[Congressional Record (Bound Edition), Volume 148 (2002), Part 3]
[Extensions of Remarks]
[Pages 3902-3903]
[From the U.S. Government Publishing Office, www.gpo.gov]




                     SOCIAL SECURITY PRIVATIZATION

                                 ______
                                 

                           HON. BOBBY L. RUSH

                              of illinois

                    in the house of representatives

                       Wednesday, March 20, 2002

  Mr. RUSH. Mr. Speaker, there has been a considerable amount of debate 
on how to reform our Social Security System and make it solvent. There 
is no question that we need to reform Social Security. The Social 
Security Trustees estimate cash flow deficits in the system starting in 
2016 with a bankruptcy date of 2038. It is also estimated that the 
system will only be able to pay 73 percent of promised benefits. There 
are many reasons contributing to this depletion, such as increase life 
expectancies and lagging birth rates. However, the crux of the issue is 
how we reform Social Security without raising payroll taxes, cutting 
benefits or allowing the government to invest in stock markets.
  In May 2001, President Bush established a 16-Member Commission on 
Social Security to make recommendations on how to reform Social 
Security. As you know, the Commission issued a final report last 
December that proposed three alternative models for Social Security 
reform that focuses on personal accounts as a central component.
  In two of the proposed alternative models, the Commission claims that 
low income workers and Minorities will fare better if they invest part 
of their Social Security taxes in stocks and bonds. The rationale is 
that Minority groups such as African-Americans are heavily dependent on 
Social Security benefits during retirement and often have little or no 
pension savings or other sources of income. Specifically the two 
alternative models call for the following:
  Alternative Model 2: Workers can voluntarily redirect 4 percent of 
their payroll taxes up to $1000 annually to a personal account (the 
maximum contribution is indexed annually to wage growth). No additional 
contribution from the worker would be required.
  Alternative Model 3: Personal Accounts are created by a match of part 
of the payroll tax--2.5 percent up to $1000 annually (indexed annually 
for wage growth)--for any worker who contributes an additional 1 
percent of wages subject to Social Security payroll taxes.

[[Page 3903]]

  It is unfortunate that the Commission failed to realize that you 
cannot help low income workers and Minorities based on a plan that cuts 
benefits up to 46 percent. These proposals would subject everyone to 
this benefit cut, not just workers who choose to have an individual 
account. Finally, Social Security privatization would expose individual 
workers and their families to much greater financial risk. Under 
privatization, Social Security benefits would no longer be determined 
primarily by a worker's earnings and the payroll tax contributions he 
or she made over their career. Rather, benefit levels would be 
determined by the volatile stock market.
  While it is true that Social Security faces a long-term challenge, 
diverting revenue from Social Security into private accounts will 
seriously undermine our commitment to the retirement security of 
American seniors.

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