STRENGTHEN SOCIAL SECURITY

WHEREAS, for nearly 70 years, Social Security has been one of the most successful and popular federal programs, providing a basic standard of living to tens of millions of older Americans and decreasing the federal poverty level for seniors to 8.5 percent (v. nearly 50 percent without the program), and providing basic benefits to the families of millions of survivors of deceased workers and workers who have become disabled; and

WHEREAS, the Board of Trustees of the Social Security Trust Funds estimates that the Social Security system will remain able to pay full benefits until 2041, if no changes in the system are made, and 73 percent of benefits thereafter; and

WHEREAS, 46 million retirees, survivors and people with disabilities depend on Social Security, and nearly two in three (64 percent) workers and almost half of those with disabilities (48 percent) count on Social Security for 50 percent or more of their income; and

WHEREAS, one in four older unmarried women (the widowed, divorced and never married) counts on Social Security for all their income, and two out of five older African and Latino Americans count on Social Security for all of their retirement income; and

WHEREAS, only one in six working Americans has a guaranteed defined-benefit pension plan, and fewer than half of all families have any kind of retirement savings account, with most of those under $24,000; and

WHEREAS, the current Social Security system is one of the nation's most efficient services, delivering these benefits with administrative costs equal to less than 1 percent of benefits paid out each year; and

WHEREAS, Congress and President Reagan made the decision in 1983 to pre-fund Social Security benefits by setting payroll taxes at a level that is higher than needed to pay current benefits, and subsequent Congresses and administrations "controlled by Democrats and Republicans" have continued that policy; and

WHEREAS, Social Security faces a manageable shortfall equal to 1.86 percent of payroll over the long term, a shortfall that can and should be addressed with modest steps that preserve Social Security's ability to protect working families; and

WHEREAS, the three proposals put forward by President Bush's Commission on Social Security would divert part of the Social Security payroll tax into private individual investment accounts, which would drain resources from Social Security; and

WHEREAS, this would result in one or more of the following: reduce benefits for future retirees by as much as 45 percent, raise the retirement age and/or require substantial benefit cuts for retirees, survivors and the disabled, all without restoring solvency to the system; and

WHEREAS, individual accounts do not provide predictable, guaranteed life-long retirement, disability benefits or inflation protection as do current Social Security programs; and

WHEREAS, the administration's $1.35 trillion tax cut, the recession and increased military expenditures to fight terrorism have eliminated the estimated $1 trillion needed to maintain Social Security benefit levels for current retirees and those near-retirees the president had promised to protect; and

WHEREAS, when fully phased in, nearly 71 percent of the tax cut will go to the top fifth of taxpayers, with one-third or more going to the top 1 percent of taxpayers, and its long-term cost is more than twice the size of Social Security's projected shortfall:

RESOLVED, that the AFT support postponing or rolling back part of the Bush administration's $1.35 billion tax cut, using these funds to reduce the federal debt rather than pay for other federal programs, thereby increasing the financial base to protect Social Security in the future; and

RESOLVED, that the AFT support restoring the payroll tax cap to its historical share of covered wages, 90 percent of covered earnings, and indexing the rate to maintain that ratio; and

RESOLVED, that the AFT oppose proposals to replace Social Security's guaranteed benefits with individual investment accounts and support only supplemental retirement accounts that truly add to existing Social Security benefits. Such supplemental retirement accounts would improve retirement security for all working Americans, particularly those least likely to have substantial financial assets or significant benefits from workplace pensions or retirement savings accounts; and

RESOLVED, that the AFT reiterate its support for a Social Security system that:

• maintains economic security for current and future retirees, reducing the economic burden on younger family members to care for their older relatives;
• provides guaranteed universal insurance protections for surviving spouses and children and disabled and retired workers; and
• offers a larger proportional benefit to low-income workers, while continuing to provide larger overall benefits to workers who earn higher wages.