Women and Social Security Alert (WomenSSA)
Items in This Alert Event—Women’s Groups Oppose Social Security Private Accounts
Event—Women's Groups Oppose Social Security Private Accounts The National Council of Women’s Organizations Task Force on Social Security, co-chaired by IWPR President Heidi Hartmann and NOW President Kim Gandy, held a press conference cablecast by C-SPAN on Tuesday, February 8. Dr. Hartmann and other women leaders emphasized women’s reliance on the guaranteed benefits that Social Security provides, the harmful aspects of private accounts for women, and the basic fiscal strength of the system overall (it is not in crisis). The speakers made clear that proposed privatization of Social Security is the actual crisis. In addition, two women shared their moving stories of how they and their families have depended on Social Security for widows’ benefits, survivors’ benefits, retirement benefits, and disability benefits. > Three-Quarters of Americans Do Not Believe Social Security Is in Crisis New polls on Social Security by the Washington Post, the Henry J. Kaiser Family Foundation, and Harvard University found that only one in four Americans thinks Social Security is in crisis, as President Bush claims, and nearly half think there is a problem but not a crisis. Other findings include:
Click here for the Washington Post article and for the full report of the “Social Security Knowledge Poll”. > More Women Than Men Oppose Social Security Privatization if It Would Mean Lower Guaranteed Benefits While the new poll does not report the responses by gender, last week’s poll results released by Rock the Vote, the Joint Center for Political and Economic Studies, and AARP showed that women are more likely to oppose (47% of women vs. 40% overall) the proposal for private investment accounts if it also entails lower guaranteed benefits, although about half of women, similar to other groups, support the idea of private investment accounts in Social Security. > Wage Indexing Is Better for Women and Men Than Price Indexing The new poll results in the Washington Post indicate that the public does not have a clear understanding of Social Security benefits indexed to prices versus those indexed to wages. Here is what can happen: According to recent news reports, President Bush’s privatization proposal is likely to include deep cuts in guaranteed benefits for all future beneficiaries (except for those who are currently age 55 and older), regardless of whether one opts for voluntary private accounts or not. These cuts would come from changing the formula for initial benefits from wage indexing to price indexing. Currently, the initial benefit at retirement is determined by the average of the 35 highest-earning years, with earnings in earlier years being adjusted to today’s dollars using wage indexing (since wages generally grow faster than prices, reflecting productivity growth and the growth of the economy, wage indexing gives the Social Security recipient a higher starting benefit level than price indexing would). This formula ensures that initial benefits for each individual reflect the individual’s earnings and standard of living at the time of retirement. After retirement, benefits are annually adjusted to prices to keep pace with inflation. What would happen if initial benefits were indexed to price increases? A recent calculation by the Economic Policy Institute (“Proposed Social Security price indexing would slash benefits”) illustrates that price-indexed initial benefits would have meant a 60% cut in Social Security benefits for today’s retirees. And, what would happen to retirees’ well-being? If current retirees (age 65+) had received their initial benefits by price indexing, the number of today’s retirees living in poverty would have been three times larger than the actual number. In fact, we already see the impact of price indexing, as benefits after retirement are adjusted to price increases only. Elderly women, since they live longer and many live alone, see their benefits falling, as years go by, relative to the standard of living of today’s working population. For example, today’s 90 year old retiree is living at about the level of a worker 25 years ago. Any proposed reduction in the cost of living adjustment after retirement would also affect women (and men) negatively, but women more so, because they live longer. > Social Security Privatization Is Worse Than Doing Nothing Administration officials claim that younger workers, despite substantial cuts in future guaranteed benefits, would be more secure if they divert their payroll taxes into private accounts. Yet, another recent calculation by the Economic Policy Institute (“Privatization fix for Social Security is worse than doing nothing”), based on a Congressional Budget Office analysis, shows that future retiree benefits in 2045-2055 that include the returns from private accounts would be lower than the benefits that would be received under the scenario of not doing anything to the current Social Security system. Remember that current Social Security will exhaust the Trust Fund in 2042 (according to the cautious projections of the Social Security Trustees) or 2052 (according to the Congressional Budget Office), and afterwards the system will still be able to pay 70-80% of scheduled benefits under current law, rather than “collapsing” as pro-privatizers claim. Private accounts, according to this analysis, are not likely to generate even this much future income.
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