State of Illinois
90th General Assembly

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 1                       HOUSE JOINT RESOLUTION
 2        WHEREAS, Social Security provides  benefit  coverage  for
 3    almost  everyone  who  is  employed  or  self-employed in the
 4    United States, with the exception  of  railroad  workers  and
 5    some  federal,  state,  and  local  government  employees; it
 6    anchors the retirement  security  of  the  vast  majority  of
 7    Americans;  for  26% of the elderly, Social Security accounts
 8    for 90% of their income;  for  14%  of  older  beneficiaries,
 9    Social  Security  is their only source of income; and for 60%
10    of American retirees, Social Security accounts for over  half
11    their income; and
12        WHEREAS,  Social  Security is a model government program,
13    providing retirement security for  most  Americans,  reducing
14    poverty among the elderly, and maintaining low administrative
15    costs;  unlike  private  pension  plans,  Social  Security is
16    protected  from  job  loss,  bad  investment  decisions,  and
17    economic fluctuations; and
18        WHEREAS, The Social Security system is a compact  between
19    generations  of  Americans,  under  which  the  taxes paid by
20    today's workers fund the benefits paid to  current  retirees;
21    the  current  ratio  of Social Security tax-paying workers to
22    Social Security benefit-receiving retirees is 3.3:1,  but  is
23    expected  to  fall to 2:1 within the next 35 years as members
24    of the "baby boom" generation begin to retire; and
25        WHEREAS,  Under  the  current  Social  Security  tax  and
26    benefit  structure,  the  Federal   Old-Age   and   Survivors
27    Insurance  trust  fund, which pays Social Security retirement
28    benefits, will be able to pay  benefits  for  about  35  more
29    years before its assets are exhausted; and
30        WHEREAS,  Some  have  proposed  that  the Social Security
31    system be "privatized" to some extent in  order  to  avert  a
32    crisis in Social Security funding; and
                            -2-                LRB9001141DJcd
 1        WHEREAS, Various plans have been proposed for privatizing
 2    Social   Security,  including  the  following:  (1)  allowing
 3    high-income  individuals  to  opt  out  of  the  system;  (2)
 4    requiring that Social Security taxpayers set aside a  portion
 5    of  their  Social  Secuity taxes for investment in stocks and
 6    bonds;  (3)  requiring  Social  Security  taxpayers  to  open
 7    small-scale  individual  accounts,  on  top  of  the  present
 8    system, for investing in stocks and bonds; and (4)  gradually
 9    replacing the present defined benefit system with large-scale
10    defined contributions, held outside the Social Security trust
11    funds, that could be invested in stocks and bonds; and
12        WHEREAS, The higher rates of return promised by the plans
13    for privatizing Social Security come with considerable risks,
14    including  the  following:  inflation;  low  and  fluctuating
15    financial  returns;  failure to make wise investment choices;
16    outliving one's investment assets  or  having  survivors  who
17    outlive  those  assets;  unpredictable retirement income; and
18    not being able  to  adequately  fund  a  personal  retirement
19    account  because  of  working  part-time, dropping out of the
20    workforce in order  to  raise  children  or  care  for  other
21    dependents, or having low wages; and
22        WHEREAS,  Action  is needed to restore long-term solvency
23    to the Social Security system, but the system is  neither  in
24    crisis  nor  near  crisis; it is completely sound, as is, for
25    the next 35 years; and long-term solvency can be restored  by
26    increasing revenue, reducing benefits, or some combination of
27    the  two--for  example,  a  series  of  small  tax  increases
28    beginning  in  2010  and continuing to 2040 would keep Social
29    Security going at current benefit levels indefinitely; and
30        WHEREAS, Any measure to restore long-term solvency to the
31    Social Security system should not stray from  the  principles
32    that  have  successfully  shaped  the  program  as we know it
33    today: the system is self-financed; employees  and  employers
                            -3-                LRB9001141DJcd
 1    contribute equally; participation is compulsory; benefits are
 2    earned;   benefits  are  related  to  pay  and  time  in  the
 3    workforce; and  benefits  are  not  based  on  need  but  are
 4    nevertheless progressive; and
 5        WHEREAS,   In  theory,  every  steadily-employed  worker,
 6    whatever his or her age or income, could come out ahead under
 7    privatization, but a favored few--namely, young, high-earning
 8    fast-trackers now in their twenties and early thirties--stand
 9    to  gain  much  more   than   everyone   else;   middle-aged,
10    middle-income workers will gain little from privatization and
11    will  pay  dearly in extra taxes to finance the transition to
12    the new system; and low-wage workers who make poor investment
13    decisions would be the biggest losers under privatization and
14    would face poverty-stricken retirements; and
15        WHEREAS, Social  Security  is  social  insurance;  social
16    because  it  spreads  risks  across  a large pool without the
17    problems of adverse  selection,  and  insurance  in  that  it
18    offers  protection  when  certain contingencies prevent work;
19    allowing high-income individuals to opt  out  of  the  system
20    would undermine that social insurance character; and
21        WHEREAS,  Eliminating the current Social Security system,
22    in substantial part  or  altogether,  in  favor  of  mandated
23    "privatized",  individually  directed  accounts  would saddle
24    individuals  with  risks  not  experienced  since  the  Great
25    Depression of the 1930s, and the  hoped-for  consequences  of
26    private  savings  being invested in private markets may bring
27    on more speculation,  depressed  consumer  demand,  and  less
28    productive growth in the future; therefore, be it
31    SENATE  CONCURRING  HEREIN,  that  we  urge the United States
32    Congress to continue funding Social Security in  its  present
                            -4-                LRB9001141DJcd
 1    form  and  to not "privatize" Social Security in any way; and
 2    be it further
 3        RESOLVED, That suitable  copies  of  this  resolution  be
 4    delivered  to  the President pro tempore of the United States
 5    Senate,  the  Speaker  of  the   United   States   House   of
 6    Representatives,    and   each   member   of   the   Illinois
 7    congressional delegation.

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