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News :: Civil & Human Rights : Elections & Legislation : Government Secrecy : Labor : Political-Economy : Regime |
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Privatizing Social Security Would Drive Millions Below Poverty Line - Report |
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by Haider Rizvi
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15 Oct 2005
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The average U.S. citizen is paying taxes at a rate that is 120 times more than what the average chief executive officer (CEO) of investment firms pays.
"Social Security would be funded and solvent into the next century if the highest earning 6 percent of Americans would pay taxes on their full income, just like everyone else," says Scott Klinger, co-author of another study that drew similar conclusions to those of the LCCR report. |
NEW YORK - While President George W. Bush continues to assert that Americans would be better off with Social Security in private hands, a new study shows that privatization of the country's 70-year-old benefit program would drive millions of people into poverty.
Privatization would have dangerous implications for African Americans, Latinos, women, children, people with disabilities, and low income workers, according to the Leadership Council for Civil Rights (LCCR-- http://www.civilrights.org/), one of the nation's oldest rights advocacy groups, which carried out the study.
"By undermining the progressive structure of Social Security's benefits, privatization would jeopardize Social Security's ability to lessen the impact of a lifetime of unequal economic opportunity," say authors of the report entitled "Social Security: The Civil Rights Program for All Americans."
Based on statistical analysis, the report says without Social Security millions of people would become poor because private accounts could amplify the effects of discrimination in the job market and pay inequalities.
Currently, about 48 million people are receiving Social Security benefits, according to official figures. They include individuals with disabilities, retirees, widows, and children.
Social Security was established by President Franklin Roosevelt in 1935.
President Bush's proposal on Social Security envisages a voluntary program where people could invest part of their payroll taxes into private investment accounts in exchange for a reduced guaranteed benefit.
Bush argues that privatization would ease a long-term financial burden on the program and that it would enable younger workers to exercise some degree of control over their retirement fund.
But many critics have countered that argument by highlighting the fact that the average U.S. citizen is paying taxes at a rate that is 120 times more than what the average chief executive officer (CEO) of investment firms pays.
"Social Security would be funded and solvent into the next century if the highest earning 6 percent of Americans would pay taxes on their full income, just like everyone else," says Scott Klinger, co-author of another study that drew similar conclusions to those of the LCCR report.
Jointly released in April this year by United for a Fair Economy (UFE -- http://www.faireconomy.org/) and Institute for America's Future (IAF -- http://www.ourfuture.org/institute/), the report raised serious questions about the pay structures of the CEOs of Wall Street firms and their share in paying Social Security taxes.
While more than 90 percent of workers effectively paid over 12 percent of their annual income last year, the CEOs paid an average effective rate of less than one percent of their annual income towards Social Security taxes, the authors said.
Since the release of that report, many private investment firms are under pressure from civil society groups to disclose whether they were spending corporate funds in the Social Security debate.
LCCR researchers describe Bush's privatization plan as "undue burden" on minorities, women, and individuals with disabilities, a concern equally shared by a number of other rights advocacy groups.
"Social Security is important to the economic survival of African Americans and other people of color. We have traditionally been at the low end of the earning scale over our lifetime," says Hilary Shelton, Washington director for the National Association for the Advancement of Colored People (NAACP).
Women's groups are also voicing similar concerns about the impact of a privatized Social Security system.
"For women, Social Security is a family insurance plan," says Joan Entmacher of the National Women's Law Center. "Given the importance of spousal benefits for women, now and in the future, it's disturbing that the effect of private accounts on women has received so little attention."
Byron MacDonald, who works at the World Institute on disability as a project development manager, describes the privatization plan as "the most illogical policy idea."
"Why would taxpayers want to lower the amount of money they pay in insurance for retirement or disability as a way of saving those insurance programs long-term?" he asks.
Despite such strong criticism from various quarters, President Bush has repeatedly said he would continue to push for his proposal on privatization.
Aware that the Bush administration may succeed in executing the privatization plan, many civil society groups are now actively taking part in a nationwide campaign to educate the public on the issue of Social Security.
"We will not stand by and let the administration tinker with retirement security," says LCCR executive director Wade Henderson. "Many Americans have spent their whole lives working for it. So many Americans count on it to make ends meet."
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