>> FOR IMMEDIATE RELEASE >> >> Contact: Nasserie Carew, IWPR >> 202-785-5100 >> >> Lisa Witter, NCWO Social Security Project >> 202-907-7219 >> >> The Institute For Women's Policy Research >> Refutes the Cato Institute's Proposal to Privatize Social >> Security >> >> Washington D.C., February 25, 2000 - The Institute for Women's >> Policy Research (IWPR) in partnership with the National Council of >> Women's Organizations' Task Force on Women and Social Security >> announces the release of its new report, Why Privatizing Social >> Security Would Hurt Women: A Response to the Cato Institute's >> Proposal for Individual Accounts. >> >> The Cato Institute, which has been at the vanguard of Wall Street's >> campaign to privatize Social Security, contends that replacing the >> existing program with a system of individual accounts invested in >> the stock market could simultaneously raise benefits and solve the >> system's long-term financial problems. IWPR's report refutes this >> argument, drawing attention to four central mistakes: the failure to >> account for the transition from a "pay as you go" system to a >> pre-funded program, an overly optimistic view of future economic >> growth, the failure to account for administrative costs, and the >> failure to account for the high cost of replacing the disability >> and life insurance provided to American workers by Social Security. >> >> Currently, about 90 percent of current payroll taxes are used to pay >> current retirees, disabled workers, and survivors. If all or a large >> portion of these funds are diverted into individual accounts, money >> to pay current Social Security beneficiaries must be raised through >> additional taxes or by cutting other programs. In essence, the >> generation(s) living through the transition must pay for two systems >> at once, both their parents' and grand parents' retirement, and >> their own. The Cato Institute also assumes that high rates of return >> on stocks will continue steadily for the foreseeable future. Given >> the slower rate of future economic growth predicted by many experts, >> and the high current valuation of many stocks, it is likely that the >> rate of return on stocks will slow in the future. Even if the stock >> market does well, the higher administrative costs associated with >> individual accounts will erode gains-particularly for lower income >> workers who have smaller accounts. Disability and life insurance >> (equivalent to that provided by the current social security system) >> are also unlikely to be replaceable on the private market, >> especially for high-risk individuals. >> >> Finally, the IWPR report describes why individual accounts would be >> particularly negative for women. For example, women tend to live >> longer, and unless sex discrimination in insurance were eliminated, >> would have to pay more for annuities (guaranteed monthly income) in >> a privatized system. Because many women earn less than men, they >> benefit from the current system because it provides proportionately >> higher benefits to lower earners. This feature would be lost in a >> privatized system, leaving millions of women facing poverty. Since >> women tend to have smaller accounts, it is likely that the yield on >> their accounts would be below average, as women would >> (appropriately) avoid risk. >> >> " The Cato Institute falsely claims that women would be better off >> if Social Security is privatized." said Dr. Heidi Hartmann, IWPR's >> Director and President, who is also a co-author of the report. >> "While the Cato Institute's proposal may seem appealing at first >> glance, IWPR's analysis reveals fundamental flaws that would affect >> women -- especially the 25 percent of elderly women who live alone >> with Social Security as their only source of income. This report >> takes Cato's assumptions head-on and provides women with the truth >> about privatization and the consequences of removing the security >> from Social Security for women and families." >> >> Dr. Catherine Hill, Study Director at IWPR and a co-author of the >> report explains that, "The Cato claims are highly dependent on >> strong market returns for all individuals - a risky assumption. For >> example, for a single woman making an average of $1000 a month for >> 35 years (diverting 7 percentage points of social security payroll >> taxes) who made a 4 percent real return on her investment, monthly >> benefits would be 70 percent of her guaranteed Social Security >> monthly check. If she interrupted her career to care for children, >> after 25 years her benefits would be about 50 percent of her >> guaranteed Social Security monthly check." >> >> The report will be released as part of a seminar series sponsored by >> the Institute for Women's Policy Research (IWPR) and the George >> Washington University's Women Studies Program on Friday, February >> 25 at 12:30 p.m., in the Lisagor Room at the National Press Club in >> Washington, DC. Speakers include Heidi Hartmann, Director and >> President, IWPR; Patricia Ireland, President, National Organization >> for Women; Kilolo Kijakazi, Senior Research Analyst, Center on >> Budget and Priorities and Lisa Witter, Director, National Council of >> Women's Organizations' Task Force on Women and Social Security. The >> presentation will be followed by a question and answer session from >> the audience. Complimentary copies of the report >> will be available for the press. >> >> >> -- >> >> Mine Aysen Doyran >> PhD Student >> Department of Political Science >> SUNY at Albany >> Nelson A. Rockefeller College >> 135 Western Ave.; Milne 102 >> Albany, NY 12222 >> > > > > -- > > Mine Aysen Doyran > PhD Student > Department of Political Science > SUNY at Albany > Nelson A. Rockefeller College > 135 Western Ave.; Milne 102 > Albany, NY 12222 >
