[lbo-talk] African-Americans and Social Security Privatization

[Michael Pugliese]

Highlighted on Google News. Which last night also featured a piece from the PWW of the CPUSA.
http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=40531
>...Advocates of privatization have shrewdly played the wealth creation card to attract economically disadvantaged groups—like African Americans, Hispanics, and others—to their cause. They argue that these populations can make up for centuries of discrimination and disadvantage by investing their hard earned Social Security dollars in private equities where they can earn inheritable wealth with the magic of compound interest.

While it should be easy to dismiss these proposals as irresponsible, there are startling indications that these arguments may be gaining ground in African-American communities. A 1998 survey conducted by the Joint Center for Political and Economic Studies asked respondents if they favored or opposed a Congressional plan that would reduce the Social Security payroll tax by two percentage points and allow workers to put the money into personal retirement accounts. A full 68 percent of African Americans said that they favored such a proposal. Most recently, Rep. Harold Ford, Jr. — a member of the Congressional Black Caucus — has openly considered the possibility of supporting privatization after citing the need for more wealth creation in low-income communities.

Despite these indicators, African Americans and other economically disadvantaged groups must take care to understand the importance of Social Security and the implications of privatizing the system. Traditionally perceived as just a retirement plan, Social Security is a comprehensive family insurance plan that provides critical support for the families of deceased and disabled workers. 

While only 12 percent of the U.S. population, African Americans are 17 percent of those receiving Social Security disability benefits and 22 percent of all children receiving Social Security survivor benefits according to the Social Security Administration. According to the Social Security Administration, an estimated 68 percent of disabled African Americans are kept out of poverty by Social Security's disability benefits. Furthermore, a 1999 study by the National Urban League Institute for Opportunity and Equality estimated that African-American children are almost four times more likely to be lifted out of poverty by Social Security survivor benefits than are white children.

Social Security remains important even for African-American retirees, who tend to have lower earnings and less pension coverage than white Americans.  Indeed, Social Security administrative data indicates that upon retirement, 65 percent of white Americans have income from assets compared to only 28 percent of African Americans. As a result, Social Security is the only source of retirement income for 40 percent of older African Americans.
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Michael Pugliese