By Sharon Johnson
WeNews senior correspondent
Wednesday, July 27, 2011
As a U.S. government default deadline looms, last-minute deal-making is intensifying the threats to Social Security, the retirement program upon which women disproportionately depend, particularly African American women and Latinas.
(WOMENSENEWS)--In these white-knuckle days ahead of a threatened Aug. 2 default by the U.S. government, women's advocates are more worried than ever about the fate of Social Security, the public retirement program upon which women disproportionately depend.
"Although Social Security has not contributed one penny to the national debt and will be able to pay all promised benefits in full for the next 25 years and three-fourths of benefits after that, the White House and Congress have put it on the bargaining table," said Cynthia Hounsell, president of the Washington-based Women's Institute for a Secure Retirement, known as WISER, in a recent telephone interview.
In his Monday night TV speech, President Barack Obama pushed Republicans to offer up revenue increases that Democrats want--such as tax increases for the wealthiest Americans--in exchange for cuts to programs such as Social Security.
Leaders of the House and Senate on Monday also offered newly urgent competing plans to cut the deficit, making it more likely that retirement-age cuts to Social Security that were staved off in 2010 could be looming again in the last-minute deal-making.
"Last year, women's groups were successful in defeating the proposal by the bipartisan National Commission on Fiscal Responsibility and Reform to raise the retirement age for full Social Security benefits to 69," said Hounsell, whose nonprofit provides financial information for low- and moderate-income women ages 18 to 65.
"Lawmakers agreed with us that the change would be particularly punishing to low-income workers in physically demanding jobs," she said. "But now opponents of Social Security are claiming that everyone must make financial sacrifices to ensure the nation's fiscal health so these issues may be back on the table."
Obama's emphasis on "shared sacrifice" in his confrontational speech on Monday was meant to call out greater revenue contributions from the country's wealthiest individuals and corporations.
Strengthen Social Security--a Washington-based coalition of over 300 national and state organizations--contend that one way to introduce more "shared sacrifice" into plans to cut the deficit is to eliminate the cap, the point at which incomes stop being subjected to Social Security taxes.
Earnings above $106,800 are exempt from the payroll tax. The coalition estimates that about 6 percent of Americans have incomes above this level and that if they had to pay Social Security on all their earnings, like everyone else, Social Security's long-term solvency would be assured.
Strengthen Social Security, which includes groups such as the National Organization for Women, the National Women's Law Center and the Older Women's League, also favors ending the two-percentage-point payroll tax holiday for employees enacted in 2010 that is scheduled to expire this year. That would restore an employee's contribution to 6.2 percent of wages from 4.2 percent.
The House Republican plan, introduced by Speaker John Boehner of Ohio Monday, includes a two-step approach that would allow the $14.3 trillion federal debt limit to rise immediately by about $1 trillion in exchange for $1.2 trillion in spending cuts. This would allow the federal government to continue spending until Dec. 31. Then early next year a new legislative commission -- six Republicans and eight Democrats -- would find an additional $1.8 trillion in spending cuts, including those in Social Security, Medicaid and Medicare.
The Democratic Senate plan, announced by Majority Leader Harry Reid of Nevada on Monday, would cut $2.7 trillion over 10 years. The national debt would be allowed to increase by about $1 trillion over the next 17 months. Then a new 12-member committee, evenly divided between Democrats and Republicans, would find an additional $1.8 trillion in programs, including entitlements such as Social Security.
Hounsell predicts that these proposals will take a heavy toll on women, especially African American, Latino and other vulnerable women who have few assets that they can tap to pay for basic necessities during retirement.
Jeff Hayes, senior research associate with the Washington-based Institute for Women's Policy Research, agrees. He says African American women are particularly reliant on Social Security because they suffer higher rates of disability in older age.
Latinas' longer average life expectancy means they depend on Social Security for longer periods, Hayes said. Latinas who were 65 in 2010 had an average life expectancy of 89 years compared with 85 years for all women and all Hispanic men and 82 years for all men.
Supporters of Social Security, such as the Progressive Caucus, the largest coalition of Democrats in Congress, are using these statistics to rebut Republican arguments that cuts in entitlement programs represent a form of "shared sacrifice" by their interest groups.
"Medicare, Medicaid and Social Security aren't the kinds of programs you use as bargaining chips, especially when you've seen up close how important they are to communities like mine in Southern Arizona," Rep. Raul M. Grijalva, D-Ariz., co-chair of the Progressive Caucus, said last week in an e-mail to Women's eNews. His district is mostly Hispanic.
"Hispanics and African American women should never be seen just as 'interest groups.' They're some of the hardest working Americans and after years of giving to their country and paying their taxes, they have every right to the support they sometimes need in retirement," he said.
Rep. Lucille Roybal-Allard, a Democrat from California, echoed that sentiment. "As chair of the congressional Hispanic Caucus Task Force on Health, I am committed to opposing cuts to Social Security," she said in an e-mail last week to Women's eNews. "Most of the constituent mail I receive on this topic is overwhelmingly opposed to cutting Social Security benefits, which are a lifeline for our seniors."
A Republican proposal would replace the current formula for cost of living adjustment with the "chained" formula, which takes into account that when faced with higher prices, consumers change their buying habits. Obama has backed the proposal, which would save over $110 billion over 10 years and help him obtain GOP support for raising taxes.
The typical 65-year-old's benefits would drop by $130 a year if the chained formula were adopted. By age 95, the annual benefit would drop by almost $1,400, a 9.2 percent reduction from the current schedule benefits.
A recent Congressional report found that the chained formula would greatly increase the tax burden of low- and moderate-income workers, while having little effect on affluent taxpayers.
If enacted in December 2012, in 2021 the tax burden on workers with incomes between $10,000 and $20,000 would increase 14.5 percent, compared to 0.1 percent on those with incomes of $1 million.
"African American and Latino women would be among the hardest hit if the COLA [cost of living adjustment] formula is changed," said Hayes, of the Institute for Women's Policy Research. "Social Security benefits for African American and Latino women are modest--under $10,000 per year--but they enable many women to put food on their tables and keep a roof over their heads. Without Social Security about half of Latino and African American women between the ages of 65 and 74 would be living in poverty."
On July 22, the Progressive Caucus sent a letter signed by 80 members to House Minority Leader Nancy Pelosi, Democrat of California, calling it unfair to include these programs.
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Sharon Johnson is a New York freelance writer.
Women's Institute for a Secure Retirement (WISER):
Institute for Women's Policy Research:
Older Women's League (OWL):
Strengthen Social Security: