Response to Heidi Hartmann

[National Dialogue Moderator <moderator>]

Ms. Hartmann,

I read with interest your response to the provisions in the Kolbe-Stenholm
bill pertaining to women.  In your message, you stated you would like a
reform plan to contain the following elements: a higher minimum benefit, a
government savings match for low-income people, no carve out and no
reductions to Social Security benefits.  I think if you consider the cost of
the Social Security program you are proposing, you may have second thoughts.

For starters, you are recommending that we pay for promised benefits that we
already know we cannot afford.  There is a $7.4 trillion unfunded liability
in Social Security -- and that's just between 2015 and 2034.  After 2034,
there is no mechanism whatsoever to pay more than 72-75% of benefits
promised.  So even if we do nothing to change current law, benefit
reductions WILL occur.

Second, if we keep the current Social Security system in place, the cost of
providing just Social Security and Medicare benefits to our nation's senior
citizens will consume 75% of the federal budget in the near future
(2010-2015).  This means there will be little money left over for other
spending priorities that are important to all Americans such as clean water
and clean air programs, student loans for college, food stamps for poor
families, aid for farmers, defense, etc.  Moreover, spending on Medicare and
Social Security would make it impossibe to pay for the NEW federal subsidies
you propose (the savings match and the minimum benefit).

Third, an add-on only will exacerbate the poor rate of return many
individuals curently receive from Social Security. Already many minorities
and young people will experience a negative rate of return from Social
Security.  With an add-on, you are asking them to contribute MORE to a
program that already provides a less-than adequate rate of return.  You must
remember, one of the reasons Social Security has been so successful is it's
universality. Until recently, everyone had something to gain from Social
Security and consequently, the program enjoyed broad-based support.  When
that universality erodes, so does support for the program.  If you recall,
this is what happened to welfare in 1996.

Rep. Stenholm and I did not create our reform plan to be unneccessarily
cruel to future beneficiaries.  The defined benefit reductions in our bill
are necessary to keep the program intact.  We've isolated these benefit
reductions to affect only mid-to-high income individuals. Since these
individuals provide a disproportionate share of the payroll taxes that fund
Social Security, a carve out was necessary to maintain their support for the
program. The carve out attempts to replace the reductions in their defined
benefit.  Without this "carrot,"  Social Security begins to look more and
more like a welfare program, and the next thing you know, there is a
rallying cry to dismantle Social Security altogether.  Indeed, in the
legislative forum on "Current Proposals" some participants are calling for
exactly that.

I can appreciate your desire to propose a plan with no "pain."
Unfortunately, we simply cannot afford such a plan.


-- Jim Kolbe