SOCIAL SECURITY PRESS CONFERENCE
April 26, 2005

Thank you all for coming here.

Today, I am releasing a new report -- prepared by my office with technical assistance from the non-partisan Congressional Research Service -- that should be a wake-up call to anyone who still thinks privatizing Social Security would be good for the American people.

As this study shows, privatization is a real loser.

In 1981, three counties in Texas decided to opt out of Social Security and instead provide their public employees with a system of privatized accounts.

Congressional Budget Office Reports
	Detailed Projections for the Old-Age, Survivors, and Disability Insurance Trust Funds Through 2015 (February 2005)
	Updated Long-Term Projections for Social Security (January 2005)
	Disability and Retirement: The Early Exit of Baby Boomers from the Labor Force (November 2004)
	Tax-Deferred Retirement Savings in Long-Term Revenue Projections (May 2004)
	Administrative Costs of Private Accounts in Social Security

This study compares two sets of families in three different income brackets. We show what happens to their retirement in 2005 under Social Security and under the Texas plan.

The bottom line is that Americans are clearly better off with Social Security’s guaranteed, inflation-protected retirement benefit.

And, minor children are protected with Social Security’s survivor benefits and completely left out in the Texas plan.

Over the last few months, you have heard many arguments against privatization -- that it will bankrupt our country, that it will result in deep benefit cuts, that it will be a windfall for Wall Street. I have made all of those arguments, and more.

The other side has responded by saying that despite all of that, it will work. They have asserted again and again that Americans will be better off with privatized accounts. They can say that no longer.

By examining the actual system in place in Texas, this study shows that Americans are worse off with privatized accounts -- not in theory, but in reality.

I will begin with retirement benefits -- the most extensive part of this study. All of these charts are included in the actual report, and you all should have received a copy.

But, I want to go through them and highlight some key points.

This chart shows the initial monthly benefits that a married couple receives at age 65 under Social Security and the Texas plan.

As you can see, low income and middle income workers do better under Social Security. In fact, the difference in monthly benefits for someone who earned the median income is $250 per month -- or $3000 in the first year of retirement.

Only high income earners are better off under the Texas plan in that first year.

But -- and this is an important point -- Social Security benefits go up each year with inflation. Annuities under the Texas plan do not.

The result can be seen here on this chart. By the age of 70, only five years into retirement, even high wage workers are better off with Social Security.

And remember that $3000 gap in the first year of retirement for those who earned the median income?

This chart shows that by the time these couples reach age 80, the gap is over $1100 per month.

Because Social Security protects seniors from inflation, at the age of 80, a couple will receive over $13,000 more that year from Social Security than from the Texas plan.

This line graph shows how, for a median income worker, the gap between the inflation-protected Social Security benefits and the flat-lined Texas benefit only keeps growing.

But the Texas plan is not only a loser for seniors. It is also a loser for children.

Both Social Security and the Texas plan provide survivor benefits, in the event the worker dies.

But, Texas does not protect minor children. Social Security does.

Our study looked at what would happen to the family of a person who earned the median income for 20 years and then died at age 40, leaving a spouse and two minor children behind.

This chart shows the dramatic difference.

The Texas plan would provide a monthly benefit of $865 per month. It provides no additional benefit for the children.

But because Social Security protects children, the Social Security survivors benefit for the whole family is more than two and a half times greater -- $2,291 per month.

As the President and his supporters continue to push to dismantle Social Security, I urge the American people to look at what was done in the President’s home state of Texas.

This study proves that privatizing Social Security is a loser for the American people.

So let us not take any action to destroy a system that has protected seniors, widows, and children for decades.

Click here to view the report

Click here to view all charts