[Congressional Record (Bound Edition), Volume 145 (1999), Part 4]
[Extensions of Remarks]
[Page 5657]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            SOCIAL SECURITY

                                 ______
                                 

                          HON. BERNARD SANDERS

                               of vermont

                    in the house of representatives

                       Wednesday, March 24, 1999

  Mr. SANDERS. Mr. Speaker, I would like to call your attention to an 
article printed in the March edition of the Labor Party Press.

                [From the Labor Party Press, Mar. 1999]

                    Don't Blow Away Social Security


                         Social Security Basics

       Under Social Security, workers contribute a certain amount 
     of their pay into the system through their work life. They 
     then earn entitlement to family benefits when they retire, 
     become disabled, or die.
       Social Security is funded through payroll taxes (FICA, or 
     Federal Insurance Contribution Act) on both the employee and 
     employer. Currently each pays 6.2 percent on all wages and 
     salaries up to a maximum of $68,400 in income. The payroll 
     taxes we pay today finance the benefits for today's retirees. 
     From the money we contribute, the government writes Social 
     Security checks and mails them to beneficiaries.
       Any extra money collected through payroll taxes goes into a 
     Social Security Trust Fund. Until the 1990s, the Social 
     Security Trust Fund was relatively small. However, it has 
     ballooned in size in the past decade--and in fact has helped 
     create the much celebrated ``balanced budget.''
       Some 44 million Americans receive benefits from Social 
     Security. Thirty million of these are the elderly and their 
     dependents, 6 million are the disabled and their dependents, 
     and 7 million are the survivors of deceased workers.
       About 92 percent of people over 65 receive Social Security 
     benefits. Since 1935, when the labor movement helped force 
     passage of Social Security, the program has dramatically 
     reduced poverty among the elderly and disabled. 
     Unfortunately, though, some people who really need it--like 
     farmworkers--still aren't entitled to Social Security.


                   What's Good About Social Security

       Social Security has dramatically cut poverty among the 
     elderly and disabled. While about 12 percent of seniors 
     currently live in poverty, without Social Security, 42 
     percent would be poor. About two-thirds of the elderly rely 
     on Social Security to provide over half their retirement 
     income. Social Security is especially essential since the 
     U.S. does not require employers to provide pensions.
       Social Security is progressive. Those who have been paid 
     high salaries throughout their lives will get a much smaller 
     percentage of their salary replaced by Social Security than 
     those who have worked all their lives in low-wage jobs. An 
     average wage-earner retiring in 1997 will get back about 44 
     percent of his or her earnings from Social Security. A high 
     wage-earner gets back about 25 percent. And a low wage-earner 
     gets about 80 percent.
       Social Security benefits just about everyone. About 92 
     percent of people over 65 get Social Security. It's a program 
     that working-class, middle-class, and poor people can all get 
     behind.
       Social Security is efficient. Because it is run entirely by 
     the federal government, puts all the money into one pool and 
     invests it in one place. Social Security only spends about 
     one percent of benefits on administration.


                     What Other Countries Do Better

       All seven major industrialized countries (Japan, Canada, 
     United Kingdom, U.S., Germany, France, and Italy) have 
     systems that are, like ours, pay-as-you-go. Today's workers 
     support today's retirees.
       Italy, Germany, and France spend 12-14 percent of their 
     gross domestic product to support retirees. The U.S. spends 
     6.9 percent. Japan, Canada, and the UK pay slightly less than 
     us.
       In the U.S., the average-earning worker can expect to get 
     42-44 percent of his or her income replaced on retirement. In 
     Germany, France, and Italy the rate is 50 percent.
       In the U.S., Germany, and Japan, retirement age is now 65. 
     It's lower in France, Italy, and Canada. In the U.K., it's 65 
     for men and 60 for women. (The U.S. retirement age is slated 
     to go up to 67 for people born after 1960.)
       All the industrialized countries have programs to cover the 
     healthcare costs of retirees, but American retirees have to 
     pay more out of their pockets than seniors in the other six 
     countries. Today, U.S. seniors pay a third of their medical 
     costs themselves.


                What We Should Do About Social Security

       The Social Security system is quite sound, and with only 
     minor modifications, it should stay that way. We don't have 
     to institute privatization, raise the retirement age, cut 
     benefits, reformulate the cost-of-living index, or increase 
     the payroll tax on workers to ``save'' Social Security.
       One modest and relatively painless change to Social 
     Security would wipe out a big chunk of the shortfall that 
     some are projecting: Eliminate the payroll-tax earning cap. 
     Currently, the Social Security payroll tax is not paid on 
     wages in excess of $68,400. Since the ranks of the very rich, 
     have been growing, this has resulted in something of a drain 
     on Social Security. In the early 1980s, 90 percent of all 
     wages fell under the threshold. Now it's 87 percent, and it's 
     expected to drop to 85 percent. Why not make it 100 percent?
       Says economist Dean Baker: ``If you eliminate the cap 
     altogether, it would wipe out about three-quarters of the 
     projected Social Security shortfall. The amount that will be 
     paid out in Social Security benefits won't be that much more 
     than before, because it's a progressive pay-out structure. 
     Someone who earned a million or two in their lifetime might 
     only get an annual Social Security payment of $50,000, say.''
       Another proposal the Labor Party has suggested: raise the 
     payroll tax on employers--but not workers. Workers have seen 
     a net drain on their incomes for the past couple of decades, 
     and this would be one way to begin to tip the balance in the 
     other direction.

     

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