NAACP, La Raza Speak on Social Security

The debate over Social Security’s future intensified Monday as two major civil rights groups expressed deep skepticism about proposals to give workers some of their payroll taxes back to invest in private retirement accounts.

Groups favoring privatization are “descendants of the same groups that opposed Social Security and civil rights,” Julian Bond, chairman of the National Assn. for the Advancement of Colored People, told a news conference.

Raul Yzaguirre, president of the National Council of La Raza, added that elderly Latinos rely much more heavily on Social Security than do whites or African Americans.

Social Security reform, he said, must boost public investment in education and other programs for Latinos, who will provide 20% of the nation’s work force after the entire baby boom generation has reached retirement age in 2030.

Partially privatizing Social Security--letting individuals invest a portion of their Social Security taxes in the stock market--is drawing increased attention in Congress. Advocates say it would enable workers to build significant nest eggs for retirement, because stocks have historically returned greater profits than the Treasury bonds in which the Social Security system now invests its surplus.

The Heritage Foundation, a conservative research organization, has issued reports claiming that minority group members would be better off with private accounts. African Americans have shorter life expectancies and Latinos are much younger than the general population, Heritage notes.

Monday’s news conference was called by the Center on Budget and Policy Priorities, a liberal research group, to publicize its rebuttal to the Heritage reports. The center attacked the Heritage methodology and emphasized the importance of Social Security benefits to members of minority groups, who are less likely than the general population to have private savings and investments for retirement.

“When the deficiencies in the analysis are corrected, the African American and Hispanic American communities no longer are the winners Heritage portrays them as being,” according to the report by Kilolo Kijakazi, senior policy analyst at the center. “They are more likely to be injured than aided by the elimination of Social Security retirement benefits and their replacement with individual accounts.”

African Americans have above-average disability and mortality rates, the report noted. So they are helped significantly by the Social Security programs providing benefits to disabled workers and their families and to the spouses and children of workers who die before reaching retirement age.

Latino retirees live longer than the average American and benefit particularly from the Social Security feature providing inflation-protected benefits, the report said. While 9% of all retired couples depend on Social Security for their entire income, 23% of elderly Latino couples rely exclusively on Social Security.

Yzaguirre, arguing for government support for young people, said: “If we don’t invest in people who are going to pay taxes, the country will suffer greatly.”

Many people are ill prepared to handle private accounts that would require them to pick among thousands of stocks and mutual funds, he warned. Many “don’t even have an education, don’t even have a bank account.”