U.S. REPRESENTATIVE XAVIER BECERRA

30TH DISTRICT OF CALIFORNIA

APRIL 24, 1999

From its inception during the Great Depression, to the present, a time of increased economic prosperity, Social Security has provided all Americans with a safety net in times of need. This safety net has consisted of a comprehensive insurance program that protects us and our families from loss of earnings due to retirement, death, or disability. If Social Security did not exist:

• Half of all seniors age 65 and older would live in poverty;

• Children who lose one or both of their parents would be left to rely on their own resources, in that 98% of children under 18, can count on Social Security if one of their parents dies; and

• The average young working family would have to purchase a disability policy worth $200,000 and a life insurance policy valued at $322,000 in order to match the coverage guaranteed under Social Security.

Last month, the Board of Trustees for the Social Security Trust Funds issued its annual report which found that the Trust Funds would not be exhausted until 2034, an improvement of two years over the previous estimate in last year's report. Said another way, starting in 2034, incoming Social Security payroll contributions will only be able to cover 71% of Social Security benefits.

Although the year 2034 is still in the distant future, there are a number of reasons why we should act now to strengthen a system that has never missed a payment and has provided in this year alone, benefits to over 44 million Americans.

The Social Security system is designed to help Americans in their times of need -- when a spouse or parent dies, when a worker is injured, or when old age makes it more difficult to make ends meet. If we wait too long to strengthen Social Security, we will be forced to make painful decisions that may be unnecessarily harsh. However, 2034 is sufficiently in the future that we can make modest changes and guard against adversely affecting the workers, children, seniors, widows, and others who have come to rely upon Social Security's promise to provide in their times of need.

We are living in a period of great economic prosperity with forecasts of large budget surpluses in the coming decades. It is imperative that we take advantage of this opportunity and follow the President's lead seeking to reduce the federal debt, and reserve the majority of the surplus to strengthen Social Security and Medicare. By reducing the government debt we foster continued economic growth; we encourage increased national saving.

It is also important to note that in strengthening Social Security, we must build upon the system's successes and not haphazardly discard components of the program that have worked so well for so many years. Americans should be able to rely on the fact that they will receive a solid, guaranteed benefit that lasts as long as they live and keeps pace with the rising cost of living.

However, as we embark upon a new century we must also ensure that the young workers of today will be provided for in a manner that uses every tax dollar to its fullest potential. According to a poll of 18-34 year-olds conducted by the 2030 Center, very few young adults expect Social Security to pay them full benefits but nearly nine in ten said that it should. Another poll found that many young adults have virtually given up on Social Security, believing that they will see a UFO before they see a Social Security check. These polls are disturbing but they also reflect the real challenge before us -- how we strengthen Social Security so that it will be there for those who are now in their twenties, just as it has been there without failure for millions of workers since the program's inception in 1935.

Our changing economy underscores the continued importance of Social Security into the next century. Small businesses with fewer than 25 employees created 75% of all new jobs last year. But according to the Department of Labor, only some 18% of employees in these businesses had a pension plan. Similarly, the number of temporary workers employed in our economy has grown dramatically. According to a Economic Policy Institute national survey, less than 4% of these employees had a pension plan through their temporary agency. The fact that today's employees may not be covered by a private pension further reinforces the need to reform Social Security so that it continues to guarantee a stable stream of retirement income.

The debate surrounding the best types of reform also reminds us that Social Security was not envisioned to be the sole source of income for retired individuals. A report by Public Agenda found that two-thirds of taxpayers were eligible to make tax-deductible contributions to IRAs. Yet, only 10% of this group actually made IRA contributions. Individual saving is an integral component of sound retirement planning. We must work towards encouraging every worker to save for the day that he or she retires.

In closing, I look forward to working with my Colleagues on the House Ways and Means Committee in drafting a proposal that builds upon the indisputable successes of the Social Security system. We have an obligation to do what we can to preserve benefits for today's elderly and to guarantee future benefits to today's young workers.