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ENLARGE
Example bond
U.S. Rep. Peter DeFazio holds up an example of a government treasury bond that money for Social Security has been invested in as he speaks
during a town hall meeting Wednesday in Roseburg.
Vi Lewis's husband died when he was 38, leaving behind a widow and five children.
Luckily for Lewis, Social Security provided survivor benefits for her and her children. Although they still struggled, the monthly payments allowed them to continue with their lives.
"Without Social Security, we would have never survived," the now-retired Lewis told U.S. Rep. Peter DeFazio Wednesday in Roseburg. DeFazio spoke at a town hall meeting on Social Security attended by nearly 200 people.
Under a privatization plan offered by President George W. Bush, DeFazio said he does not know what would happen to families placed today in a similar situation as Lewis. Nothing has been discussed on whether such payments would be covered if workers began investing their money in private accounts.
DeFazio criticized the call for privatization of Social Security, saying the current program provides good benefits and is economically stable. Even if no changes were implemented, the system has the ability to pay at least 75 percent of benefits for at least another 40 or 50 years, he said. That does not signal a program in crisis today, he said.
The Springfield Democrat referred to an analysis from the Congressional Budget Office which showed how out of three possible scenarios, people investing in the private accounts would fare the worst.
The analysis looked at a median wage earned by a person born in the 1990s who would retire at age 65. Under the current Social Security benefit structure, that worker would receive $23,300 annually, in 2004 dollars, according to the analysis.
If Congress does not act to prevent the Social Security trust fund from running out of money when payments to retired workers exceed the amount of money coming in from current employees, the benefit to the retired worker would decrease to $18,100.
Under the final scenario, in which workers are allowed to privately invest two-thirds of the money that would normally go to the Social Security Administration, the retired worker would only receive $14,500 from both the private investment and reduced Social Security payments.
The Wall Street Journal, which ran its own mock scenario of three different private investment options, came to the same conclusion that workers would fare worse than under the current Social Security program.
George Roth, a computer science instructor at Umpqua Community College, said he was perplexed by the president's proposal.
"Given what we know of the situation, why would he make such a proposal?" Roth asked.
DeFazio said the privatization of retirement accounts has not worked very well in Great Britain, Chile and Argentina. Great Britain is currently looking at establishing a program much like Social Security.
"They think it's kind of funny that we want to mimic their failure," DeFazio said.
DeFazio told the crowd of mostly elderly people who attended the town hall in the Douglas County Church Annex that he would like to see the cap pulled on Social Security payments for high-income workers. Currently, employees pay the 6.2 percent Social Security tax on wages up to $90,000. Above that, neither workers nor their employers pay any additional taxes.
Without the cap, those earning higher wages would continue to pay their fair share. It would also mean that corporations employing those workers would also pay higher payroll taxes.
Recently, Bush said he would not oppose having the cap raised or eliminated on the table for discussion. In the past, he had been more adamant in his opposition to even having the item discussed.
DeFazio said he would also exempt the first $4,000 earned by a worker each year from Social Security payroll tax. That would give everyone earning less than $94,000 a year a payroll tax cut, he said.
DeFazio held another town hall meeting Wednesday evening in Grants Pass. Today, he is scheduled to be in Brookings and Coos Bay.
* You can reach reporter John Sowell at 957-4209 or by e-mail at jsowell@newsreview.info.
Luckily for Lewis, Social Security provided survivor benefits for her and her children. Although they still struggled, the monthly payments allowed them to continue with their lives.
"Without Social Security, we would have never survived," the now-retired Lewis told U.S. Rep. Peter DeFazio Wednesday in Roseburg. DeFazio spoke at a town hall meeting on Social Security attended by nearly 200 people.
Under a privatization plan offered by President George W. Bush, DeFazio said he does not know what would happen to families placed today in a similar situation as Lewis. Nothing has been discussed on whether such payments would be covered if workers began investing their money in private accounts.
DeFazio criticized the call for privatization of Social Security, saying the current program provides good benefits and is economically stable. Even if no changes were implemented, the system has the ability to pay at least 75 percent of benefits for at least another 40 or 50 years, he said. That does not signal a program in crisis today, he said.
The Springfield Democrat referred to an analysis from the Congressional Budget Office which showed how out of three possible scenarios, people investing in the private accounts would fare the worst.
The analysis looked at a median wage earned by a person born in the 1990s who would retire at age 65. Under the current Social Security benefit structure, that worker would receive $23,300 annually, in 2004 dollars, according to the analysis.
If Congress does not act to prevent the Social Security trust fund from running out of money when payments to retired workers exceed the amount of money coming in from current employees, the benefit to the retired worker would decrease to $18,100.
Under the final scenario, in which workers are allowed to privately invest two-thirds of the money that would normally go to the Social Security Administration, the retired worker would only receive $14,500 from both the private investment and reduced Social Security payments.
The Wall Street Journal, which ran its own mock scenario of three different private investment options, came to the same conclusion that workers would fare worse than under the current Social Security program.
George Roth, a computer science instructor at Umpqua Community College, said he was perplexed by the president's proposal.
"Given what we know of the situation, why would he make such a proposal?" Roth asked.
DeFazio said the privatization of retirement accounts has not worked very well in Great Britain, Chile and Argentina. Great Britain is currently looking at establishing a program much like Social Security.
"They think it's kind of funny that we want to mimic their failure," DeFazio said.
DeFazio told the crowd of mostly elderly people who attended the town hall in the Douglas County Church Annex that he would like to see the cap pulled on Social Security payments for high-income workers. Currently, employees pay the 6.2 percent Social Security tax on wages up to $90,000. Above that, neither workers nor their employers pay any additional taxes.
Without the cap, those earning higher wages would continue to pay their fair share. It would also mean that corporations employing those workers would also pay higher payroll taxes.
Recently, Bush said he would not oppose having the cap raised or eliminated on the table for discussion. In the past, he had been more adamant in his opposition to even having the item discussed.
DeFazio said he would also exempt the first $4,000 earned by a worker each year from Social Security payroll tax. That would give everyone earning less than $94,000 a year a payroll tax cut, he said.
DeFazio held another town hall meeting Wednesday evening in Grants Pass. Today, he is scheduled to be in Brookings and Coos Bay.
* You can reach reporter John Sowell at 957-4209 or by e-mail at jsowell@newsreview.info.
