The Truth About Social Security

Roughly 44 million Americans receive Social Security.

They constitute 16 percent of the U.S. population. They include 92 percent of people 65 and older.

Of the 44 million who receive Social Security, just 27 million are retired.

Some 5 million-plus are widows and widowers.

Another 5 million are disabled workers.

The remaining 7 million are wives, husbands and children of retired, disabled and deceased workers.

The point is, Social Security is not just a retirement plan. And it is not — repeat, not — an investment vehicle.

It is social insurance.

This, Social Security Commissioner Ken Apfel stressed in a recent interview, is the hardest message to get across to people. Especially those who clamor for reform.

Such reform ostensibly would be for the purpose of “saving” Social Security from insolvency. Otherwise, by 2032, in order to continue payments, the program will have to start paying recipients 75 percent (in constant dollars) of what they receive now.

The Clinton administration and Congress are preparing to take action.

Against this backdrop, a few dozen Inland Northwest residents recently took part in a White House Conference on Social Security. Discussions were patched into Spokane via satellite downlink at Gonzaga University’s teleconferencing center.

In the Spokane group, organizers also passed out survey sheets that participants were asked to complete, indicating what they considered to be the most acceptable methods of reforming the system. Verbal responses during the live discussion and written answers were to be compiled for transmittal to Commissioner Apfel and the president.

A subsequent column offered my perspective on the live discussion. The following is based on a just-received summary of combined verbal and written responses by participants in the Spokane portion of the national forum.

In our earlier interview, Commissioner Apfel had emphasized, “Our goal in these forums is to start the process of finding common ground.” To that end, here are options for reform which won support from a majority of participants in Spokane:

Increase the wage base subject to Social Security tax. Workers and employers currently each contribute 6.2 percent of earnings up to $68,400. Self-employed workers pay the full 12.4 percent.

Extend coverage to all workers, making participation in the program universal.

Establish individual investment accounts in addition to Social Security. That is, make these individual investment accounts an extension of or supplement to the existing system — not an alternative.

Increase the taxes on Social Security benefits.

Reform options most opposed by participants in Spokane included:

Raise the retirement age.

Reduce the annual cost of living adjustment (COLA).

Use individual investment accounts in place of Social Security.

According to the Social Security Administration’s summary of the Spokane forum, the “values most expressed by participants included the need to”:

Maintain a financial floor for all retirees and disabled individuals to ensure that they do not fall into poverty.

Ensure fairness to all workers, including women, employees who are displaced by corporate downsizing and those who are forced to stop working prematurely because of health reasons.

Ensure that all workers receive a “living wage” for their work.

Maintain Social Security’s identity as a self-sustaining earned right.

On the survey forms, many favored individual investment accounts as an adjunct to Social Security, but not to replace any part of the Social Security program. Among their reasons:

“Only the stockbrokers and mutual funds managers will benefit.

“Not everyone will invest wisely and profit from their investment.”