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American Federation of Labor and Congress of Industrial Organizations

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AFL-CIO President John J. Sweeney Statement on Social Security

America's working families have a huge stake in the future of Social Security, and the 72 national unions of the AFL-CIO and our 13 million members will be fully engaged in the drive to strengthen this, our nation's most important and comprehensive family protection system.

Strengthening the system demands reasoned, responsible changes - not phony schemes railroaded by extremists to "save" the system by scrapping it. While the program's finances must be shored up to meet its commitments to today's workers, radical changes should be propelled neither by a false sense of "crisis" nor by questionable long- term economic projections. Rather, changes to strengthen Social Security must be guided by a clear and full understanding of the program's role in the lives of ordinary people and of the real impact of proposed changes on Americans, both direct and indirect.

In no case should the program's core guaranteed benefits upon which a majority of older Americans depend be traded in for risky and expensive private accounts. Furthermore, most Americans cannot work to age 70 or older, cannot afford cuts in guaranteed benefits, and will not tolerate changes that make the system less fair.

  1. Social Security is the foundation of retirement income for America's workers and their families and the principal insurance against family impoverishment due to death or disability. Its role must not be compromised nor its financial condition weakened. Two thirds of older Americans rely on Social Security for half or more of their income -- and 30% of them get 90 percent or more of their income from Social Security. The system's guaranteed benefits are especially crucial to women and workers of color. Without Social Security, more than half of people 65 and older would live in poverty, compared with 11 percent today. And the system provides benefits to six million workers with disabilities and dependents, and seven million survivors of workers who have died.

  2. Social Security must be strengthened so it can meet its commitments to today's workers, just as it has to workers - without missing a check - for the last sixty years. But there is no "crisis." "Sky-is-falling" rhetoric is being used by extremists to undermine support for the current system and replace it with costly private investment accounts. A privatized Social Security system would mean billions of dollars in fees for banks, insurance companies and investment firms - an estimated $240 billion in the first 12 years of privatization alone.

  3. Working families would be heavy losers under privatization. Privatization proposals call for some combination of:

    • raising the retirement age to 70 or older - which would be especially hard on workers in physically demanding jobs and workers of color, who have lower life expectancies;

    • cutting Social Security's guaranteed benefits (one major proposal cuts them 48 percent; another reduces the maximum guaranteed benefit to $4 10 per month);

    • reducing or eliminating cost-of-living adjustments, hitting workers with the longest life expectancies hardest.

In addition, privatization would entail dramatically higher costs (out of workers' benefits) to finance a likely unworkable system of 140 million private accounts. It would also leave benefits dependent on workers' luck or skill as investors and the ups and downs of the stock market and adversely impact workers' private pensions.

Addressing the long-run financial challenges of Social Security does indeed demand responsible changes to the system, and the AFL-CIO is committed to enacting reforms to address the system's shortfall. The AFL-CIO Executive Council has agreed upon seven fundamental principles that reforms must meet, if they are to work for working families.

  • Steps must be taken soon to strengthen Social Security so that all Americans can be assured that the program will be there for them.

  • Social Security should continue to provide retired and disabled workers, as well as dependents and survivors, with a guaranteed monthly benefit, protected against inflation, for life.

  • Benefits should not be subject to the whims of the market, and private accounts should never been substituted for the core defined benefits the system currently provides.

  • The age at which workers are eligible for early or full benefits should not be raised.

  • Social Security should continue to replace a larger share of past earnings for low-income workers and to provide bigger benefits to workers who earned higher wages during their careers. Replacement rates should not be cut.

  • Social Security should continue to provide family insurance protection, with benefits that cover dependent and surviving children and spouses in addition to disabled and retired workers.

  • Government budget surpluses should be used to save Social Security first, not to pay for tax cuts.

If Social Security did not exist, we would have to create it. No other system provides every working American with a core guaranteed retirement benefit protected against inflation for as long as he or she lives. No insurance policy on the market today matches the protections Social Security provides to families through its disability, dependent and survivor benefits. And no private pension system compares with the efficiency of Social Security's low administrative cost of less than one percent per dollar paid out in benefits.

The deliberation over how to strengthen the foundation of retirement income for working families is undoubtedly one of the most important national debates for the new century. We should not compromise our expectations of the system or the security of America's families.

EXECUTIVE COUNCIL
JOHN J. SWEENEY RICHARD L. TRUMKA LINDA CHAVEZ-THOMPSON
PRESIDENT SECRETARY-TREASURER EXECUTIVE VICE PRESIDENT
Vincent R. Sombrotto Gerald W. McEntee John T. Joyce Morton Bahr
Robert A. Georgine Gene Upshaw Jay Mazur John J. Barry
Moe Biller Frank Hanley James J. Norton Michael Sacco
Ron Carey Arthur A. Coia Frank Hurt Gloria T. Johnson
Douglas H. Dority George F. Becker Stephen P Yokich J. Randolph Babbitt
Clayola Brown M.A. "Mac" Fleming Pat Friend Michael Goodwin
Joe L. Greene Sonny Hall Sumi Haru Carroll Haynes
James La Sala William Lucy Leon Lynch Douglas J. McCarron
Arthur Moore Arturo S. Rodriguez Robert A. Scardelletti Robert E. Wages
Jake West Alfred K. Whitehead Andrew L. Stern Edward L. Fire
Martin J. Maddaloni John M. Bowers Sandra Feldman R. Thomas Buffenbarger
Boyd D. Young Dennis Rivera Bobby L. Harnage, Sr. Stuart Appelbaum
John W. Wilhelm Elizabeth Bunn Michael E. Monroe

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