|
||||||||
Why Seniors Should Be Concerned About Privatization
Alexandria, VA (February 7, 2005) - Seniors should be extremely concerned about proposals to privatize Social Security, warns a national non-partisan seniors issue advocacy organization. "Despite assurances that proposals would not affect current retirees, TREA Senior Citizens League (TSCL) believes that leading plans to 'fix' Social Security through privatization will result in major Cost-of-Living Adjustment (COLA) cuts for current beneficiaries," states George Smith, Chairman of TSCL. The Bush Administration is pushing a plan that would allow workers to divert a portion of their Social Security payroll taxes into private retirement accounts. Proponents of the plan argue that the accounts would provide more retirement income because the current system is running out of money to pay the benefits currently promised. "Privatization of Social Security is bad business for today's and tomorrow's Social Security recipients because it would make Social Security's funding problems even worse." Smith states. "Private accounts would take money out of the system- money that's used to pay benefits to current beneficiaries and thus would create a funding crisis far sooner than currently projected and trigger benefit cuts," Smith explains. The Bush Administration is looking at a privatization proposal that in fact includes benefit cuts by changing the Social Security benefit formula to use price indexing. Because consumer prices rise more slowly than wages, the proposal would over time result in deep cuts in benefits -- by as much as 50 percent for future retirees, according to a CBO analysis.[1] "For current Social Security recipients the price indexing change could mean COLA cuts, " Smith states. "If Congress were to adopt such a change, then legislation would specify which Consumer Price Index would be used to index Social Security benefits," Smith explains. "In the past Congress has chosen the most slowly growing CPI to index Social Security and other government benefit programs,"[2] he notes. "Today there is a new CPI that grows more slowly than the one currently used to calculate COLAs," he adds. "Adopting this new 'chained' CPI would most assuredly cut the COLAs of current retirees,"[3] Smith declares. In recent years Federal Reserve Chairman Alan Greenspan has repeatedly urged Congress to switch to the "chained" CPI [4] saying that the current CPI grows too quickly and thus "overpays" retirees.[5] The Wall Street Journal reported that the White House contacted the Bureau of Labor Statistics for information on the "chained" CPI and its relevance for indexing government programs and taxes in December.[6] " Other less drastic options exist for addressing Social Security's long-term financing and nothing should be ruled out of consideration," Smith states. "Let's not forget, everyone who has paid into Social Security has a say in how we want our retirement benefits to be handled," Smith points out. "Our elected lawmakers design and set the funding of Social Security, not just the president alone. We urge seniors as well as every working Social Security taxpayer to contact your Members of Congress to protest deep benefit cuts and oppose ill-conceived privatization plans. TSCL is a national group of politically active seniors concerned about the protection of their earned Social Security, Medicare, military, and other retirement benefits. TSCL members participate in a number of grassroots lobbying and public education campaigns designed to ensure governmental bodies, including the Social Security Administration and the Centers for Medicare and Medicaid Services, live up to their commitments. For more free information on our organization, please contact TREA Senior Citizens League, Department S608A, 909 N. Washington St., Suite 300, Alexandria, VA 22314, or visit our website at: www.tscl.org. [1] Long-term Analysis of Plan 2 of The President's Commission to Strengthen Social Security, The Congressional Budget Office, July 21, 2004, page 12. [2] Report of the 1981 National Commission on Social Security, Chapter 15 CPI-E, page 321. [3] CBO Cost Estimate, Bipartisan Retirement Security Act of 2004, CBO, July 21, 2004. [4] Statement of Alan Greenspan Before the House Committee on the Budget, February 25, 2004. [5] Testimony of Alan Greenspan Before the Senate Committee on Finance, January 30, 1997. [6] White House Sharply Reduces Expectations for Job Growth, Greg IP, The Wall Street Journal, December 20, 2004. Distributed by The Senior Exchange, Inc. Serving The Mature American With Timely, Low-Cost, Self-Help Information February 2005 | ||||||||
|
|
||||||||
