WHEREAS:

Every four years, the President appoints an Advisory Council on Social Security to examine long range issues pertaining to Social Security's old age, disability, survivor and health care programs; and

WHEREAS:

The report issued by the 1995 Advisory Council contained multiple options for securing Social Security's long term solvency, including new and controversial proposals; and

WHEREAS:

Two of the options propose using a portion of the Social Security payroll tax for mandatory IRA-style accounts, to be invested in the private securities market by individual workers whose retirement benefits would be determined by the success of their investment choices; and

WHEREAS:

This form of privatization destroys the social insurance foundation of the system, which pools the resources of nearly all workers and their families in order to replace a portion of lost wages due to death, disability or retirement -- thereby protecting families and ensuring that the lowest-wage workers receive an adequate income replacement rate; and

WHEREAS:

Social Security privatization would reward individuals who have the most skill and experience in the stock market, penalize those who do not, and introduce risk to Social Security benefits which are now guaranteed by law to be a secure foundation of retirement income; and

WHEREAS:

The biggest winners under privatization are the large stock brokerage houses, which plan to spend millions of dollars to promote Social Security privatization so that they can make billions on investment income and administrative fees (Social Security administrative costs are only about 1%); and

WHEREAS:

The Advisory Council report also includes recommendations for universal Social Security coverage for public employees, specifically requiring that all public jurisdictions that currently do not participate in Social Security -- including such states as Ohio and Massachusetts and such localities as the Cities of Chicago, Minneapolis and Los Angeles -- begin covering all employees hired after 1997; and

WHEREAS:

Employees in these jurisdictions have had every opportunity to join Social Security but have opted instead for their own pension systems, to which they and their employers generally contribute a larger percentage of pay than employees and employers in Social Security-covered jurisdictions contribute to their public pension systems; and

WHEREAS:

This proposal would not only increase payroll costs (6.2% for each covered worker) for public employers that do not now participate in Social Security, but could result in re-examination of their public employee retirement systems and adoption of multi-tier pension plans; and

WHEREAS:

The Advisory Council also recommends that the normal retirement age for receiving Social Security benefits -- currently 65 and scheduled to rise gradually to 67 by the year 2022 -- be raised to 68, despite the fact that many workers -- especially those whose jobs require strenuous physical labor -- may be too sick or too weary to wait this long for retirement; and

WHEREAS:

Social Security clearly faces a long term solvency problem once the baby boom generation retires and begins to spend down Trust Fund reserves, but the problem can be solved in numerous ways and is not so great as to require drastic restructuring of the Social Security system.

THEREFORE BE IT RESOLVED:

That AFSCME oppose specific recommendations in the report of the 1995 Advisory Council on Social Security including those that would require a portion of the payroll tax be set aside for private investment accounts, universal participation of public employees in Social Security, and raising the retirement age; and

BE IT FURTHER RESOLVED:

That AFSCME advocate further examination of Social Security's long term solvency, with an emphasis on solutions that will not drastically restructure a system which has efficiently paid benefits to millions of Americans for over 60 years, will not place benefits at risk, will not unfairly penalize specific groups of workers or retirees, but will fairly spread future Social Security costs over the whole population of contributors and beneficiaries in order to keep the Social Security system sound and effective for many more generations to come.

SUBMITTED BY:

John J. Demanovich, President and Delegate
Retired Public Employees Council of Washington, Chapter 10
Washington