Women in the Kolbe-Stenholm bill

[National Dialogue Moderator <moderator>]

I'd like to comment on the moderator's question about how well the 
Kolbe-Stenholm bill meets women's needs.  Some features of their bill are 
good, for example the government match for the savings of low-income 
individuals.  This is similar to the President's idea in his USA accounts, 
that low income individuals will get a match--the President's match is bigger 
at the low end, and the President's accounts are totally separate from Social 
Security.

The Kolbe-Stenholm plan is a "carve-out"--it takes some of the payroll tax, 
2%, and diverts it to individual accounts.  It therefore requires cuts in 
Social Security benefits.
To protect many from the cuts, the bill establishes a new more generous 
minimum, but to get benefits guaranteed to be at (not above!, just at), you 
have to work for 40 years. (Currently benefits are based on the highest 35 
years of earnings).  Unfortunately, very few of the poor have worked 40 
years--they often live in jobless areas or have health problems or family 
care needs that prevent such steady work.

The bill also provides for anyone to pay extra into his/her individual 
account, and this is what Koble recommends women do when they are staying 
home to take care of the kids.  There is a generous government match at the 
low end, but to get the max. match you have to contribute several hundred 
dollars, which could be very hard for low income women staying home with the 
kids.  An alternative idea to deal with the years spent with young children 
would be to credit years spent with small children at some amount (either 
into a savings plan like the USA accounts or give wome earnings credits into 
their Social Security years so more of their 35 years will have earnings and 
fewer of them will be "0" years).

The bill allows low income individuals to divert some of their EITC benefits 
into their individual accounts; that seems sensible and could be applied to 
the President's USA accounts.

Overall I prefer the president's idea of "add-on" accounts rather than 
"carve-out" accounts.  Like Kolbe, Stenholm, I'm in favor of a higher minimum 
SS benefit so there would be fewer poor retired people.  But Kolbe-Stenholm 
pays for that higher mimimum with other benefit cuts, in order to help 
finance the carve out individual accounts--in other words it reduces the 
security in social security.

So, yes to a higher minimum, yes to govt matches for savings for poor people, 
yes to allowing use of EITC credits to provide the poor people's savings to 
be matched.  No to a carve out and to reducing SS benefits to provide for the 
new individual accounts.  I don't think Kolbe-Stenholm would help as many 
women as the sponsors suggest, but maybe SSA could do some studies to see 
what the effects on women would be.

Heidi Hartmann