Senate Democrats Claim Bush's Social Security Proposal Hurts Hispanic Retirees
Rosa Ramírez     [Photo]

Hispanic families will disproportionately feel the impact of President Bush's proposed plan to create private Social Security accounts, largely since this population relies on such benefits more than other groups, a report released Feb. 17 by the Senate Democratic Policy Committee claims.

The committee, comprised of legislators opposed to Bush's privatization plan, released the report two and a half weeks into Bush's scheduled tour across the country intended to draw public support for his proposed changes, and nearly a month after he began lobbying Congress.

The report, "Privatizing Social Security: Benefit Cuts and Debts for Our Familias," notes that Hispanics benefit more than any others from the current system because they generally have lower earnings and depend more on a "progressive" benefit formula, which makes it possible for lower-wage earners on average to receive more in Social Security benefits, the report said.

Forty-one percent of Hispanics rely on Social Security as their sole source of retirement income, according to the Social Security Administration. Seventy-six percent rely on the benefits for 50 percent or more of their total income.

Congressman Xavier Becerra (D-Calif.), a member of the House subcommittee on Social Security, is a leading critic of the privatization proposal. "Social Security is probably the most important program for Hispanic families," he said during a Capitol Hill press conference releasing the report.

The report claims that 49 percent of the nation's elderly and 56 percent of Hispanic seniors would fall into poverty under Bush's plan.

Without Social Security, the poverty rate for Hispanics would increase significantly, the authors say. As an example, the report shows that 85 percent of Hispanics 65 years or older do not receive income from any private pension or annuities.

Other press conference speakers helped build their case.

Sen. Jeff Bingaman (D-N.M.) added that Hispanic seniors are much less likely to obtain income from other sources, including dividend, savings and interest. "More than half of Hispanic women aged 65 and older depend on Social Security for 100 percent of their income," he said.

Gabriela Lemus, policy director for the League of United Latin American Citizens, added, "Without Social Security, the numbers would definitely increase, placing additional burdens on their families and diminishing their sense of independence."

LULAC and the Labor Council for Latin American Advancement are among several Hispanic advocacy groups opposing the president's plan.

The plan would allow individuals under 55 to invest 4 percent of their income that is subject to Social Security payroll tax into private retirement accounts.

The administration contends that by the year 2042, when workers now in their mid-20s begin to retire, the current system would be bankrupt.

Those now retired or near retirement age would not be affected by the changes, the White House emphasizes.

Critics of Social Security privatization contend that the president is inflating the severity of the problem and using the word "crisis" too loosely, as a scare tactic.

Rep. Bob Menéndez (D-N.J.), asks the question: "If it's such a crisis, why isn't it in his budget?"

Supporters of private accounts say the plan would allow younger workers to "take ownership" of their retirement and create a larger amount of retirement insurance.

Speaking to Hispanic Link, Berna Brannon, analyst for the Cato Institute, a public policy group in Washington, D.C., says that critics are focusing primarily on the guaranteed benefits of the current Social Security plan and are not looking at long-term investment. "They are assuming that the accounts bring them nothing. And you need to look at the entire picture," she says.

Opponents counter that the system was never intended to be an investment program and there are market risks that could cost them dearly.

(Rosa Ramírez is a reporter with Hispanic Link News Service in Washington, D.C. She may be contacted by e-mail at Rosa@HispanicLink.org.)

© 2005, Hispanic Link News Service
02/27/05
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