Friends:

For two-thirds of America’s seniors, Social Security is the primary or only source of income during retirement.  The program is also a safety net for workers who become disabled and for families whose sole provider dies prematurely.  For many Americans, Social Security is a rock solid guarantee from the United States that we will not let them fall into poverty if they have paid into the system.  For nearly 70 years, the Social Security program has assured Americans a monthly payment, paid in full and on time.

The Trust Fund that pays for Social Security checks every month currently has a $1.7 trillion surplus, which is projected to grow to a $6.6 trillion surplus in the year 2027.  After that point, the Trust Fund will continue to pay full benefits until 2042, after which point workers’ contributions (“FICA” or “payroll taxes” will still be able to pay 75 percent of promised benefits (which will still be at amounts higher than today’s benefits).  We in Congress should be working in a bipartisan way to avoid this future shortfall, such as Congress did in 1983, when Social Security was in a much deeper dilemma.

Instead, President Bush has called on Congress to dramatically change the Social Security system, asking for a portion of the funds that are currently paid by workers into the Trust Fund to be diverted into private stock and bond market accounts, without addressing the $5 trillion hole he would create in the Social Security Trust Fund over 20 years.  Still, the president referred to a plan put together in 2001 by a commission he appointed as a “good blueprint for reform,” and seems to have modeled his proposal on that plan. 

Because the private accounts proposed by the president will actually take money out of the Social Security Trust Fund, the problem of solvency actually becomes worse.  To make up for the worsening shortfall, the commission’s plan would cut benefits for future retirees by as much as 40 percent.  Under this plan, a 25 year old worker today could see his Social Security benefits reduced by $152,000 through a “privatization tax” against proceeds from his private account and a change in the way benefits are calculated.  Finally, although participation in the private account scheme is said to be voluntary, everyone will see their benefits cut in order to offset the amounts diverted into the private accounts.

I hope the information on the pages linked below helps you stay informed about the debate.

Sincerely,

XAVIER BECERRA
Member of Congress

For further information about the Privatization debate, please visit the Committee on Ways and Means page on Social Security.