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FOR IMMEDIATE RELEASE: February 18, 2005
SCHUMER: OVER 350,000 STATEN ISLANDERS COULD LOSE SOCIAL
SECURITY BENEFITS UNDER NEW PLAN – DETAILED EFFORT TO SAVE
IT
Senator outlined effect on Staten Islanders; from seniors to
young people
70,060 people currently receive Social Security benefits on Staten
Island, over 350,000 additional Staten Islanders to be targeted
for cuts under Bush plan
Schumer: We will not allow Washington to play retirement roulette
U.S. Senator Charles E. Schumer today met with seniors on Staten
Island to outline the shortcomings of the President’s proposal
to privatize Social Security and shortchange Americans. Schumer
warned seniors that privatization will make the underlying problems
of Social Security more difficult to solve, add trillions to the
national debt, slow our economy and put future generations at enormous
risk.
"When it comes to cutting Social Security, my answer is no
way, no time, no how," Schumer said. "The federal government
made a promise to all Americans that if they worked hard, paid their
taxes, and played by the rules, they could retire in dignity and
get their benefits. The privatization plan that is on the table
puts everyone’s benefits at risk.”
On Staten Island, approximately 70,060 people receive Social Security
with an average monthly payout of $920. Social Security has become
an essential facet of American life, with one in every six Americans
receiving a Social Security benefit and more than 95 percent of
all workers covered by Social Security. Today, 47 million people
receive these benefits. Nine out of ten individuals age 65 and older
receive Social Security benefits, and roughly two-thirds of beneficiaries
receive 50 percent or more of their income from the program. Social
Security also provides benefits to disabled workers and survivors
of deceased workers.
Amazingly, the President’s proposed privatization plan actually
worsens Social Security’s already existing long-term financial
problems. According to the Social Security Administration, Social
Security will be able to pay full benefits until at until at least
2042. With the President’s private accounts and no other changes,
the system would only be able to pay full benefits through 2031.
Privatization shortens the Social Security trust fund by eleven
years because payroll taxes that would otherwise go to pay benefits
are diverted to private accounts, which forces the government to
borrow trillions more to pay benefits to current retirees.
“Its simple math,” Schumer said, “You can’t
use the same dollars for two different things.”
Then, to restore solvency, the privatization plan slashes benefits
in two ways. The first, price indexing, targets young Americans
who are just entering the work force. The younger a future social
security recipient is today, the smaller their initial Social Security
benefit will be.
The second cut, the privatization tax, is the additional amount
of a promised Social Security benefit that a recipient loses as
a result of having set up a private account. Under the privatization
plan, recipients get to keep what’s in their account, minus
any administrative fees. But the guaranteed Social Security benefit
will be reduced by whatever is contributed to an account plus some
interest. Private accounts only help if the annual rate of return
earned on investments exceeds the rate of inflation plus three percent.
If the money is invested poorly, or the market drops right before
retirement, then the expected payout will drop accordingly.
The President’s plan also increases the birth tax - the amount
of debt that is laid on the shoulders of each newborn child. It
is already high enough, but the President’s plan adds almost
$17,000 to every child’s birth tax, because it adds nearly
$5 trillion in new debt over the first 20 years.
“It is morally irresponsible to be passing such a huge birth
tax to future generations. All of this borrowing will eventually
have to be repaid with interest, just like a home mortgage or a
personal credit card,” said Schumer.
This week, Schumer and other Senate Democrats unveiled an easy-to-use
and easy-to-understand website for every American to see how much
they lose under this privatization scheme. The Social Security calculator,
which can be accessed through a button on Schumer’s website,
www.schumer.senate.gov, allows Americans to simply plug in their
average annual salary and year of birth and see a side-by-side comparison
of the benefits between the Bush Privatization Plan and the current
Social Security system. The calculator shows the expected annual
benefits under both systems, the difference between the two plans
as well as the percent reduction that Americans will face under
the Bush Privatization Plan.
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