[Congressional Record Volume 148, Number 76 (Tuesday, June 11, 2002)]
[House]
[Pages H3430-H3431]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   IMPACT OF SOCIAL SECURITY PRIVATIZATION ON AFRICAN AMERICAN WOMEN

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from Texas (Ms. Eddie Bernice Johnson) is recognized for 5 
minutes.
  Ms. EDDIE BERNICE JOHNSON of Texas. Mr. Speaker, I rise today to 
address the devastating impact that privatizing Social Security would 
have on women, most especially African American women.
  Social Security is particularly important to women, especially in my 
home State of Texas. Without these vital retirement benefits, 564,000 
women in the Lone Star State would be classified as poor according to a 
report released by the Senate for budget policy and priorities.
  Currently, Social Security benefits are progressive, that is, those 
with low wages receive a larger percentage of benefits relative to 
their earnings than higher-income individuals do. This system of 
progressivity, combined with a cost-of-living adjustment that increases 
benefits every year, strengthens the safety net for those who are the 
most economically disadvantaged.
  Privatization flows from concerns that many people have about the 
future of Social Security. Some of those concerns are founded and some 
may not be. We are all well aware that as the post-war baby boom 
generation ages, the numbers of retirees relative to the number of 
workers will increase. These are facts that cannot be changed. However, 
modest changes implemented immediately can give people time to plan for 
the future and would take us a long way toward resolving the issue.
  Privatizing Social Security is the most radical change, and it 
assumes that there is magic in diverting some portion of the current 
Social Security payroll taxes into the private markets. I hope that 
people who have money in the private markets understand what happened 
in the last year or so. Most privatization plans propose to strip a few 
percentage points off the Social Security payroll taxes and divert them 
to the private individual investment accounts. Most people happily 
focus on the vision of a few dollars a month growing into millions of 
dollars over time. Just ask me and a few others who have put small 
amounts of money on the market, that is lost. Unfortunately, this is a 
dream and not a reality as we have witnessed in the common stock 
market.
  There are three very important things that should be considered when 
privatizing Social Security benefits: first, the huge cuts in benefits 
which would be required under the privatization plans, most as large as 
a 60 percent cut in Social Security benefits. For people with large 
savings from other sources, that may not seem like much; but for most 
Americans, it would be a drastic reduction in the protections they have 
come to rely on. That means many of the women of which I speak depend 
solely on Social Security as their retirement pension income.
  Next, privatization would be a major change in who bears the risk of 
saving for retirement. Privatization would shift nearly all of the risk 
to the individual. People who are unwise or unlucky in their 
investments would suffer. We saw many examples of this in the recent 
stock market failures.
  Finally, privatization would increase the Federal deficit by more 
than $1 trillion over the next 10 years. Taking a mere 2 percent of 
payroll taxes away from the trust fund would double or triple the size 
of the deficit. This effect is what some people trivialize as 
transition costs. I do not believe it is trivial, and given the other 
concerns which privatization raises, I think we should look long and 
hard before we lapse and leap into the wrong direction.
  How do African American women fair in privatization proposals 
floating around in the country? Not good at all. Although black women 
typically live longer lives, their lifetime earnings are usually much 
lower than their white counterparts. Under privatization, this lower 
level would mean black women would be forced to live longer on a 
smaller amount of money, and they cannot get by with what it is now. 
They have to make a choice between food or medicine.
  Hugh Price, president of the National Urban League, and Julian Bond, 
chair of the National Association for the Advancement of Colored 
People, wrote an editorial in the New York Times on July 26, 2001, 
addressing African American women and Social Security. They found that 
guaranteed government assistance is essential to the African American 
community. While African Americans make up only 12 percent of the 
general population, they make up 17 percent of all Americans receiving 
Social Security benefits and 22 percent of all children's survivor 
benefits.
  At this point I will insert my entire statement into the Record.
  Ms. EDDIE BERNICE JOHNSON of Texas. Mr. Speaker, I rise today to 
address the devastating impact that privatizing Social Security will 
have on women, especially African American Women.
  Social Security is particularly important to women, especially in my 
home state of Texas. Without these vital retirement benefits, 564,000 
women in the Lone Star State would be classified as poor, according to 
a report released by the Center for Budget and Policy Priorities.
  Currently, Social Security benefits are progressive; that is, those 
with low wages receive a larger percentage of benefits relative to 
their earnings than higher income individuals do. This system of 
progressivity, combined with a cost-of-living adjustment that increases 
benefits every year, strengthens the safety net for those who are the 
most economically disadvantaged.
  Privatization flows from concerns that many people have about the 
future of Social Security. Some of those concerns are founded and some 
are not. We are all well aware that as the post-war baby boom 
generation ages, the number of retirees relative to the number of 
workers will increase. These are facts that cannot be changed. However, 
modest changes, implemented immediately, can give people time to plan 
for the future and would take us a long way toward resolving the issue.
  Privatizing social security is the most radial change, and it assumes 
that there is magic in diverting some portion of the current social 
security payroll tax into the private markets. Most privatization plans 
propose to strip a few percentage points off the Social Security 
payroll tax and divert them to private individual investment accounts. 
Most people happily focus on the vision of a few dollars a month 
growing into millions of dollar over time. Unfortunately, this is a 
dream and not reality, as we have witnessed in the current stock 
market.
  There are three very important things that should be considered when 
privatizing Social Security benefits. First, the huges cuts in benefits 
which would be required under the privatization plans, most as large a 
60 percent cut in Social Security benefits. For people with large 
savings from other sources, that may not seem like much, but for most 
Americans, it would be a drastic reduction in the protections they have 
to come to rely on.
  Next, privatization would be a major change in who bears the risk of 
saving for retirement. Privatization would shift nearly all the risk to

[[Page H3431]]

the individual. People who are unwise or unlucky in their investments 
would suffer. We saw many examples of this in recent stock market 
falls.
  Finally, privatization would increase the Federal deficit by 
more than a trillion dollars over the next ten years. Taking a mere two 
percent of payroll away from the Trust Fund could double or triple the 
size of the deficit. This effect is what some people trivialize as 
``transition costs.'' I do not believe it is trivial, and given the 
other concerns which privatization raises, I think we should look long 
and hard before we leap in this direction.

  How do African-American women fare in privatization proposals 
currently floating around in Congress? Not good at all.
  Although Black women typically live longer lives, their lifetime 
earnings are usually much lower than their white counter-parts. Under 
privatization, this lower level would mean black women would be forced 
to live longer on a smaller amount of money.
  Hugh Price, President of the National Urban League and Julian Bond, 
Chair of the National Association for the Advancement of Colored 
People, wrote an editorial in the New York Times, on July 26, 2001 
addressing African American women and social security. They found that 
guaranteed government assistance is essential to the African American 
community. While African Americans make up only 12 percent of the 
general population, they make up 17 percent of all Americans receiving 
Social Security benefits and 22 percent of all children's survivors 
benefits. However, the Administration has been unclear on how 
disability and survivor benefits would continue to be funded.
  A study by the National Urban League counters assertions made by the 
Administration that African Americans will benefit from private 
accounts bequeathed to their relatives. According to the study, the 
typical African American man dying in his thirties would only have 
enough in his private account to cover less than two percent of the 
survivor's benefits under current law. This also has a devastating 
impact on African American women as survivors.
  Members of Congress must be fiscally responsible when it comes to 
making decisions regarding Social Security. Fiscal responsibility 
entails looking at the whole picture and seeing the effect it may have 
on all individuals in society. I urge my colleagues to make this the 
inclusive America we continue to represent to the world and ensure that 
Social Security proposals give everyone some comfort in life!

                          ____________________