Congressional Response: Representative Gene Green (D-29, TX) Responds to Your Privatization Treaty

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Congressional Response: Representative Gene Green (D-29, TX) Responds to Your Privatization Treaty

Thank you for contacting me to express your opposition to the partial privatization of Social Security. I appreciate hearing your views on this issue.

According to the most recent Social Security Trustees Report, Social Security outlays will begin exceeding income provided by the payroll tax in 2017. At that time, the program will begin drawing down its Trust Fund to make monthly Social Security payments to beneficiaries. By 2017, the Trust Fund will have accumulated more than $3.5 trillion for this very purpose, a fact that many privatization proponents fail to recognize when they claim that Social Security faces a crisis. While the Trustees indicate that the Trust Fund will be depleted in 2041, the program's revenue from the payroll tax will still be able to finance approximately 74 percent of current benefits. Furthermore, more realistic Congressional Budget Office projections indicate that the Trust Fund will not be depleted until 2052.

As a result of these projections, the President has proposed a system of
individually controlled accounts, so that taxpayers can control their investments and earn more money. I have serious concerns about investing Social Security funds in the stock market. First, private accounts are much more costly to manage. Some estimates show that administrative costs could consume up to 40 percent of the accumulated lifetime account balance for a typical worker. There is also little evidence that individual accounts will have a greater rate of return than Social Security.

Some studies show that by diverting portions of the trust funds to start up individual accounts, we could seriously threaten the financial stability of Social Security. The President's blueprint to partially-privatize Social Security would increase the program's funding gap by $1.4 trillion in the first ten years of private accounts. In the second decade, that gap would widen by another $3.5 trillion. These projections suggest that the privatization component of the President's proposal would worsen, not help, Social Security's financial outlook.

Social Security faces a future financial challenge, but the program is not in crisis. I support maintaining our current fiscal policy so that the minor changes that will be necessary to sustain Social Security can be made without jeopardizing our economy or the program. We need to make sure Social Security continues to provide the retirement safety net not only for our parent's generation, but also for our generation and our children's generation. I oppose privatizing Social Security because we could all lose that safety net. Please be assured that I will do all I can to support this critical program.

Sincerely,
Gene Green
September 2005