– Amidst a largely like-minded crowd of Democrats and liberals,
Congressman Mike Honda (D-San Jose) tangled with a few proponents
of one of the most controversial items on President Bush’s domestic
agenda – allowing workers to divert Social Security payments to
private investment accounts.
Gilroy – Amidst a largely like-minded crowd of Democrats and liberals, Congressman Mike Honda (D-San Jose) tangled with a few proponents of one of the most controversial items on President Bush’s domestic agenda – allowing workers to divert Social Security payments to private investment accounts.
Speaking before a crowd of about 25 people at Gavilan College Wednesday night, Honda numbered Social Security as “one of three contracts our government has put together with our people. … There’s a sense that we have a responsibility to the greater good in terms of contracts that we’ve made.”
Each year the program doles out monthly income to 48 million people. In addition to helping retirees, it also provides income assistance to a pool of 16 million citizens that includes disabled people and families that lose a primary income-earner.
A few proponents of privatization criticized the Social Security system for not offering the same rate of return as private investment accounts.
“I consider Social Security a poor return,” one Gavilan employee said. “What I’m guaranteed is not to be poor.”
“It’s not supposed to make you rich,” Honda replied. “You’re guaranteed not to be in poverty. It’s not a pension plan.”
Roy Aragon, a retired Social Security Administration official, joined Honda in trying to demystify the crisis atmosphere surrounding the social safety net.
Aragon dismissed claims that the system is headed toward bankruptcy, pointing instead to several dates that mark points of potential trouble. The first date of concern is 2018, when payouts under the Social Security system are expected to exceed incoming revenues.
At that point, the system will have to draw on its trust fund, or surplus, to fully fund payments to beneficiaries. In the absence of a long-term fix, the system is expected to run out of surplus funds by 2042, the second important date. At that point, Social Security will only have enough funds to pay 70 percent of benefits.
According to Aragon and Honda, saving the system requires increasing the income cap (currently only the first $90,000 of income is subject to Social Security taxes), increasing the retirement age, or borrowing money – an option that becomes increasingly difficult given current debt levels.
Honda said the Bush privatization plan seeks to balance the system by adjusting one piece of the formula used to calculate benefits.
Currently, payments under Social Security are indexed to wages – meaning payouts grow in step with real increases in living costs. The president’s plan would switch the index to inflation, which typically rises at a slower pace than wages, according to Aragon. The plan effectively amounts to a reduction in returns.
John Perez, a resident and local dentist, drew on the words of a Mexican guerilla in a book titled Los De Abajo, or The Underdog, to describe the average citizen’s experience of the Social Security debate .
“Sometimes we feel like one of these leaves in the whirlwind,” he said, invoking the guerilla’s description of the revolution. “None of us have control over it. And the purpose is to create this wedge in the electorate and reduce the formula.”
At the heart of the debate, Honda said, lies a clash in ideology, where Republicans believe taxes are “their money” and Democrats believe it is “our money.”
“There is a ‘me’ also,” Honda acknowledged of his party’s positions. “But the ‘us’ in a lot of cases is more important.”
Congressman Honda will host a panel discussion on electronic voting April 4 at Santa Clara University. To learn more, call his office 408-558-8085.