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Politicians need to strengthen Social Security’s protections, especially for lower-income women, youth and ethnic elders and stop focusing on reducing Social Security’s already modest benefits to make up for projected shortfalls for the program decades from now, according to members of the Commission to Modernize Social Security during a national webinar held last week.
The commission, a group of national experts from groups representing Black, Asian, Latino and Native America communities, held the online panel in conjunction with the release of an updated edition of its 2011 report, Plan for a New Future: The Impact of Social Security Reform on People of Color.
“The point of Social Security is that people who work hard and contribute their labor and their lives while building the economy shouldn’t die in poverty for reasons outside their control,” stated Meizhu Lui, of the Insight Center for Community Economic Development, which co-organized the study with the think-tank Global Policy Solutions.
“People have lost both wealth and jobs during the recession,” Lui noted, and now is not the time to reduced Social Security’s protections, such as by raising the full retirement age, said Lui, director emeritus of Insight’s Closing the Racial Wealth Gap Initiative.
Safety net and the presidential campaign
The commission’s focus on vulnerable groups most dependent on Social Security came last week just as Republican presidential candidate Mitt Romney declared that he was not concerned with the very poor because they have a safety net, which, were he elected, he would repair if needed.
Media response to that and other Romney gaffes was sharp, such as the blog by Columbia Journalism Review blogger Trudy Lieberman. Her piece describes how Romney’s stated policies belie his pledge to Florida seniors to protect Social Security and Medicare.
Also last week, Politico blogger Glenn Thrush suggested that the Obama campaign may appeal to older Latino voters with ads vigorously supporting Social Security. Polls show that Hispanics of each political party strongly support the program, and both Romney and Newt Gingrich have pledged to support a budget-cutting plan floated by conservative coalition last year likely to result in cuts to Social Security and Medicare.
The Plan for a New Future report shows that Asians and Latinos turning 65 today live to 85 on average, live three-to-four years longer than other demographic groups. In addition, Hispanic elders are particularly prone to chronic illnesses, such as diabetes, and disability, so proposed reductions both by Democratic and GOP leaders in the annual cost of living adjustment (COLA) would especially impact them.
Furthermore, says the report, because African Americans and Native Americans have lower life expectancies than other groups, Social Security’s early retirement option, allowing workers to retire at age 62—which some political figures have proposed raising, is especially important to them.
How ethnic elders are struggling
The report, ‘Plan for a New Future: The Impact of Social Security Reform on People of Color,’ reveals many ways in which ethnic elders and their families head toward late life with fewer resources than white seniors—who are also struggling to make ends meet in their Golden Years. Among the study’s findings are that:
- Wealth for Latino households dropped by 66 percent from 2005-2009, and by more than half for African American and Asian families in the U.S., compared to an average 16 percent loss for white households.
- Almost half of black beneficiaries and nearly six in 10 people categorized as “Other” racial and ethnic groups by the Social Security Administration rely on the program for its survivor and disability benefits for people under age 65. For example, nearly 21 percent of children receiving the program’s disability benefits are African American, although they are only 15 percent of all American children. Meanwhile, one-quarter of whites depend on Social Security for its disability and survivors protections.
- Ethnic elders are less likely than whites to have a pension, “mostly due to continued occupational segregation by race and gender,” says the report. Although half of white workers had employer-sponsored pension plans from 2003-2009, only four in 10 Asian and black workers and one quarter of Hispanics had such pensions.
- Far fewer ethnic individuals receive any family inheritance. Only one in 20 African Americans benefit from an inheritance, key for many to establish long-term savings, for instance, compared with one in four whites.
- Ethnic Social Security recipients need the program for at least 90 percent of their income, significantly more than whites. In 2008, about half of older Latinos (52.8 percent), African Americans (47.2 percent) and Asians (44.2 percent) relied on the program for almost all of their income, compared to a still high 32.5 percent of whites.
Wilhelmina Leigh a senior research associate at the Joint Center for Political and Economic Studies, stressed during last week’s Web panel that blacks and Latinos today have little or no savings to supplement the already low level of Social Security retirement benefits, only about $1,200 per month for the average beneficiary. Over 70 percent of African American and Hispanic elders have only $25,000 or less in savings, she said.
Leigh challenged the “ill-conceived schemes” of politicians of both parties to reduce Social Security benefits in the wake of the recession, when some many Americans “lost their shirts.” due to the subprime debacle and economic crash.
Raising the full retirement age by two years, she explained, would be a 13 percent across the board cut in benefits. And proposals to tighten the annual cost of living allowance (COLA) may seem slight to many but would lower average Social Security benefits by $1,000 a year by the time someone reached age 85.
Hard Times for Native American Elders
Although Social Security was originally designed as one leg of a “three-legged stool” for retirement support, along with private pensions and personal savings, Native Americans are left with “a one-legged stool,” said Dave Baldridge, executive director of the International Association for Indigenous Aging.
Baldridge, a member of the commission on Social Security, noted that a disproportionate number of Native American workers who can get work end up in very low-paying and often “dangerous jobs.” Few families can save for retirement, he said.
Last year, Baldridge met with over 450 Indian elders at most of New Mexico’s 19 sovereign pueblos in New Mexico about the role Social Security plays for them.
“One elder stood up and said, ‘When I was young we had large households like our parents before us. Now too many of us are living alone, and we don’t have enough caregivers when we get sick.”
Baldridge said that elder and many others noted they are taking what Social Security they can as soon as possible at lower monthly rates for early retirement because they have no other source of income.
He continued, “Their children have increasingly left for the cities to work, so these elders are more reliant on Social Security just to get by than ever.”
Baldridge, former executive director of the National Indian Council on Aging and a consultant to the U.S. Centers for Disease Control and Prevention, persuaded the All Indian Pueblo Council to pass a resolution in December calling on Congress not to reduce the program’s COLA increase to adjust for inflation.
Going further, the Pueblo council’s resolution called on Congress to provide low-income beneficiaries an even higher inflation allowance, because things such as rising health care costs even more than the general population affect impoverished people. The council resolution urges Congress both not to raise the full retirement age, and also to “return it to 65.” (The age for full benefits is now 66 and will increase to 67 by 2022.)
Baldridge, who stressed that the Pueblo council and similar groups guardedly stay clear of political issues, said they felt in this case that preserving Social Security’s protections was nonpartisan. He plans to present a similar resolution later this year to the National Congress of American Indians for approval.
Recommendations for Strengthening the Program
During the Social Security webinar, Roy Aragon, of the National Committee to Preserve Social Security and Medicare, said that rather than reduce Social Security’s benefits, Congress should heed the commission’s recommendations to modernize the program by strengthening it for vulnerable groups.
For example, Aragon said, Planning for a New Future calls for increasing benefits for people once they reach age 85, when elders not only have little but often see what other support they have diminish.
Also, he said, women should receive five years’ credit for child or elder care, or half of the 40 quarters of work Social Security now requires to receive benefits.
What’s more, those who become widowed should receive larger benefits based on what both spouses earned, not the paltry 50 percent now allowed. That small amount is especially difficult for older women of color, who usually earn much less than their husbands and are frequently left with too little to make ends meet. The commission, Aragon said, is recommending that widowed people be eligibly for 75 percent of the benefit the spouses received when both were alive.
Those and other recommendations by the commission are not only vital changes to make the program fairer, but they affordable, said participating experts on the webinar panel.
Aragon declared that in spite of continual claims by politicians and mainstream media reports that cuts are needed in Social Security to protect it for the future, “By no stretch of the imagination is Social Security going broke.”
The program now has a surplus of $2.6 trillion, which will increase to $4.3 trillion by 2023. The Social Security trustees show that the program can pay 100 percent of promised benefits until 2036. If Congress fails to do anything to patch up the projected long-term shortfall in the program, it will still be able to pay three-quarters of those benefits.
One of many ways he and others noted to improve the program’s solvency for the next 75 years would be to raise the annual limit on how much income the government can tax. Currently, even millionaires are only subject to the payroll tax up to $110,200 in earnings. Lifting that cap would go a long way to solving the problem, he said.
“It’s a myth that Social Security is going broke,” Aragon stated.