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Privatization devastating: Reps receive input on Social Security changes from local residents

BY BECKY MALKOVICH, THE SOUTHERN

Tuesday, October 4, 2005 7:36 AM CDT

MARION - Reps. John Bradley and Brandon Phelps held a forum Monday, seeking input from the public about proposed Social Security changes.

They asked and they did receive.

Almost 85 current and future retirees, as well as representatives from many local agencies that deal primarily with senior citizens, attended the forum to learn about the different proposals and what changes they might bring to the retirement system.

"Congress is planning to consider major Social Security reforms that may have a profound impact on millions of people in Illinois," Bradley, D-Marion, said. "We hosted this event because it is important for Southern Illinoisans to have a full understanding of what is at stake. Based upon what I heard tonight, the vast majority of people feel privatization would be devastating."

The forum began with a presentation by John Hollman and Asha Spencer of Illinois House Speaker Michael J. Madigan's office. The two gave a brief history of Social Security and how it currently operates before discussing some of the proposals expected to be debated later this fall.

Hollman said concerns about the state of the system stem from a number of issues, including the cost when Baby Boomers start to retire in 2008.

"The elderly population will rise from 13 percent to 21 percent and continue to rise," he said. "And life expectancy increases every year."

The outlook for Social Security depends upon which agency is doing the projecting, he said. By 2079, the Social Security Administration predicts, only 68 percent of benefits will be paid, while the Congressional Budget Office predicts a slightly less dire financial picture. Other analysts argue that there is no problem with the system, he said.

Three major proposals will be discussed by Congress, Spencer said:

Increase revenue; reduce benefits or privatization. Revenue could be increased by raising the tax rate or raising the cap on taxable income.

General tax revenues could be used to subsidize the system or payroll taxes could be extended to all government workers.

Benefits could be cut across the board or by reducing benefits for high-wage workers. Other ways to reduce benefits include raising the retirement age or changing cost-of-living adjustments.

Privatization would see the creation of a voluntary retirement program for those 55 or younger. The personal retirement account would consist of restricted equity investments. Spencer said other countries like the United Kingdom and Chile have experienced the downside of privatized retirement systems, including administrative fees and charges that reduced accounts by some 30 percent.

Many in the audience said they attended to learn about the system. "I wondered what kind of shape Social Security is in," said Lora Hindman, 78, of Marion. "Is it going to go broke or not?"

Her husband, William "Pete" Hindman, 90, said he is concerned that money earmarked for Social Security ends up going elsewhere.

 

"If Social Security is so broke, how come then we can send $180 million to Iraq?" he asked.

Cheryl Vanderford and Georgia Smith of the Shawnee Development Council said they attended the forum to gain information to take back to their clients. "It's a big concern," Smith said. "Everybody wants to know how the changes may affect them."

Phelps said he will continue to fight privatization of the administration. "Social Security has provided retirement security to millions of Americans for 70 years. I think we demonstrated here tonight that the effect of privatization would be devastating for the economic health of many of our constituents," Phelps, D-Norris City, said.

beckym@onecliq.net

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