher for all workers earning $55,000 or more if they consisted only of what payroll taxes make possible rather than the President's plan.

    Info on the President's plan from "What You Might Not Have Learned About The President's Social Security Plan"

Privatizing Social Security

  • They say we must privatize the system--put our Social Security dollars into the stock market. Of course financial interests will profit from the bonanza of billions of dollars in payroll taxes. Apart from this, privatizers are trying to convince younger people that higher stock market returns will offset declining Social Security benefits.
  • Privatizers argue with a contradictory combination of pessimism and optimism

When it comes to predicting economic growth they say the economy will grow much more slowly than it did over the past century and that this will cause a Social Security "crisis" or a shortfall in revenues.

Although privatizers take a dim view of future economic growth, they are very optimistic about the stock market. They claim the stock market can rescue Social Security, despite the prolonged, sluggish economic growth that they predict.

But ultimately, the performance of the stock market depends on the underlying strength of the economy, including economic growth. How can they be optimistic about the stock market and pessimistic about the economy?

Privatizing Social Security Would Increase Social Insecurity

Privatizing would expose Social Security funds to the inevitable swings of the stock market

Taking money out of the trust funds and putting it in the stock market would cut the funds available for current benefits

Privatizing would mean that Social Security is no longer a lifetime, inflation-adjusted benefit with a guaranteed minimum, but rather an income which varies with stock prices and the financial expertise of the wage-earner, as well as with length of working life. The latter means that benefits for disabled men and women and the survivors of young workers would be too small to cover family needs.

Privatizers forget that before the public sector was enlarged—including Social Security and Medicare--depressions were a recurring phenomenon in the United States. Instead of a depression about every 20 years—the record throughout the entire period from 1800 to 1928—the United States has been depression-free since 1941. An enlarged public sector is a buffer against
recessions because it keeps up purchasing power. Yet, the opponents of Social Security would risk removing or crippling these safeguards. Everyone, including economic elites, would suffer, not only current beneficiaries of Social Security.

Keeping Social Security Strong

Increasing public investment, reducing unemployment, and ensuring that wages regain and surpass earlier peaks will provide a strong economic foundation for financing Social Security and other social needs

Jobs for All at living wages is the best economic insurance for Social Security because it means more people make higher contributions and fewer people collect benefits

In addition to the economic foundation for Social Security, we need the political will to use our abundant resources to protect all our people against poverty and extreme inequality

Prepared by Social Security Task Force: Robb Burlage, Eleanor Kremen, Helen Lachs Ginsburg, Laura Piil, June Zaccone, Editor, Gertrude Schaffner Goldberg, Chair
July 18, 2001 Latest revision April 2008, by June Zaccone

WHAT IS SOCIAL SECURITY?

The program popularly known as Social Security is really Old Age, Survivors’, Disability, and Health Insurance (OASDHI). In 1935, during the Great Depression, Congress passed the Social Security Act which initiated not only Old Age Insurance but Unemployment Insurance and several public assistance programs as well. When he signed the bill for which he and other New Dealers had campaigned vigorously, President Franklin Roosevelt declared that had no other bill been passed by Congress, "this session would be regarded as historic for all time." Before Social Security, much of the population had neither savings, private insurance nor public provision for old age, unemployment, disability, and the loss of a family breadwinner

From the beginning Old Age Insurance has been financed by a payroll tax or a percentage of workers’ wages that is shared equally by employers and employees (except in the case of the self-employed who pay the combined tax). Financing the program with the contributions of workers and their employers has meant that the beneficiaries of Social Security feel that they or their breadwinners have contributed to their benefits rather than that they are getting charity or welfare. However, because the tax is levied on a portion of workers’ wages, individuals with employment income over the maximum ($97,500 in 2007) pay smaller portions of their earnings than those below the maximum. Whereas the Social Security tax is regressive, the benefit is progressive; that is, the benefits of lower-wage workers, though smaller than higher earners, are a larger proportion of their former earnings. Social Security is a federal program that is uniform throughout the 50 states.

Social Security began modestly with a retirement benefit for workers in some industries. Initially, it excluded such occupations as agriculture and domestic service in which large proportions of African Americans and women were employed. Within a few years Social Security began to expand and to cover more of the population. In 1939, survivors of deceased workers—spouses and orphans—were included, and in the 60 years of its existence Social Security has grown to include disability and health insurance (Medicare) and to provide for additional dependents such as disabled children and divorced spouses. Whereas many workers and their dependents were excluded from the limited, initial benefits, nearly all workers and their dependents are now covered.

Social Security is the largest social program in the United States. In 2007, nearly $600 billion dollars in benefits were paid to 50 million people.


©The National Jobs for All Coalition, a project of the Council on International and Public Affairs.


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