DETROIT, MICH. – A typical 20-year-old Michigan resident will lose $152,000 during retirement if Social Security’s guaranteed benefit is replaced with a guaranteed gamble, according to a report released today by the Institute for America’s Future. It would also mean a 15 percent cut for a 45-year-old worker today and a 25 percent cut for a 35-year-old worker in Michigan.
Rep. Sander Levin, D-Mich., joined other Michiganders to release the report on a conference call with reporters today, one day before President Bush is expected to visit Detroit to push his plan to replace the trusted Social Security system with a risky investment plan.
Rep. Levin opened the news conference, noting that privatizing Social Security would take away the bedrock of retirement security that has given millions of seniors independence and economic stability.
“Diverting Social Security funds into private accounts means major benefit cuts and massive borrowing,” said Rep. Levin. “Far from resolving the long-term challenges facing Social Security in 40 to 50 years, the president’s privatization plan would make it worse, and bring about the dismantling of Social Security through benefit cuts and massive borrowing.”
Alliance for Retired Americans secretary-treasurer Ruben Burks joined Rep. Levin on the news conference call. Burks noted that President Bush’s plan will not only open up the door for corruption, but also for mismanagement of workers’ retirement accounts.
“Privatization would only make the close relationship between Washington Republicans and Wall Street cozier,” said Burks. “People may think they have safe retirements but find they have invested in fraudulent companies with crooked accountants, like Enron.”
Burks also noted that his group, the Alliance for Retired Americans, is working with the Campaign for America’s Future, which is promoting the efforts of more than 20 organizations opposing President Bush’s privatization plan, including USAction, ACORN, the American Federation of State, County and Municipal Employees and others. The groups unleashed a broad assault on the president’s privatization plan in all the cities he visited last week with daily news conferences, grassroots mobilization and advertisements.
Professor Matthew Shapiro, who is the chair of the University of Michigan Department of Economics and formerly served on the Council of Economic Advisors for both the Clinton and Carter White Houses, noted that the President Bush’s push for privatizing Social Security benefits could hurt our national savings in the long run.
“It’s a matter of macroeconomics,” said Prof. Shapiro. “The president’s plan to privatize Social Security does not increase savings and it doesn’t save Social Security. As a matter of fact, it could create false hopes and lead folks to cut back on much-needed savings for retirement security.”
Byron Frazier, 30, also spoke to reporters on the conference call, noting that the market will probably drop sharply when the baby boomers retire and take their money out of investments. Frazier is not prepared to rely on a volatile market for his retirement security.
“Young people already have enough to worry about—how we’re going to pay for school, if our friends are going to come back safe from Iraq, if we’ll be able to afford health care,” said Frazier. “And now Bush wants to jeopardize our future financial security by making us gamble our retirement in the stock market? It’s just not right.”
There are currently 1.7 million people in Michigan who depend on Social Security’s safety net. One million of these beneficiaries are retired after a life of work. A retired worker in Michigan received a Social Security check averaging $895 each month in his or her mailbox in 2003.
The president’s privatization plan adds $15 trillion in transition costs over 40 years, according to the House Budget Committee Democratic Staff Review, and according to the National Women’s Law Center, the president’s plan would cut Michigan income by nearly $8 billion each year, including the White House’s income estimates from private accounts. This accounts for one-fifth of the state’s government expenditures in 2002.
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**NOTE: Media representatives interested in a copy of the Michigan Social Security report released today by the Institute for America’s Future should visit http://www.ourfuture.org/docUploads/sotu-ss_MI.pdf**