[Congressional Record Volume 151, Number 64 (Monday, May 16, 2005)]
[House]
[Pages H3294-H3295]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           SOCIAL SECURITY, PRIVATE ACCOUNTS, AND PAY EQUITY

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from New York (Mrs. Maloney) is recognized for 5 minutes.
  Mrs. MALONEY. Mr. Speaker, on April 19 of this year, we observed 
Equal Pay Day, a day that indicates just how far into each year a woman 
must work to earn as much as a man earned in the previous year. Because 
women on average earn less than men, they must work longer for the same 
pay.
  While many of my colleagues have addressed the impact of the pay gap 
on working women, I want to call attention today to how Social Security 
reduces this inequity for women in retirement in a way that private 
accounts will not.
  It is no surprise that women are particularly wary of President 
Bush's proposed private accounts for Social Security. Women are more 
likely than men to depend on Social Security for their financial well-
being, not only in retirement but throughout their lives, through 
survivorships and disability benefits.
  The vast majority of Social Security recipients are women, 
representing almost 60 percent of all beneficiaries age 65 and over. 
And an even higher percentage of women that are seniors and are in 
older age groups are on Social Security. Unfortunately, women still 
make less money than men, about 76 cents on the dollar, and usually 
work fewer years than men. Social Security provides proportionately 
higher benefits for lower earners; so the progressive benefit structure 
counteracts the pay and pension gaps that women experience during their 
working years.
  As this chart shows, women typically earn about 24 percent less than 
men. Since their lifetime earnings are lower than men's, they receive 
smaller Social Security benefits than men, but the gap is narrower. The 
typical woman's Social Security benefit is only 17 percent lower than 
the typical man's, narrowing the gap by almost one third. In contrast, 
private accounts would preserve the wage gap. The typical woman would 
accumulate 24 percent less in her private account than the typical man.
  By taking time out of the workforce to raise children or care for 
ailing parents or spouses, women typically lose more than a decade of 
earnings.

                              {time}  2015

  This second chart shows the impact that time out of the workplace 
would have on private account accumulations. A man born today with 
average earnings throughout his career who diverted 4 percent of his 
earnings into a private account would accumulate about $204,000. A 
woman who earned 24 percent less each year would only accumulate about 
$155,000. If she took 10 years out of the workforce, her private 
account accumulation would drop to about $112,000, just over half what 
the typical man would accumulate. If she only took 5 years out of the 
workforce, her private account accumulation would drop to about 
$132,000, 35 percent less than what the typical man would accumulate.
  Women are also more likely to work part-time, less likely to be 
covered by an employer-sponsored pension plan, and more likely to work 
in low-paying fields. As a result, they have lower lifetime earnings, 
making Social Security a larger portion of their retirement income.
  Because women earn less, they would have less to invest in private 
accounts than men and more to lose from the substantial benefit cuts 
under the kind of privatization plan the President supports. The 
President's preferred plan requires cutting guaranteed benefits by more 
than 25 percent, even for middle class workers, and even for those who 
choose not to invest in private accounts. Meanwhile, those that do 
choose a private account also would be hit with a privatization tax of 
70 percent or more of the value of their account, which would be 
deducted from their Social Security benefits upon retirement. Because 
Social Security helps level the playing field for women, cutting their 
benefits would make it even harder for women to achieve financial 
security in retirement.
  Without Social Security, more than half of white and Hispanic senior 
women and almost two-thirds of African American senior women would live 
in poverty. Also, because women live longer, whatever they are able to 
save in private accounts would have to be stretched to cover more years 
in their senior years. Unlike private savings, you cannot outlive 
Social Security, and the benefits are not eroded over time by 
inflation.
  The President is having a hard time convincing the American people, 
especially women, that private accounts would be better for American 
families than Social Security, and rightly so. It has touched so many 
of our lives. Social Security is an insurance program, not an 
investment plan, and private accounts would destroy much of the 
insurance value of the program.

[[Page H3295]]

  The President's private accounts pose a serious threat to the future 
economic security of all Americans. Private accounts would cut Social 
Security's funding, weaken the program, and make its financial problems 
worse, not better. Federal Reserve Chairman Alan Greenspan told 
Congress that private accounts would do absolutely nothing to improve 
Social Security's solvency. The government would have to borrow nearly 
$5 trillion over 20 years to fund private accounts. That would increase 
interest rates, harm our economy, and lead to large tax increases.
  Democrats want to work with President Bush to strengthen Social 
Security for the long term, but we need to get it right. Clearly, women 
are disadvantaged when facing retirement. They are paid less and work 
fewer years than men, on average. Any reform that is enacted must keep 
the safety net intact. Our mothers, our daughters, and our 
granddaughters are counting on us.

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