DAILY SUMMARY May 28 - 31

[National Dialogue Moderator <moderator>]

		DAILY SUMMARIES FOR MAY 28-31, 1999 
		      WOMEN AND MINORITIES


MODERATOR'S QUESTIONS- Based on a post from one of our participants,
Maureen West asked the panelists if they agreed that Social Security
serves two purposes: retirement income and insurance against
disability and death of the breadwinner.  Should these two programs
be split and paid for in its own way and could either side or both
be privatized?  If we were starting from scratch should we privatize
and if we did how would this impact on women and minorities?

PANESLISTS' RESPONSES:

KIOLO KIJAKAZI questions one participant's figures on the system's
payout to the non- elderly.  Ms. Kijakazi indicates that, according
to 1998 figures from SSA, 17% of benefits are distributed to
survivors and disability recipients. She points out that proponents
of private accounts or carve-outs do not make it clear what impact
their reforms will have on the funding of survivors and disability
programs. She notes that a 2% carve-out nearly doubles the size of
the long-term trust fund shortfall and that this will entail large
reductions in retirement, disability and survivors' benefits. She
indicates that if the Disability Insurance trust fund is separated
from the retirement fund, it will become insolvent in 2020 and that
payroll taxes will have to be raised or benefits cut. She goes on
to state that those with higher incomes could afford to purchase
private disability insurance but those with low incomes may be
faced with higher premiums because they are more likely to have
physically risky jobs. She ends with a description of the problems
that the disabled will face when they reach retirement age under
a private account plan and concludes that the privatization will
entail significant reduction in retirement, survivors' and disabled
benefits.

In a second post responding to Javier Jimenez, Ms. Kijakazi points
out the limitations of private disability and life insurance markets
for low-income workers.  She notes that insurance premiums are
based on the occupation and health of the applicant and that the
greater the physical risk and the less healthy the worker the higher
the premium; thus a low-income worker may be unable to secure
coverage.  Similarly, the cost of a life insurance policy will
depend on the worker's health.  She also notes that, given the high
transition costs of privatization that a low-income worker starting
at age 21 would do less well under a PRA* than Social Security
according to the Employee Benefit Research Institute.

JOHN BANKS-BROOKS responds to Ms. West question by stating that
Mr. Arsinow's hypothetical young man purchasing private insurance
is favorably situated and most minorities and women are not similarly
blessed. He thinks that Social Security must maintain a safety net
of disability and survivors' benefits for minorities and women.

KIOLO KIJAKAZI responds to today's question from Ms.West by endorsing
both purposes of the Social Security and pointing to her response
to Mr. Jimenez for the remainder.

REPRESENTATIVE JIM KOLBE responds to Ms. Hartmann's critique of
his reform plan by suggesting that her desired reforms are far too
costly. He states that in 15 years, with no reform, Medicare and
Social Security will consume 75% of the federal budget.  Secondly,
he suggests that her add-on benefits will negatively influence the
rate of return to many workers and that this undermines the universal
commitment to the program. He points out that the defined benefit
reductions in Kolbe/Stenholm are designed to affect only mid to
high-income individuals but that a carve-out is necessary to maintain
support for the program.

ANNA RAPPAPORT gave us a series of excellent questions in order to
assess the impact of the various legislative proposals upon women
and minorities.  Our moderator, Maureen West, will be submitting
these questions and others from the panelists and our participants
to the Congressional members in our companion Roundtable on Current
Legislative Proposals.  In a second post responding to the Moderator's
question, Ms. Rappaport observes that the private disability
insurance market is not a good option for those who are not young
and healthy and that many with chronic health problems cannot obtain
coverage at a price they can afford.  She points out that the
disability payments under Social Security are a start and that
private marketplace is the place to buy the next layer.

HEIDI HARTMANN responds to Representative Kolbe by advocating two
measures to fund the additional benefits she suggested. She would
raise the cap on taxable earnings and invest a portion of the trust
fund surpluses in the market.  She also thinks that both SSA and
the Treasury have been unduly pessimistic in their projections of
future economic and wage growth.  She suggests that given these
uncertainties we could enact benefit changes contingent upon future
economic productivity.

DARCY OLSEN also suggests a series of criteria with which to evaluate
the current legislative proposals.


PUBLIC COMMENTS:

--Questions. We had a number of questions for the panelists: (1)
how can we provide better benefits to a woman who has worked all
her life in a low wage job with no access to a private pension?
(2) Do the other advanced industrial nation fund both medical and
retirement benefits through regressive payroll taxes and (3) do
you support using general revenues to fund additional benefits such
as prescription coverage for the low-income elderly.

--Richard Arsinow presents his analysis that shows that PRAs would
more fairly compensate a woman for the years she spends out of the
work force caring for children. He thinks that even conservative
investments from her pre-child-rearing years will continue to
compound at a higher-than-inflation rate, whereas Social Security
only protects these earnings on a par with inflation.  He points
out other advantages from privatization such as pre-funding,
flexibility in retiring, and the inheritablility of the private
account.

--Walter Hart responded to Ms. Kijakazi's post on disability and
survivors' benefits. While he agrees with her that the disability
insurance concerns she raises are important, he does not think
these concerns should trump adoption of a private account reform
plan.

--Carolinec responded to Michael Jones' post on widows and red
herrings by arguing that social security was designed to ameliorate
the poverty rates of elderly women and that politicians are not
pandering when they take these concerns into account. She points
out that a reform effort cannot narrowly focus on his rate of return
at retirement and ignore the issues of women, the disabled and the
poor.

--Ruth Reilly thinks that equal pay and the glass ceiling are real
problems for women that should be addressed in the benefit structure
of Social Security.  However, she does not think this system is
the best place to address the problem of women spending less time
in the work force.  In a second post she answers the Moderator's
question by observing that Social Security is an insurance program
designed to protect one from misfortune and that given all the
circumstances it faces, she thinks overall it works pretty well.
She also notes that privatization does not address the needs of
those who live hand-to-mouth and many do not have the skills to
invest wisely or the time to learn them.

--Dora Noble wants the disabled to be treated like the retired with
respect to earning outside income in addition to their benefit
payment.

--Michael Jones responds to Ruth Reilly by arguing that most people
are paying more in premiums than the benefits are worth. He doesn't
think that privatization should be held up by the problems of the
unlucky. He also notes that low-income workers have a hard time
saving but thinks they would do better under privatization.

*  "PRA" stands for a private retirement account.


Barbara Brandon