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Senior Group Warns Against Privatization
Alexandria, VA (February 15, 2005) - Social Security and Cost-of-Living Adjustment (COLA) cuts are a threat to all retirees under privatization proposals, warns a national non-partisan seniors issues advocacy organization. "Diverting Social Security taxes into private accounts takes money out of the system that's currently used to pay benefits," states George Smith, Chairman of TREA Senior Citizens League (TSCL). "More troubling, is that the major proposals contain no plan to repay the $1.6 trillion that's been borrowed from the Social Security Trust Fund," Smith points out. "Unless the government is stopped from using the Social Security Trust Fund as its private piggy bank," warns Smith, "unsustainable budget deficits in other parts of the federal budget will continue to create the need for deep benefit cuts for all retirees - not just future retirees." "Social Security recipients should be very wary of promises to allow workers to 'pre-fund' their retirements by diverting a portion of their Social Security into private accounts," Smith states. "Twenty five years ago we were told something very similar to that," he points out. "In 1983, Congress passed a massive Social Security overhaul, enacting a host of benefit cuts, a big boost to payroll taxes, and creating the Social Security Trust Fund. In creating the Trust Fund the public was led to believe that the higher taxes were to 'pre-fund' our retirements far into the future, "[1] explains Smith. "Instead, Congress spent our retirement money on everything else- like the war in Iraq, narrow interest tax cuts, and pork barrel projects. Now that the money is almost gone, our government is saying benefits need to be cut again," he adds. According to the Congressional Budget Office (CBO), when the Social Security Trust Fund receives more payroll taxes than needed to pay benefits, the Treasury credits the fund with a non-marketable bond (or IOU) and uses the excess cash for other government purposes.[2] When the Trust Fund runs short of cash, however, the government by law may reduce spending on benefits, in addition to increasing taxes and borrowing. In addition, the CBO has reported that, although the Trust Funds are projected to run a surplus for 2005, "that balance is misleading," because the Trust Fund will receive much of their income, an estimated $14 billion, as interest on the IOUs in the Trust Fund, rather than real cash revenues.[3] "TSCL believes that true Social Security reform must begin with measures to protect excess Social Security revenues from being spent for other government purposes, and to guarantee the benefits of those who are currently retired. We also believe it is unacceptable to renege on promises by cutting benefits rather than using general federal revenues to redeem the IOUs in the Social Security Trust Fund," Smith states. "TSCL supports measures that would ensure the integrity of the Social Security trust fund by requiring the investment of the annual surplus into marketable, interest-bearing U.S. bonds or certificates of deposit, in addition to locking away the Trust Funds from the federal budget deficit. We urge seniors to contact your Members of Congress. Ask them to ensure that the money owed to Social Security is repaid out of general federal revenues, not by cutting our benefits!" Smith adds. 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 S608C, 909 N. Washington St., Suite 300, Alexandria, VA 22314, or visit our website at: www.tscl.org. [1] Revamping Social Security, Jonathan Weisman, The Washington Post, January 2, 2005. [2] Budget and Economic Outlook, CBO, January 25, 2005, pages 22 & 23. [3] Ibid. Distributed by The Senior Exchange, Inc. Serving The Mature American With Timely, Low-Cost, Self-Help Information February 2005 | ||||||||
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