Commentary | Retirement

Bush plays down SSA benefits to widows, disabled

Opinion pieces and speeches by EPI staff and associates.


Bush plays down SSA benefits to widows, disabled


By  William E. Spriggs

It’s too bad the president’s plan to privatize Social Security has focused on those retiring based on their own earnings — only half of the beneficiaries of the program. This narrow lens drives wedges where there oughtn’t to be any.

This incomplete debate has allowed President Bush to play the race card, using partial information to suggest that blacks are less well served by the program than others — pitting black disabled and survivor beneficiaries against old-age beneficiaries.

In truth, it would be hard to find a more even-handed program than Social Security. And that’s no accident.

Social Security was designed to serve families, not just individual workers. The forgotten “other half” of Social Security beneficiaries includes disabled workers and family members of retired, disabled or deceased workers — a vulnerable population who would be the most hurt by privatization.

The focus on old-age benefits has more to do with who votes and is organized than it does with Social Security. Three of every ten 20-year-old men can expect their families will need the disability benefit; for survivors’ benefits, it’s roughly two out of 10. Alas, there is no AARP for surviving children or disabled workers.

Social Security is the great American unifying program; with one benefit formula that treats the families of disabled and old age workers, and survivors of deceased workers with the same earnings equally.

That’s why what blacks pay in is balanced by what they get back. Bush’s claim that, because of the shorter life expectancy of black men, the program is unfair to blacks is simply wrong.

More black men do die young and are, therefore, greatly under-represented among retirees, but they are also more likely to get disability benefits and their children are more likely to get survivors’ benefits. That all explains why the average age of blacks getting a Social Security benefit is 58.

Each year black workers pay about 9 percent of the Federal Insurance Contribution Act (FICA) taxes paid into Social Security, and each year blacks receive about 9 percent of the benefits paid out. That sounds fair.

The benefit formula for Social Security smoothes out the effects of discrimination in pay and benefits as well as getting a job, which a private account would accentuate. Under private accounts, saving at younger ages counts more than saving at older ages because early savings have more years to accumulate compound interest.

Gaps in employment are greatest between 20-something whites and blacks. In part that reflects discrimination in finding jobs, and in part it reflects that blacks need more education than whites to earn the same levels of income.

So, young blacks of similar backgrounds to whites are more likely to be in school than at work. And, blacks are more likely to get jobs when the economy is booming and the stock market is high.

Moreover, the income of blacks grows relative to whites when the economy is booming, and falls relative to whites when the economy and the stock market are low. So, blacks will have lower returns to their private portfolios, because they will accumulate more when stock prices are high.

Finally, given higher mortality and disability rates, blacks are more likely to call on their private accounts over a short time horizon when the market could easily be down.

Do Americans accept the president’s new philosophy that treats Americans as isolated individuals rather than as members of families?

Before Congress agrees to wreck the one program that is common and fair to all American families, we should at least make sure we don’t multiply our problems by falling victim to the politics of division.

William Spriggs is a senior fellow at the Economic Policy Institute in Washington, D.C.


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