the taxes that they’re already paying and allowing them to put that into a personal account. We’re not talking about taking new taxes from workers.” Of course, there’s no guarantee that such investments would generate an adequate return, but Moore argues that there are no absolutes with the current system either.
Insolvency is not an immediate crisis, says William Spriggs, a senior fellow at the Washington, D.C.-based Economic Policy Institute and a member of the BLACK ENTERPRISE Board of Economists. “The tax cuts the president wants to make permanent are large enough to close the actuarial gap the nation is facing 45 to 75 years from today. That money could be devoted to making Social Security solvent. Privatization is going to take money out of the system.”
Citing a recent study by the Center on Budget Policy Priorities, Jones says that individual accounts would significantly increase federal borrowing for at least several decades, increasing deficits and borrowing by $1 trillion to $5.3 trillion over the next 10 years. “I believe that long-term balance for Social Security can be achieved through modest revenue and benefit adjustments that will begin to reduce the deficit within the next 10 years,” she adds. Examples are smaller cost-of-living increases for retirees or slightly smaller benefits for people who earned high incomes.
Most of the money that is being collected today is going into the Social Security program to pay benefits to current retirees. Through a privatized program, “there will be a shortfall initially until people with accounts start retiring and easing the burden on the government,” concedes Moore. “It’s called transition cost, and it’s currently calculated to be $2 trillion.”
Seniors are not the only ones likely to be affected. Social Security provides income to a significant number of African Americans — many of them young — under its disability and survivor programs. African Americans represent 11% of the labor force but constitute almost 18% of workers receiving Social Security disability insurance benefits. Roughly 21% of children of disabled workers who receive benefits are African American.
If disability benefits are cut, argues Spriggs, there is no guarantee that the loss can be made up by private disability insurance. In fact, he predicts, those rates will soar. “Currently, you get the same benefit whether you retire or become disabled,” he says. The people selling private disability insurance know you’re getting 40% of your income from the government and they only have to provide the amount above that. They’re not going to want to make up [any loss in benefits].”