HOUSE OF REPRESENTATIVES

H.R. NO.

100

TWENTY-THIRD LEGISLATURE, 2005

H.D. 1

STATE OF HAWAII

 
   


HOUSE RESOLUTION

 

URging president george w. bush to reconsider his plan to privatize social security.

 

 

WHEREAS, people throughout human history have faced uncertainties, especially those uncertainties brought on by death, disability, and old age; and

WHEREAS, prior to the turn of the twentieth century, the majority of individuals living in the United States lived and worked on farms, relying in part on immediate and extended family, friends, and neighbors to provide them with economic and social security; and

WHEREAS, as the United States moved through the Industrial Revolution and became an industrial power, increasing numbers of individuals began moving to the cities and suburbs where employment opportunities abounded; and

WHEREAS, this migration from the farmlands to the industrial centers of the United States reduced the degree to which a person's immediate and extended family and neighbors could augment the economic security of those living in the cities and suburbs; and

WHEREAS, with the stock market crash in 1929 and the beginning of the Great Depression, the United States found its economy in crisis and individuals in this country, especially elder Americans, were faced with economic hardships never before seen; and

WHEREAS, in an address to Congress on June 8, 1934, President Franklin Delano Roosevelt stating that he intended to provide a program for the social security of Americans, subsequently created, by Executive Order, the Committee on Economic Security (Committee), with instructions to study the problem of economic insecurity and make recommendations for legislative consideration; and

WHEREAS, in 1935, six months after its establishment, the Committee made its report to the President and Congress, who after deliberations and compromise, enacted the Social Security Act of 1935, which created a social insurance program designed to pay retirees age 65 or older a continuing income after retirement, and to keep these retirees out of poverty; and

WHEREAS, Social Security taxes were collected for the first time in 1937, with initial lump-sum payments being made that first month and regular monthly benefit payments being made beginning in January, 1940; and

WHEREAS, today, Social Security provides a guaranteed income for more than 47 million retirees, family members of workers who have died, and persons with disabilities; and

WHEREAS, Social Security beneficiaries earn their benefits by paying into the system throughout their years of employment, and currently serves as the main source of income for a majority of retirees, with over two-thirds of retirees currently dependent on Social Security for financial survival; and

WHEREAS, for the past 70 years Social Security has remained solvent and has been able to pay benefits to millions of Americans with few adjustments; and

WHEREAS, although the Social Security trustees state that in its present form, Social Security has enough funds in its reserve to be able to meet 100 percent of its obligations until 2042 and, there is concern over the solvency of the current Social Security system and whether it will be able to pay benefits for the millions of Americans scheduled to retire over the next decade; and

WHEREAS, individuals who support efforts to reform Social Security are currently reviewing a three-prong approach including raising of the retirement age, increasing the maximum annual earnings subject to Social Security tax, and allowing the establishment of voluntary private investment accounts; and

WHEREAS, the current focus on the national level has been the establishment of private investment accounts to allow taxpayers to put a portion of their social security tax into stocks, bonds, and other investments that may pay them a higher return and increase their retirement benefits; and

WHEREAS, contrary to the original purpose of Social Security, which established a comprehensive and secure safety net to keep retirees out of poverty, private investment accounts may result in Social Security beneficiaries with poor returns on their investments to fall through the cracks of the system; and

WHEREAS, the costs of transitioning to this system of private investment accounts may effectively scuttle the current Social Security system; and

WHEREAS, it has been estimated that transitioning to a system of private investment accounts will generate costs as high as $2-$3 trillion, which will degrade any investment earnings of these private accounts; and

WHEREAS, diverting a portion of Social Security money to private accounts will leave fewer dollars available to pay Social Security benefits, and reduce system reserves and the cash on hand to pay beneficiaries; and

WHEREAS, it has further been estimated that by allowing for the establishment of private investment accounts, the current Social Security trust fund reserves could be wiped out by 2021, a full 20 years sooner than if the system had been left alone; and

WHEREAS, arguments have also been made that the way to "fix" Social Security is not to change the system and its purpose, but rather to help individuals establish their own private pensions and retirement savings accounts such as Individual Retirement Accounts, to supplement the guaranteed benefit of Social Security; and

WHEREAS, with the myriad of difficult choices to be made to keep the Social Security system solvent, and given the fact that the Social Security system will still be solvent for a good number of years, the issue of strengthening Social Security and making any changes or adjustments to the system should be carefully studied and planned to ensure that future generations will be provided the retirement security received by past generations; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-third Legislature of the State of Hawaii, Regular Session of 2005, that this body hereby urges President George W. Bush to reconsider his plans to hurriedly enter into a Social Security privatization plan; and

BE IT FURTHER RESOLVED that this body also urges President George W. Bush to carefully study the effects that privatization may have on the basic purpose of Social Security, and on the welfare of current and future beneficiaries, and to consider privatization within a comprehensive review of alternative methods of adjusting Social Security, such as raising the retirement age, increasing the maximum annual earnings subject to Social Security tax, and helping more individuals establish supplementary private pension and retirement savings accounts; and

BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the President of the United States, the Speaker of the United States House of Representatives, the President of the United States Senate, the members of Hawaii's congressional delegation, and the Governor.

Report Title:

Urging President George W. Bush to reconsider his plan to privatize social security.