Joint Committee on Social Security ~ Issues Report ~ Not Good !

Panel's Report Rebuts GOP Proposals for Changes to Social Security
By Vicki Needham - 10/21/10

The Joint Economic Committee has released a report that shows that Republican proposals to make changes to Social Security would result in benefit cuts for millions and put the program's solvency in jeopardy. The report shows that two aspects of GOP plans — privatizing and progressive price indexing — would cuts the benefits of millions of middle-income workers and put nearly 50 percent of seniors at risk of living in poverty without Social Security benefits, compared with 10 percent who face poverty under the program. The issue has become a central focus in several House elections as the mid-term elections approach although it hasn't been an issue raised recently by Congress. "This report highlights that it is unwise to look to the stock market for a guaranteed annuity," said JEC Chairwoman Carolyn Maloney, (D-N.Y.). "We all know all too well that the stock market is subject to wild swings. We cannot afford to roll the dice with our seniors’ retirement security." The report, "Unnecessary Risk: The Perils of Privatizing Social Security," focused its analysis on recently revived Republican proposals to privatize the program by allowing future retirees to divert a portion of their payroll taxes to individual investment accounts. Under GOP proposals, according to the report, private accounts are unlikely to provide a guaranteed retirement annuity, indexed for inflation, as the current Social Security system provides. The report also found that allowing current contributors to divert funds out of the general Social Security fund into private accounts will "exacerbate the shortfall in revenues for current and future retirees as well as for current and future recipients of disability and survivors insurance." As an example, the report showed that an annuity purchased by a worker who retired in 2008 would replace only 40 percent of their final income, down from 87 percent replacement just two years earlier. So a worker expecting an annuity of $867 per month in 2006 would have received $399 per month if they retired in 2008.