Social Security: The Fight of a Lifetime

By Jan Erickson, Government Relations Director

August 19, 2005

With Social Security turning 70 this month, activists around the country are preparing themselves for the fight of a lifetime. Even though there is a notable lack of public support for privatization, the Republican leadership recently announced that they would proceed with legislation this fall. A number of GOP bills have been introduced that would revamp — and consequently undermine — this vital social insurance program that in 70 years has never missed a check for retired and disabled workers and dependents of deceased or disabled workers.

For some time, polls have shown that the public opposes by two to one converting Social Security to a private investment program, while a whopping 70% of seniors oppose private accounts (WSJ/NBC poll). Additionally, a sizeable number of Republican House members do not want to vote on a bill that cuts benefits, while Democrats appear to be in solid opposition to any re-working of Social Security that would threaten the program's solvency. Even with a 231-202 GOP majority, the 218 votes needed to pass a bill would seem to be a mountain too high to climb.

But never doubt the privatizers and their well-financed Wall Street and big business backers — they can force a bill through the House, and maybe even the Senate. GOP "leadership techniques" of holding a bill until the last minute before a floor vote so no member has a chance to understand what's in it, of threatening recalcitrant members and promising pork for others, as well as just plain lying about the effects of the legislation have been successful in the past. The disastrous 2003 Medicare prescription drug bill is a great example.

Reportedly, the Republican leadership goal is to get a retirement or pension bill — any bill — through both the House and Senate and then to insert private accounts in the final conference committee version — even if private accounts have not been voted on by either body. One rumor is that a House Social Security bill will be sent directly to the Senate floor with no Senate hearings and little time to review and debate its merits. These practices fly against time honored traditions and are un-democratic, to say the least.

So there is a lot at stake here. Unless you are saving several million dollars or planning on winning the lottery or have a generous pension (few women do), you probably want to have the same comfortable retirement that many of our parents enjoy — thanks to Social Security and Medicare. If so, plan now to visit your member of Congress.

Bad Bills to Oppose

House Ways and Means Chair Bill Thomas, R- Calif., is deploying a clever strategy that buys off key GOP members by incorporating their pet ideas into a larger bill - presumably one that would have wide political support. Reportedly, the legislation may not feature private accounts or benefit cuts to Social Security, but may contain a huge bailout for troubled airlines' pension plans, propose retirement savings incentives and offer other attractive initiatives. Then, the privatization

language would be dropped in during conference.

Representative Jim McCrery, R-La., chair the Subcommittee on Social Security of the Committee on Ways and Means, is pushing H.R. 3304 (the misleadingly titled, Growing Real Ownership for Workers Act) that would raid the Social Security "surplus" to finance the multi-trillion dollar conversion to private accounts. This is seen as a less "painful" move to a private investment system by its advocates (because it simply adds massive costs without cutting benefits), who hope that Congress's tendency to push costs into the future will afford a winning margin.

To anyone who can count, it is clear that this approach would seriously weaken near- and mid-term financing for Social Security and explode the national debt. In other words, the proposal is a notable example of Republican irresponsibility and fiscal incompetence.

Also, it should be noted that the use of the term "surplus" Social Security funds is a misnomer: those additional millions are flowing into the Social Security Trust Fund to build up reserves to help pay for baby boomers' retirement. A 1983 increase in the payroll tax (currently a 6.2% match by employees and employers) assured that there would be sufficient funding for many decades into the future.

Another horrible bill is the again deceptively-titled Stop the Raid on Social Security Act (S. 1302) which is just a straight conversion to a private investment system, sponsored by Sen. Jim DeMint, R-S.C., and 11 others. The Republican spin on this bill criticizes Congress's practice of borrowing from Social Security to pay for other programs and promises to "protect" these monies by transferring them directly into a broad-based index fund.

The notion of saving us from the "raid" of Social Security trust funds for other purposes is downright Orwellian coming from the party that has engineered five years of out-of-control budgets, huge tax cuts for the rich that have drained the Treasury and built up the largest federal deficit in recent history.

George W. Bush has indicated that the core of his preferred Social Security "reform" plan is to severely cut benefits -- by altering the formula under which benefits are calculated. By switching from the wage index to a price index, the growth over time of retirement benefits is slowed considerably. Projections show that by mid-century, retirement benefits may be nearly halved.

Democrats Want to Increase Savings

House Democrats have recently introduced a package of proposals intended to help middle-class workers plan and save for retirement security. Their America-Save proposal would encourage retirement savings and pension fairness without burdening future generations with additional debt. The national saving rate is now at the miserably low level of .6% — falling from 4.6% just ten years ago (measured as the personal savings portion of disposable income).

Their approach involves an incentive to save through a match from the federal government for the first $1,000 invested in a 401(k) or IRA accounts, as well as automatic enrollment in 401(k) plans and tax credits for IRAs. In addition, small businesses would get tax incentives to offer retirement plans. An important feature is a reform of the troubled pension system by making it more difficult for companies to default on promised benefits.

NOW's Acts to Preserve, Improve Social Security

In 2000, nearly 7 million women escaped poverty through monthly Social Security retirement checks. For decades, NOW has been actively involved in advocating for a strengthened Social Security program.

Just prior to the NOW National Conference in July in Nashville, Tenn., NOW staged a forum on Social Security with Barbara Kennelly, formerly a long-time House member from Connecticut who is currently president of the influential National Committee to Preserve Social Security and Medicare. Kennelly, who was also recently named to chair the National Council on Aging, spoke of the absolute necessity to protect and maintain the program in its current structure.

Mary Liz Knish, communications director for Tennessee AARP, joined Kennelly and NOW President Kim Gandy and Vice President-Action Olga Vives in discussing what is at stake if we lose on the privatization issue. Informational packets for NOW activists attending the conference were distributed.

Later in July, NOW joined a "Women's Debate on Social Security Reform" at the Capitol. Gandy joined Dr. Heidi Hartmann, president of the Institute for Women's Policy Research, and Rep. Hilda Solis, D-Calif., to argue against privatization.

Rep. Melissa Hart, R-Pa., Leanne Abdnor, executive director of Women for a Social Security Choice, and Alison Acosta Fraser, director of the Thomas A. Roe Institute for Economic Policy Studies at the Heritage Foundation, argued for privatization. The debate focused primarily on privatization's effects on women.

In particular, Gandy and Hartmann discussed the broader family insurance benefits, such as life insurance and disability coverage that would end with private accounts. "We must prevent large-scale benefit cuts and work for improvements in the treatment of all beneficiaries," Gandy said.

"If wealthy workers are allowed to opt out of the [Social Security] scheme entirely, it will put an even greater burden on low and middle-income workers to keep the trust fund healthy," NOW President Kim Gandy said.

"Instead of scrapping the current system, NOW suggests we fix it and fund it," Gandy concluded. In particular, benefits for widows, childcare, disabled and divorced women could be increased through raising the taxable wage base. "With a few changes, we can make our guaranteed insurance and retirement program the envy of the world and assure that all women who have given so much to society live out their later years in economic security."

Communications Intern Michelle Kline contributed to this story.