Rep. Maloney & Queens Seniors Discuss Pitfalls of Bush Social Security Overhaul
QUEENS, NY - Today, Congresswoman Carolyn Maloney (Queens, Manhattan) spoke with Queens residents at the Sunnyside Senior Center about why the President’s proposed Social Security overhaul would be harmful for current and future retirees of New York.
Maloney said at the event, “Social Security has been one of the most effective social programs of all time, because it provides a guaranteed benefit that people earn and that they can count on for retirement. Under the President’s plan, Social Security would become a roulette game, where people have no idea what to expect when they retire and where trillions of dollars in costs will be lost out of the current Social Security Trust Fund. Unfortunately, the Administration is blatantly misrepresenting the facts in order to scare Americans into taking apart our Social Security system that has provided all working Americans financial support in their old age.”
Maloney answered several questions and comments from participants at the Sunnyside Senior Center drawing from the following facts:
SOCIAL SECURITY: A VITAL PROGRAM FOR SENIORS
• Fifty percent of seniors rely on Social Security to keep them out of poverty.
• For nearly two-thirds of seniors, Social Security provides the majority of their income.
• Four in 10 widows rely on Social Security to provide 90% or more of their income.
PENSIONS & PERSONAL SAVINGS NOT ENOUGH
• While more than 90% of seniors receive Social Security, fewer than half have a pension.
• Americans are at the bottom of the industrialized world in personal savings. According to Consumer Federation studies, the average American has less than $10,000 in savings.
SOCIAL SECURITY NEEDS SUPPORT, NOT AN OVERHAUL
• The current Social Security system is at no financial risk for the next 40 to 50 years, even under the most pessimistic budget projections.
• Social Security as it is now, is remarkably efficient, spending less than one percent on administrative costs.
• Up to 30% of the money invested in private accounts would be consumed in administrative costs according to the Congressional Budget Office (and backed up by a University of Chicago study that had similar results). That’s a $940 billion windfall for money managers.
THE RISKS OF PRIVATIZATION
• From 1999-2002 near-retirees saw the value of their personal 401-ks drop by an average of
25%. Many had to put off retiring because they just couldn’t afford it. A privatized Social Security system would put near-retirees in the same market conditions in which 401-ks exist.
• Some economists worry that the billions of social security money would create a bubble in the market as too many dollars chase too few assets.
• In Chile and England, two countries that have experimented with privatized security accounts, people who invested in the private accounts have less income than if they’d remained in the old guaranteed benefit type systems, and the administrative costs have been huge.
Maloney explained one of the central problems in the President’s plan, noting, “If you divert money from current retirees to invest money in the stock market, there isn’t enough money to pay for existing beneficiaries. The President’s plan actually makes Social Security’s financial condition WORSE than if Congress did nothing. We would have to borrow $2 trillion in the next 10 years, and $4.4 trillion in the 10 years after that - meaning that all the Trust Fund assets would be used up by 2021 - two decades sooner than if we did nothing at all. President Bush says he will guarantee that current beneficiaries and near retirees will face no reduction in benefits - but he is not guaranteeing that benefits will continue to rise to keep pace with inflation.”
Maloney concluded, “The President hasn’t put an actual proposal on the table yet - but his trial balloons make it clear that he would cut deeply into the benefits available to current retirees, increase our deficit by trillions of dollars and do nothing to provide a secure financial base for younger people to rely on in the future. At a time when our retirement security system needs a steady and supportive hand at its helm, the President is offering an ideological driven and hugely expensive proposal that will hurt current and future retirees instead of helping them.”