For nearly 70 years, through depressions, recessions and wars, Social Security has provided predictable, guaranteed benefits to millions of older and disabled American workers and their survivors. These benefits are completely funded by Social Security payroll taxes of 6.2 percent of salary paid by both workers and their employers.

The system includes an annual cost-of-living adjustment that protects recipients against inflation. Benefits are guaranteed for the lifetime of the worker and spouse. Today, one in six Americans receives a Social Security check: More than 47 million Americans, including 32.6 million retired workers and spouses, 6.8 million survivors and dependent children and 7.6 million disabled workers and spouses get benefits.

In 1983, a bipartisan commission of Republicans and Democrats devised a series of reforms designed to provide full funding for the retirement of the 76 million baby boomers born between 1946 and 1964, the largest population increase in American history. These reforms included increasing the Social Security tax and gradually raising the retirement age from 65 to 67 to create enough revenue to fully fund the retirement of baby boomers and the generations to follow. Each year since then, the Social Security tax alone has generated much more revenue than needed to pay benefits. Under federal law, these surplus Social Security taxes can only be invested in 30-year U.S. Treasury bills, one of the safest investments anywhere.

According to the latest projections by the Social Security actuaries, in 2018, the payout from Social Security benefits will surpass the funds collected via the payroll tax. However, as long as the U.S. Treasury honors its Social Security bonds, it will be able to pay full benefits to all retirees until at least 2042. Even if there were no changes in the funding of Social Security benefits, the actuaries calculate that the system could pay 73 percent of promised benefits through 2075.

President Bush's Proposal

Privatizing Social Security has been a goal of George W. Bush since he ran for Congress in the 1970s. Since 2001, when he named a special commission composed exclusively of members committed to privatization, the president has made private accounts a top priority. In his Feb. 2, 2005, State of the Union address, the president called for a radical overhaul of the nation's retirement security program. Although he has so far left details of the actual plan to Republican leaders in Congress, incorporating the president's ideas would involve the following measures:

• Creating individual private accounts diverting up to 4 percent of the 12.4 percent of the Social Security payroll tax into individual private accounts.

• Borrowing $4.9 trillion in the first 20 years of the program to pay full benefits to current retirees and all American workers now 55 and older.

• Changing the formula for calculating benefits from the increases in wages during the retiree's working lifetime to the increase in prices for all workers under 55.

• Requiring most retirees with private accounts to buy an annuity when they retire.

The Impact of President Bush's Proposals

Private accounts will cost everyone a lot. Under the president's proposals, the average worker who lives 20 years beyond retirement will see a $152,000 cut in guaranteed benefits whether or not he or she chooses to have a private account. Retirement will be less secure because guaranteed benefits will be cut by 40 percent or more for workers who put in a full career under the new system, according to the experts at the Social Security Administration. Today's younger workers will see cuts between 26 percent and 45 percent. If the formula the White House proposes were in place now, the average retiree worker retiring this year with full benefits would get $515 a month instead of $1,278 per month. In addition, there are still unanswered questions about the fees that will be charged to administer these private accounts.

Private accounts will be voluntary; but workers will not be able to have the same, higher Social Security benefit. According to experts at MIT and the Brookings Institution, guaranteed Social Security benefits will be cut 40 percent even if workers don't choose to have an individual account. This is because the initial guaranteed Social Security benefit—not the private account—is calculated on a price index, not the current wage index, resulting in a significantly lower initial benefit.  Workers under age 55 won't have the option of choosing the current system; guaranteed benefits will be cut for all of them whether they choose a private account or not.

The 20-year federal deficit will jump by 50 percent. The federal budget is already running a record deficit of $4.3 trillion over the next 10 years. Private accounts would have to be financed through even more borrowing. Even using the administration's own optimistic estimates, privatization increases the deficit by $754 billion, or one-third, in just the first six years of operation. The figure for 20 years approaches $5 trillion, doubling the federal deficit Young Americans will have to pay for this unnecessary borrowing.

Future retirees will be much more likely to live in poverty. If private accounts had been in effect since the creation of Social Security, the number of older Americans living in poverty would be three times larger than it is today.  Remember that 50 percent of today's beneficiaries count on Social Security for at least 50 percent of their income, and 20 percent of them rely on Social Security for 100 percent of their income. A 40 percent cut would put most of them below the poverty line.

Disabled workers and young surviving children could see big cuts. Social Security provides critical benefits to millions of workers who become severely disabled and cannot work, as well as surviving children of workers who die young. The president has not said whether or how he will protect disabled workers and surviving children. Under plans endorsed by President Bush, disabled workers and surviving children are hit with the same cuts as retirees to pay for private accounts. To fully protect them, he will have to come up with hundreds of billions of dollars in additional financing.

Women, blacks and Latinos will be hit harder than others. Women will be hit hard by cuts in benefits for widows and spouses who worked at home without substantial time in the paid workforce. Women, blacks and Latinos will also see cuts in Social Security's benefits, which currently provide higher returns for lifetime low-wage earners. Blacks and Latinos are more likely to become disabled, and black children are more likely to have a parent die young.

Private accounts will weaken the economy. Privatization would hurt the economy and explode the deficit, passing on almost $5 trillion more in debt to younger Americans during the first two decades alone. Eighty percent of all U.S. debt is held by foreigners, the lion's share by bankers in China and Japan.

Private accounts will open Social Security to corruption. Politicians will handpick the Wall Street investment companies that will make billions in fees to administer private accounts.

The AFT Position

• Social Security is not headed for disaster; we need to strengthen the current system through modest steps to maintain its integrity.

• Privatizing Social Security will unnecessarily destabilize a program that has allowed hundreds of millions of Americans to live with dignity and security.

• Workers have earned Social Security benefits by paying into the system over time; they should not be guinea pigs for a flawed social experiment.