RE: SS, MORE than retirement

[Walter Hart <tracy.hart@cwix.com>]

>"SS is more than retirement."

One tactic of AARP and the elderly lobby in fighting Social Security
reform is to tout the supposed benefits of Social Security to
younger age groups. But let's look at the facts and we'll see that
this isn't as significant as the argument purports.

But first, let's properly define the scope of the debate. Social
Security is generally understood to consist of Old Age and Survivor's
Insurance (OASI) and Disability Insurance (DI). Most reformers
aren't really talking about changing the Disability Insurance (DI)
portion of Social Security, only the Old Age and Survivors Insurance
(OASI) portion.

So, what are we talking about privatizing? It's all or most of
OASI. But what are the numbers? In 1997, regressive payroll taxes
were at 15.3 %. This broke down as follows: Old Age and Survivor’s
Insurance (OASI) was at 10.7% Disability Insurance (DI

So, what are we talking about privatizing? It's all or most of
OASI. But what are the numbers? In 1997, regressive payroll taxes
were at 15.3 %. This broke down as follows: Old Age and Survivor’s
Insurance (OASI) was at 10.7% Disability Insurance (DI) was at
1.7%. Hospital Insurance (HI), i.e., Medicare) was at 2.9%

So, when we're talking about Social Security privatization reform,
what we're usually talking about is the 10.7% of payroll. (For
1998, it may be a different percentage, but I'm using the latest
numbers available to me now in the analysis below, and those are
from 1997.).

Using the 1998 Annual Report of the Board of Trustees of the Federal
Old-Age and Survivors Insurance and Disability Insurance Trust
Funds, see http://www.ssa.gov/OACT/TR/TR98/tric.html#pgfId=1551
and http://www.ssa.gov/OACT/TR/TR98/triic.html#36308  we can see
how that 10.7% of payroll was spent, and what part of it went to
directly benefit younger workers or their families.

What I've done below is present the dollar amounts of payments in
1997 that the SSA estimated for different categories of benefit
recipients (from SSA Table II.C7). To the right of these numbers,
I've roughly computed what each of these beneficiary payment
categories means in terms of a percentage of payroll. These
computation were done based on the net total of all OASI taxes for
1997 being $342.3 Billion (SSA Table I.C1.) Given that this number
represents 10.7% of payroll, each beneficiary category can also be
translated into a percentage of payroll as well. The total of all
benefits paid was $312.9 Billion, which translates into 9.78% of
payroll, leaving an OASI Current Year Surplus of $19.8 Billion,
which translates into .92% of payroll.


BENEFICIARY			EST. AMOUNTS PAID 		% OF PAYROLL 

RETIREMENT BENEFITS 
Retired Workers			$220.8 Billion			6.902% 
Wives and Husbands of 
  Retired Workers		$18.0 Billion			. 562% 
Minor & Disabled Children 
  of Retired Workers		$1.9 Billion			. 059% 
SURVIVORS' BENEFITS 
60+ Year Old Widow or Widower	57.8 Billion			1.807% 
50-59 Year-Old Disabled 
  Widow or Widower		$1.1 Billion			. 034% 
Dependent, 62+-Year-Old, 
  Parents of Deceased Workers	$.03 Billion			-----% 
Minor or Disabled Children 
  of Deceased Workers		$11.5 Billion			. 359% 
Widowed Mother or Father 
  Caring for Child Beneficiary 
  Under 16 years old		$1.5 Billion			. 046% 
Death Benefit			 $.2 Billion			. 006% 

So, what percentage of payroll actually might be described as a
paying for a benefit that might directly go to a younger worker or
his or her immediate family? Each person has a different life
situation. But, for me, as a 38-year-old husband and father in
1997, there were only three (3) categories of benefits that
conceivably could have applied to provide a benefit to my family
or me. In decreasing order of magnitude, these are the benefits
paid 1) to a Minor or Disabled Child of a Deceased Worker; (2) to
a Widowed Mother or Father Caring for a Child Beneficiary; and 3)
as a Death Benefit.

As can be seen, however, the estimated payments for these categories
of benefits in 1997 totaled less than .5% of payroll. In other
words, of my 10.7% OASI taxes, only .411% of payroll went to some
kind of insurance that might apply to my family, while 10.289% went
to other types of insurance and surplus.

For a younger worker making $50,000 a year in 1997, this means that
of his or her total OASI taxes of $5,350.00, only $205.50 went to
pay for a category of benefit that might have provided a direct
benefit to his or her family.

Walter