National Association of Manufacturers

National Association of Manufacturers

The National Association of Manufacturers represents both large and small firms. Of our nearly 14,000 members, 10,000 have fewer than 500 employees with many in the 50 and 100-employee range. Some 18 million people are employed in manufacturing in the U.S. NAM's chairman for 1998-99 is Calvin Campbell, President of Goodman Equipment Corporation in Illinois with 65 employees. Social Security reform is the NAM's top legislative priority for the opening months of the 106th Congress. To fulfill its promise to the American people, a reformed Social Security retirement system must adhere to the following principles:

Preservation of existing benefit levels for the current and near-retired;

Permitting workers to invest a portion of their FICA contributions in individually-controlled and owned Personal Retirement Accounts;

Protecting all retirees with a government-guaranteed safety net.

Accomplishing the above with no increase in taxes.

With the profound belief that no single domestic policy issue affects long- term U.S. economic growth more than Social Security, the NAM Board of Directors in 1997 endorsed the above principles. In addition to the NAM, these principles were also endorsed on December 2 at a rally kicking-off the "Campaign to Save and Strengthen Social Security" by 42 groups representing women, the self-employed, African-Americans, Hispanics, young people and seniors, in addition to businesses of all sizes and types.
Campaign members recognize that Social Security faces a demographic crisis and financing shortfall of $9 trillion and that raising taxes 50 percent to resolve this shortfall is unacceptable. They know that today's young workers will get back a negative return on their lifetime FICA contributions and that future retirees will receive only 75 percent of promised benefits if nothing is done to fix Social Security. For these reasons, the NAM and campaign members support Personal Retirement Accounts as part of Social Security reform to enable individuals to save and invest for retirement and pass on any remaining savings to survivors and heirs, something not currently possible under Social Security.
Investing a portion of the current FICA tax (2 percent for example) in Personal Retirement Accounts will provide retirees with a greater return than the average 2 percent currently available from Social Security. Experience has shown that investment in the private market over the long term is not inherently risky. For the period 1926- 1996 (a period which included the great crash of 1929), the return was 7 percent.
Personal Retirement Accounts are a tested concept with operational systems in such countries as Chile, Australia and the United Kingdom and with Sweden's nearly ready for implementation. These nations, like the United States, have aging populations making traditional pay-as-you-go systems unworkable over the long term. And in the United States, 2.3 million federal employees participate in the Thrift Savings Plan that permits workers to select from various investment vehicles for retirement.
The traditional solutions of fixing Social Security by raising taxes (either increasing the rate or raising the wage cap) are unacceptable. Already 70 percent of Americans pay more in payroll taxes than they do in federal income taxes. Today's payroll tax of 12.4 percent (shared by employer and employee) is levied on the wage base of $68,400, and in 1999, the wage base rises to $72,600-a six percent increase. Increasing taxes further will only hurt jobs and not solve Social Security's long-term demographic problems.
The NAM has been actively working to bring about reform by establishing a lobbying coalition, the Alliance for Worker Retirement Security, working with members of Congress, serving on the CSIS Commission on Retirement Policy, developing written and electronic materials to educate our members and their workers and convening grassroots forums around the country. Our goal is a remodeled Social Security system that takes care of seniors, does not overly burden today's workers, promotes economic growth and jobs for America's next century and enables ordinary citizens to accumulate real wealth.
For further information on the NAM's Social Security reform efforts, contact Sharon Canner, Vice President of Entitlement Policy, 202/637-3040 or by email scanner@nam.org.