79S20092 CME-D
By: Raymond H.C.R. No. 11
CONCURRENT RESOLUTION
WHEREAS, Enacted in 1935, the social security system was
designed to provide continuing income for American workers and
their family members on retirement, disability, or death; the
system includes two trust funds to which American workers
contribute a portion of their income: old-age and survivors
insurance and disability insurance; and
WHEREAS, Today, more than 96 percent of American workers pay
into social security and expect to collect benefits from the
program; more than 47 million receive checks from the social
security system, and social security constitutes more than half the
income of nearly two-thirds of retired Americans--for one in five
it is their only income; and
WHEREAS, President George W. Bush has made it clear that a
primary objective of his administration is the fundamental
transformation of the social security program; to that end, in
2001, President Bush established the President's Commission to
Strengthen Social Security, which submitted three proposals for the
privatization of the program that featured private investment
accounts created by diverting two percent of each worker's
traditional social security contribution; and
WHEREAS, Analysis of these proposals has revealed it would
cost between $2 trillion and $3 trillion to pay for the creation of
private investment accounts while continuing coverage for social
security's current beneficiaries; such an enormous increase in
spending would clearly require some combination of benefit cuts,
increased taxes, or further borrowing by the federal government;
and
WHEREAS, The 2004 Economic Report of the President
acknowledged that the impact of one of the privatization proposals
considered by the president's commission would be annual increases
in the federal budget deficit greater than one percent of gross
domestic product (GDP) for nearly two decades, resulting in an
increase to the national debt in an amount equal to 23.6 percent of
GDP by 2036; with the national debt currently at $7.8 trillion, just
under the statutory limitation, the economic consequences of
privatization could be severe; and
WHEREAS, Moreover, economists predict that privatization
would actually worsen social security's long-term finances and
jeopardize the baby boom generation's retirement; social security
was originally funded on a "pay-as-you-go" basis with annual
revenues equal to annual outlays, but federal legislation passed in
1983 authorized the system to take advantage of changing
demographics and build surpluses in the system's trust funds; the
Congressional Budget Office has projected that these surpluses will
be spent and the program will revert to "pay-as-you-go" in 2052; and
WHEREAS, Under privatization, however, funds that are now
deposited to prepare for retiring baby boomers instead would be
diverted to create private investment accounts, and as a result
social security's trust funds would be exhausted before 2030, and
the federal government would be forced almost immediately to take
drastic measures to uphold commitments to current beneficiaries and
near-retirees; the burden to retirees in the form of lowered
benefits or increased taxes could not be ameliorated by returns
from private investment accounts in such a short period of time; and
WHEREAS, Indeed, the Securities and Exchange Commission
reported in 1999 that most Americans lack the financial education
necessary to make even basic investment decisions; similarly,
research by noted economists at Yale University and Princeton
University has demonstrated that an individual investor's
portfolio cannot be expected to match the overall yield of the stock
market and that even professional money managers significantly
under-perform market indexes over the long term; and
WHEREAS, While individual investors cannot be guaranteed a
significant rate of return on social security contributions
diverted to Wall Street, brokerage houses, banks, and mutual funds
stand to make considerable profit from management and
administrative fees associated with private investment accounts;
since 1988, financial intermediaries operating within the United
Kingdom's privatized national pension system have collected an
average of 43 percent of the return on pensioner investments; and
WHEREAS, In fact, the national pension system in the United
Kingdom serves as a principal example of the potential consequences
of privatization; in Britain, citizens have been victimized by poor
investment decisions, and the government has been saddled with
substantial bureaucratic expenses and the obligation to rescue
failed individual private pension plans in the face of lost
revenue, prompting researchers at the international Organization
for Economic Cooperation and Development to conclude that pensioner
poverty, which had been all but eradicated before privatization, is
again a pervasive problem in the United Kingdom; and
WHEREAS, The continued solvency of social security is
certainly in the best interest of every American; millions depend
on the program for income during retirement, and for some families
social security has become a vital safety net as the result of death
or disability; equally certain, however, is the fact that the
disadvantages of privatization far outweigh the benefits, and
privatization should be rejected in favor of a more studied
solution to the program's longevity; now, therefore, be it
RESOLVED, That the 79th Legislature of the State of Texas,
2nd Called Session, hereby respectfully urge the United States
Congress not to privatize the social security program; and, be it
further
RESOLVED, That the Texas secretary of state forward official
copies of this resolution to the president of the United States, the
speaker of the house of representatives and the president of the
senate of the United States Congress, and all members of the Texas
delegation to the congress with the request that this resolution be
officially entered in the Congressional Record as a memorial to the
Congress of the United States of America.