Notwithstanding the topsy-turvy stock market, the collapse of high-tech companies, and the notorious Enron debacle, which has left thousands of current and former employees and retirees without retirement savings, the President remains firmly committed to his goal of privatizing Social Security.

The President's hand-picked privatization commission issued a final report in December, which included three Social Security reform options; all replaced a large part of Social Security's guaranteed retirement, survivors and disability benefits with private accounts. Most recently, the President reiterated his call for private accounts in his State of the Union Address.

The strategy of the President and Congressional supporters of Social Security privatization is to bury the issue for the rest of this year in order to avoid a public debate before the 2002 elections. They want to hide their support for changes that would cut benefits or raise the retirement age. Then they plan to bring the issue up for Congressional debate in 2003.

The Bush plan to privatize Social Security will drain $1 trillion out of the retirement security program.

• Taking $1 trillion out of Social Security to fund individual stock accounts in the next decade alone, as President Bush has proposed, doubles the size of Social Security's projected shortfall. That's because the $1 trillion has already been promised to pay future benefits, and you cannot spend it twice.
  

The $1 trillion price tag for privatizing Social Security is on top of the billions in Social Security trust fund monies that will be tapped over the next decade to pay for the President's millionaire tax cut.

• For the first time in 5 years, the federal budget is in deficit, and the Congressional Budget Office projects that on-budget (i.e., non-Social Security trust fund) deficits will continue through 2009. Beginning in 2004 and continuing through 2009, the President's tax policies are the prime reason for these huge on-budget deficits. Between 2004 and 2009, more than $500 billion dollars in Social Security trust fund surpluses — workers' payroll taxes — will be siphoned off to pay for tax cuts that primarily benefit the very wealthiest taxpayers.
• Besides being grossly unfair, this redistribution from the middle class to the wealthy will rob Social Security of money that will be needed to pay future benefits.
  

The $1 trillion price tag for the Bush privatization plan means big benefit cuts.

• There is no way around the costs of changing over from Social Security's guaranteed benefits to privatized individual accounts. The tab for privatization can be paid for in three ways—use the on-budget surplus, increase taxes, or cut benefits. The President has taken the first two options completely off the table with his millionaire tax cut that eliminates the budget surplus and with his no-new-taxes promise. That leaves benefit cuts.

Under the Bush privatization plan, workers will see a 40 percent average benefit cut.

• Simple arithmetic tells us that setting up individual accounts, using Social Security resources and complying with the guidelines required by President Bush, means that guaranteed benefits must be cut for workers under 55 by 40 percent, on average.
• And even under ideal circumstances, workers will see a large cut of 20 percent in their total benefits after counting in the individual account. That says nothing of the additional cuts that will hit workers who are not fortunate enough to have full careers with steady earnings or were not lucky enough to live in a time when stock market returns were high.
  

Secure, dependable Social Security benefits are critical to tens of millions of Americans.

• Nearly two-thirds of older Americans count on Social Security for half or more of their income in retirement. One in four older unmarried women (the widowed, divorced and never married) count on it for all of their income. Two out of five African American and Latino older Americans count on Social Security for all of their retirement income. These families need more for Social Security, not less.
• Social Security is so important because most people do not have substantial pensions from their employers, and their savings are very modest. Fewer than half of all families have any kind of retirement savings account, and among those lucky enough to have one, half have less than $24,000 in it. As employers continue to cut back on real pensions, retirement security is likely to decline for working families.
• As Enron has taught us, even those who work hard, plan and save can get caught up short in a stock-based retirement system. It is clearer today than ever that the stability and security Social Security has provided and continues to provide must remain the cornerstone of national retirement policy.