Politicians want to play a shell game called "privatization" with our Social Security tax dollars. Here's how it works: Conservatives abolish the current Social security program and hire non-government firms to do the job. In the end, the companies that takeover the program would get to line their pockets with our tax dollars while politicians get to claim they reduced government. Like most shell games, privatization is a scam. And women will likely suffer the greatest losses if it is implemented.
Privatization of Social Security would be risky and expensive. Administrative costs of Social Security are just 1% of benefits, compared to 12 to 14% for private insurers. Most of the proposals offered would create private accounts by diverting Social Security taxes while cutting benefits and raising the retirement age to make up for lost revenues.
An atmosphere of panic has been created by the millions of financial industry dollars pushing for privatization of Social Security. (With the Social Security system taking in some $1.5 billion a day, the possible fees for managing even a fraction of that amount are quite an incentive.) But what we are facing is not a crisis; it's a scam contrived by the Wall Street moguls who stand to gain from privatization. The threat our families face is not the imminent collapse of Social Security funding, but a possible shortfall if the Trust Fund is drawn down to zero after 2032. And the projection of this shortfall is based on a cautious economic forecast; maintaining current levels of growth would sustain Social Security through the 21st century without any changes in the program.
Before we look for remedies, perhaps we should take a moment to analyze the problem. Congress created the current Social Security Trust Fund (financed by the excess of current payroll taxes over current payments to beneficiaries) to help the system meet the challenge of supporting baby boomers who will begin to retire in 2010. By 2032, when the Trust Funds may be drawn down to zero, the system will be purely pay-as-you-go -- as it was from the 1940s through the 1960s.
Women must be particularly wary of privatization and other proposed remedies to "fix" Social Security. After a lifetime of work, women often find ourselves in dire economic straits during what were supposed to be our golden years. Women are a majority of all Social Security recipients, and roughly three out of four of the recipients over 85 are women. Older women are twice as likely to depend on Social Security as their sole support. And senior women are twice as likely as men to live in poverty.
There are many important benefits under the current program that would not be available under privatization. For instance, Social Security replaces a higher proportion of low-wage workers' income when they retire. Under a private plan, this progressive aspect of Social Security that provides a buffer for the poor would be lost.
In addition, lifelong benefits are especially important to women, who after reaching 65 have a life expectancy of 19.2 years compared to 15.6 for men. What are older women supposed to do if they exhaust their assets before death? Adjustment for increases in cost of living under Social Security is also crucial to saving older women from poverty. Without such protection even a modest 3% inflation rate cuts the purchasing power of a $100 benefit to $74 over 10 years and to $55 after 20 years. Inflation adjusted private annuities are non-existent in this country, and lifetime annuities, if available, would be prohibitively expensive.
As the economy fluctuates, so will the yields of privatized plans. Hard as it may be to remember during this boom, the market lost 45% of its value between 1965 and 1978. Seniors need a steady income they can count on, not the booms and busts of the market.
Young people also should beware. Seniors aren't the only ones who benefit from Social Security. Three million children and their sole caretaker parents depend on Social Security's death and disability benefits to survive. Indeed, Social Security's safety net is wide; without it, vulnerable people of all ages will suffer.
Under the cover of an exaggerated funding crisis and in the name of
reducing government,
conservatives want to revise or even eliminate Social Security in ways
that will essentially
tear holes in this safety net. We must use this opportunity to
strengthen and make Social Security
more equitable, especially for women, whose Social Security benefits
are substantially less than men's.
Gender-neutral language in Social Security does not mean equality. For example, 63% of women on Social Security receive benefits based on their husband's earnings (wives' or widows' benefits), while only 1.2% of men receive benefits based on their wife's earnings; 37% of these women had no earnings history and 26% have a higher benefit as a wife or widow than as an earner. We challenge Congress and the next president to change the distribution of spousal and primary earner benefits to make them equitable so that women are no longer penalized for providing full-time child and elder care at home.
We want the cap on social security taxes raised to remove the extra tax burden on low-wage earners, who are disproportionately women. And we want to work with policymakers to develop an earnings sharing plan that will not be detrimental to low-income women, so that each spouse has benefits in her or his own right rather than as a dependent.
The greatest menace to Social Security is not a crisis in funding, but cynical politicians who are more interested in kowtowing to big money interests than they are in safeguarding the elderly, people with disabilities, widows, widowers and their dependent children.
Can women afford the privatization of Social Security, moving the responsibility for administering the nation's retirement monies from Washington to Wall Street? No, we cannot. Will women be duped by the privatization shell games of politicians like the men who would like to be president? No, we will not.
Women must fight to strengthen Social Security, so it will continue to be there for our grandmothers, our mothers and for us. We will not fall for the false promise of quick-fixes like privatization. And we will hold politicians accountable on Election Day.
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