Response from Senator Murray

Thank you for contacting me about privatizing the Social Security system. It is
good to hear from you.

As you know, Social Security was created by President Franklin D. Roosevelt in
1935 to address the widespread poverty experienced during the Great Depression.

As part of a three-pronged retirement strategy that includes pensions and
private investments, Social Security provides retirees with a foundation of
economic security. As you may know, the average retiree benefit is about $930
per month, or $11,160 a year. Although the average benefit is by no means
extravagant, it has provided America’s seniors with vital protection against
poverty. In fact, since Social Security’s creation, the level of poverty among
seniors has fallen from half of all seniors in 1935 to one in ten seniors today.
According to the U.S. Census Bureau, about 49 percent of American seniors would
live in poverty today without Social Security.

Although most Americans view Social Security as an earned retirement program,
Social Security is also a comprehensive family insurance program, protecting
families of deceased and disabled workers from sliding into poverty. Indeed,
three in ten beneficiaries receive survivors’ or disability insurance benefits.

Clearly, Social Security faces a long-term financing issue. I agree with
President Bush when he says, “We have an obligation and a duty to confront
problems and not pass them on to future generations.” However, President Bush’s
privatization plan does not meet this obligation. Instead, the President’s
proposal will reduce the guaranteed benefits under current law, exacerbate the
national deficit, harm women and minorities and do nothing to address the long
term solvency issues facing the system.

President Bush frequently claims that privatizing Social Security will not cut
the benefits of Social Security beneficiaries. However, this guarantee is
disingenuous at best, since the transition cost to establish private accounts
will steal trillions of dollars from the Social Security Trust fund. Quite
simply, the President’s proposal will cut Social Security’s funding by diverting
payroll taxes into privatized accounts, which will weaken the program and force
deep cuts in benefits.

Furthermore, privatization will exacerbate the deficit by adding trillions to
the national debt, creating huge tax burdens for future generations. In the
next two decades alone this plan will create nearly $5 trillion in new debt,
according to the Center on Budget and Policy Priorities. The Administration has
acknowledged that its proposal will require borrowing trillions of dollars, much
of which we know will come from countries like China and Japan. This could
increase our interest rates, harm our economy and lead to large tax increases.
As you can see, the President's plan simply adds to our problems.

The current system keeps millions of older women and minorities out of poverty.
Its benefit formulas are tilted to give a greater rate of return for lower wage
workers like women and minorities. Many American women face unique challenges in
retirement. Women make less money than men, leave the workforce to raise
families, live longer and are more likely to suffer from chronic health
conditions. Minorities who are low wage workers also tend to have chronic
health conditions; due in large part to vigorous work in numerous labor
occupations around America. The Administration’s proposal will make room for
both women and minorities to fall into poverty by slashing their benefits with a
new life expectancy requirement.

Lastly, President Bush’s plan does nothing to address the long term solvency of
Social Security. According to Federal Reserve Chairman Alan Greenspan, the
President’s plan to create voluntary private savings accounts, in place of
Social Security contributions, would “by itself alone do nothing to improve the
long-term solvency of the Social Security system.”

It is clear that we must fight to preserve Social Security so that future
generations have confidence in the program that all Americans contribute to. I
believe that any reform made to Social Security must safeguard Social Security's
guaranteed benefits; provide protection for workers when they are disabled;
protect against benefit reductions for women, minorities and all others; and
protect our budget from ever growing deficits. Without these foundations fully
intact, Social Security will no longer be America’s insurance against poverty.
Regrettably, the Administration’s proposal does not uphold these fundamental
foundations.

I believe that providing incentives for individuals who invest in long term care
insurance and set aside retirement savings accounts could be part of the
solution. Additionally, it is necessary to create a Security Lock Box to lock
away every cent of the Social Security surplus. As we move forward in addressing
the long term solvency of Social Security, rest assured that I will continue to
stand up for future generations against a private solution that simply adds
trillions to the national debt, allows women and minorities to fall into poverty
and ultimately destroys the guaranteed benefits for present and future
generations.

Again, thank you for contacting me. Please keep in touch.

Sincerely,
Patty Murray
United States Senator