U.S. Social Security
The U.S. Social Security system is administered by the U.S. Social Security Administration. It was without doubt one of the "hottest" topics under consideration in U.S. presidential election, 2004 for America's ever-growing aging population, particularly the Baby Boom generation.
In early 2005, the Bush administration began in earnest its campaign to achieve U.S. Social Security privatization. This is primarily to end the racism that exist in the system. Social Security is a bad deal for all Americans, but African-Americans often get the worst deal. This is because African-Americans pay too much into Social Security while working and get back too little in retirement benefits to make Social Security a good deal. So they also have the most to gain from moving to a system based on individual ownership and private investment.
How much you get from Social Security depends partly on how long you live, and African-Americans generally have lower life expectancies than other groups. When a black man reaches age 65, he is expected to live only another 13.9 years, almost 2 years (24 payments) less than a white male. The RAND Corporation concluded that, because of differences in life expectancies and marriage rates, on a life-time basis the income transfer from blacks to whites is as much as $10,000 per person.
African-Americans often do not have enough money left over after paying taxes to save for retirement. Elderly African-Americans are much more likely than other groups to be totally dependent on Social Security for retirement income. Social Security's benefits are simply not enough: the poverty rates among black elderly women is 29 percent-almost twice the rate for all women.
African-Americans would be among those with the most to gain from transforming Social Security into a system of individually owned, privately invested accounts, similar to IRAs or 401k plans.
Higher benefits: Through the power of compound interest, all workers would be able to accumulate substantial savings. Take, for example, a 28-year-old worker making $13,500 per year and paying $1,674 in Social Security tax. If she invested in a conservative savings program that earned just a 4 percent return, she would accrue $177,147 by age 67. That amounts to a monthly benefit of $1,243-$400 more per month than the benefits promised by Social Security.
Private property: Workers would own their savings. If an individual died young, he could leave his accumulated savings to family members.
Improved economy: The increase in savings caused by moving to a fully funded retirement system would stimulate the economy and lead to increased investment resources. That would be particularly important for those areas the most in need of capital.
Finally, Social Security reform must be looked at in light of the alternatives. Incremental reforms to prop up the existing system-such as raising payroll taxes or cutting benefits-could disproportionately harm African-Americans.
SourceWatch resources
- Alliance for Retirement Prosperity
- Bush administration
- Congressional Budget Office
- Department of Veterans Affairs
- Freedom of Information Act
- Health Care
- Medicare
- Office of Management and Budget
- State of the Union 2003
- State of the Union 2004
- U.S. budget deficit
- U.S. National Debt
- U.S. prescription drug system
- U.S. Social Security privatization
- U.S. tax cuts
- U.S. unemployment
- Veterans benefits
External Links
- Edmund L. Andrews, "Clamor Grows in the Privatization Debate," New York Times, December 17, 2004.
- Stuart Butler and Peter Germanis, "Achieving a 'Leninist' Strategy," Cato Journal, vol. 3, no.2 (Fall 1983). This document lays out in detail the right wing's long-term strategy for Social Security privatization.
