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IN THE NEWS

Republicans Propose Scaled-Back Plan for Private Investment Accounts

As the American people continued to show declining support for President Bush’s proposal to privatize Social Security by diverting payroll taxes, key Republican lawmakers announced a scaled-back version of Bush’s privatization proposal on June 22. The new plan was announced by House Social Security Subcommittee Chairman Jim McCrery (R-LA), and was based on a plan developed by Senator Jim DeMint (R-SC). The plan would finance private investment accounts by using the surplus the Social Security system is currently building up to pay for the retirement of the baby boomers. Currently, based on modest economic growth projections, the surplus is expected to be spent on paying benefits by 2017.

While President Bush initially proposed a privatization plan by arguing that the current Social Security system is “in crisis” due to its long-term solvency problem, the newly unveiled plan, ironically, would do nothing to restore solvency to the current system. The plan would also include offsetting reductions in traditional Social Security benefits for workers who choose the private accounts (often referred to as a “clawback”). Proponents of the plan said it would ensure Social Security surplus revenues are used to fund only retirement programs (rather than being used to offset the cost of other government programs as is the case in the current budget process). Republicans also hope the new proposal would shift the debate away from benefit cuts that were proposed by President Bush. Opponents, however, argue that the plan would worsen Social Security solvency problems by making some of the surplus unavailable for future benefit payments. The plan would also increase the federal debt and incur high administrative costs if implemented. The chief Social Security actuary estimates that the proposal would increase the budget deficit by about $90 billion next year and about $860 billion over 10 years.

For more details, please go to:

House GOP Offers Plan for Social Security (The Washington Post, June 23, 2005)

New Plan on Benefits Urges Use of Surplus (The New York Times, June 23, 2005)

The DeMint Social Security Plan (Center for Budget and Policy Priorities, June 22, 2005)

SSA Analysis of Sen. DeMint’s Social Security Plan (Social Security Administration, June 23, 2005)

Increasing the Retirement Age Has Little Public Support

A recent New York Times article (“In Overhaul of Social Security, Age Is the Elephant in the Room” June 12, 2005) discusses a dilemma facing policy makers in their efforts to overhaul Social Security, especially with respect to the retirement age. By 2040, the average 65-year-old American will live to age 85, while an American turning 65 this year is expected to live until age 83. Yet, over 50 percent of Americans today retire at age 62 or under, and 75 percent receive their first benefit checks before age 65.

Policy experts in recent weeks have told Congress to deal with rising life expectancy by increasing the retirement age as part of the solution for the long-term financing gap in current Social Security. Increasing the retirement age is politically unpopular, however, with 8 of 10 respondents to a New York Times/CBS News Poll saying they oppose raising the retirement age. Many argue that people in low-income jobs or physically demanding jobs are not capable of working at older ages. A study by the National Academy of Social Insurance showed that 25 percent of those who retired between 62 and 64 had a serious health problem that affected their ability to work. Others also cite age discrimination as a reason why some seniors may not be able to continue working even if they want to do so. According to a research note from the Economic Policy Institute, large percentages of both men and women lose employment before they reach Social Security eligibility. Increasing the retirement age, therefore, would put more Americans at risk of poverty while not necessarily helping to make employment opportunities more available to older Americans. The normal retirement age is already in the process of increasing from 65 to 67 for those born in 1938 or later; it will be 67 for people born in 1960 and later.

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NEW RESEARCH

Government Programs for Low-income People Discourage Savings

It is well known that women are more likely to be found at the lower end of the income distribution. According to recent census data, nearly two-thirds of female-headed households are in the bottom 40% of the household income distribution. Low-income households face many barriers in saving for their retirement. A recently released report Protecting Low-Income Families' Savings from the Retirement Security Project shows how asset tests for government programs such as food stamps, Medicaid, TANF (Temporary Assistance for Needy Families), and Supplemental Security Income can discourage low-income people from saving for retirement. When individuals apply for these means-tested programs, their eligibility is based on their income and their assets. For food stamps, for example, the asset limit is $2,000 for most households. Often, retirement accounts, such as IRAs and sometimes 401(k)s, are counted as assets in determining eligibility. Therefore, low-income families are penalized for saving for retirement since doing so can cause them to lose eligibility for means-tested government programs. The report details the steps that the federal government and the states can take to remove barriers these policies pose to retirement saving.

Women and Social Security: Benefit Types and Eligibility

IWPR’s latest briefing paper “Women and Social Security: Benefit Types and Eligibility” provides details on how various groups of women earn eligibility for Social Security retirement, disability, and survivor benefits. It also examines data on current beneficiaries that show a larger percentage of women than men are eligible for Social Security benefits as spouses, caregivers of minor children, widows, surviving dependent parents, and so forth. A copy of briefing paper is also available at womenandsocialsecurity.org.

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UPCOMING EVENTS

Women’s Debate on Social Security Reform

Representatives for and against Social Security privatization will argue their cases in a debate co-sponsored by the National Council of Women’s Organizations (NCWO) and Women for a Social Security Choice. Susan Page, Washington bureau chief for USA Today, will moderate. The debate will take place Thursday, July 14 from 9:30 am to 11:00 am in Room HC-5 on Capitol Hill.

The pro-private account debaters are:

• Leanne Abdnor, Executive Director of Women for a Social Security Choice and former member of the President’s Social Security Commission
• Alison Acosta Fraser, Director, Thomas A. Roe Institute for Economic Policy Studies, Heritage Foundation
• A leading female member of Congress supporting private accounts

The debaters opposing private accounts are:

• Dr. Heidi Hartmann, President of the Institute for Women’s Policy Research and Co-chair of NCWO’s Women and Social Security Task Force
• Kim Gandy, President of the National Organization for Women and Co-Chair of NCWO’s Women and Social Security Task Force
• A leading female member of Congress opposed to privatization

Community Dialogue on Social Security Reform and Women

The National Organization for Women (NOW) is sponsoring a community dialogue on Social Security and women in Nashville, TN on June 30. Speakers include Barbara Kennelly, former member of Congress and president of the National Committee to Preserve Social Security and Medicare, NOW President Kim Gandy, NOW Action Vice President Olga Vives, and Mary Liz Knish, Communications Director of the Tennessee AARP. The event will take place Thursday, June 30, from 5:00 pm to 6:30 pm in Nashville, TN, at the Loews Vanderbilt Hotel (Symphony II Room, 2100 West End Ave.), the site of the 2005 National NOW conference.

Free Social Security Academy for Interns and Students

The National Academy of Social Insurance is offering a free Social Security Academy in Washington, DC for interns and students to learn about the diverse role of the Social Security program and the current issues surrounding it. The Academy will feature guest speakers, expert panels, interactive activities, and networking opportunities. The Academy will take place Friday evening, July 8, to Sunday afternoon, July 10, at the Omni Shoreham Hotel near the Adams-Morgan/Woodley Park-Zoo Metro stop. Interns and students can register for the Academy at http://www.nasi.org/calendar_reg3634/calendar_reg.htm or by calling 202-452-8097.

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