Student Paper #1
The Scope of Social Security Privatization
Social Security privatization is debated fervently as of late. Supporters, as well as their objecting counterparts, often tout that the ideals their plans uphold are the same ideals that spurred the birth of Social Security. The real debate, however, is whether or not the welfare of our public is really in the scope of Social Security privatization. The privatization of this program is inherently flawed as it does not promote Social Securities foundation as a welfare program. It does not take the needs of women into account. Privatization is also economically biased in favor of those in the higher income tax brackets. Social Security does need to be reformed but it must not be abolished altogether.
The original promise of Social Security was to be a welfare program that would provide the retired with a reasonable amount of money to get by on. With this in mind it is incomprehensible to allow a change as drastic and as risky as the privatization of this program. Social Security is effective because it tries to eliminate the possibility that people will fall through the cracks and into the clutches of poverty. As the largest government program in the world there will inevitably be those that do slip by, but according to Richard Leone, the president of The Century Foundation, since 1950 Social Security has reduced poverty from 40 percent to 12 percent. Privatization supporters often claim that their plan addresses this more effectively because people receive higher returns and receive more benefits in the end. Whether or not this is true is unimportant because of the overwhelmingly large amount of risk that is inherent in the privatization of Social Security. The stock market is bumpy at best. It's not in the best interest of recipients to put their hard earned money into a system that has the potential to not pay out the benefits it is supposed to. The stock market is also very complex. This is obvious when you consider the industry it takes to just get a grip on understanding this abstruse being. If we are going to let people invest their money themselves there will inevitably be some mistakes made in this complex transaction. These mistakes can be the difference between financial stability and poverty. While there will be a "safety net" in place to catch the "mistakes" it will essentially be at a drastically reduced amount as compared to the benefits one would have received in our current system. It is precisely because there is a greater possibility that more people will slip through the loose grip that the privatization of Social Security has on the welfare of our retirees that must make us reevaluate this risk-laden plan.
The privatization of Social Security is also gender biased. Women will undoubtedly receive an unfair portion of benefits under these privatization schemes. This will happen mainly because widows are not in the ³scope² of the current privatization models. Trudy Lieberman, the health policy editor at Consumer Reports, has said that Social Security will pay 100 percent of the late husbands benefits upon the widows' retirement and 50 percent of their husbands benefits for spouses who retire at the regular time. She continues in an article titled, "Social Security for Women," that "proposals to privatize do not include spouses' and widows' benefits." If privatization cannot provide for this large segment of our population then it doesnıt meet the needs of our country.
Low wage earners will also be effected adversely along with women. Privatization transfers wealth to the rich. California Representative Robert Matsui said in a radio address , "Instead of going to Social Security, their (taxpayers) payroll contributions are being funneled directly into tax breaks for individuals and corporations who need them least." In our current system, which is by no means perfect, there is a measure of equality apparent that privatization cannot address. This is due largely to the fact that those who have the lowest wages receive more benefits in our current system. According to the editors of the Nation, ³the bottom 60 percent of retirees get more back than the affluent relative to their contributions.² With this in mind, under the privatization schemes which are not adjusted for low wage earners, the already financially burdened will receive less benefits in the end.
The main problem with the privatization of Social Security is that all of a sudden a welfare program intended to provide universal coverage is traded in for what seems to be mandated stock portfolios and government savings accounts. But unlike our welfare system the "security" we had hoped for is lost in privatization because there are innumerable risks at every corner. It is specifically the greater possibility that more people will receive less benefits if privatization occurs that makes this plan so dangerous. It is also ideologically unjust to institute a policy into our national government that is gender and economically biased. The preamble of the constitution says:
We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquillity, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America
The tenants of establishing justice and promoting the general welfare are lost when the rich get richer and the poor and minorities are forced to endure the imperfections of privatized Social Security.
Proponents of privatization often claim that our Social Security program will soon be bankrupt. House Democratic Leader Richard Gephardt has been quoted on the floor of the house saying, "Social Security will be solvent for the next 36 years -- at a minimum." Without an impending disaster there is time to evaluate several alternatives to stabilize Social Security. The most just and simple solution is to remove the limit on the amount of money those in the higher tax brackets pay. The editors at the Nation say, "Social Security officials forthrightly admit that raising the cap alone would remove two-thirds of their projected actuarial crisis." The years that this alone could keep Social Security solvent is reason enough to not risk the welfare of our countries beneficiaries. Senator Corzine eloquently said to a seniors club that, "Social Security promises all Americans that if they work hard, pay their taxes, and play by the rules, they will be able to retire and live in dignity. Social Security is not a handout. It's an earned benefit that promotes and rewards work," This proposed drastic change to one of the most well received government programs in our nations' history undermines the values that are the foundation of Americaıs success.