81R3442 BPG-D
By: Raymond H.C.R. No. 74
CONCURRENT RESOLUTION
WHEREAS, The current financial crisis has drained some $2
trillion in value from 401(k) accounts; millions of older Americans
now face diminished prospects for a comfortable retirement and are
more dependent than ever on the safety net provided by our social
security system; and
WHEREAS, Before passage of the Social Security Act of 1935,
economic hardship threatened many elderly Americans; now, only
about 11 percent of the elderly fall below the poverty line; 89
percent of those 65 and older receive social security benefits,
which are the major source of income for two-thirds of all
beneficiaries; these benefits are the sole source of income for
more than a fifth of beneficiaries; and
WHEREAS, Although social security is the most successful
domestic program in the nation's history, the last presidential
administration sought to dismantle it through privatization; under
various Bush administration proposals, a portion of each worker's
social security contribution would have been diverted into a
personal investment account, and astonishingly, support for
privatization continues in some quarters, despite the market
meltdown; the Dow Jones Industrial Average plunged 39 percent
between October 9, 2007, and October 9, 2008, providing a vivid
illustration of the perils of personal accounts; and
WHEREAS, Privatization has proven disastrous in a number of
other countries; it brought enormous administrative costs in Great
Britain, which devoured some 40 percent of the return on
investment; unscrupulous brokers preyed on unsophisticated
investors, and the basic pension shrank dramatically, throwing many
retired citizens into poverty; in Chile, transition costs,
commissions, and other administrative expenses siphoned so much
value from investment accounts that more than 40 percent of those
eligible to collect were forced to continue working; and
WHEREAS, Administrative costs for flexible private accounts
in the United States would be much higher than the very low
operating costs of social security today; moreover, the government
would need a new bureaucracy to track the myriad small investment
accounts belonging to individual taxpayers; the estimated cost of
establishing the new accounts is somewhere between $2 and $3
trillion over coming decades, which would weaken social security's
long-term finances and require some combination of federal
borrowing, tax increases, and benefit cuts; and
WHEREAS, Privatization is a hugely complicated and costly
process, fraught with potential disaster for even the most savvy
investors; since most employers today offer defined contribution
plans, such as 401(k)s, rather than defined benefit plans, retiring
workers are already dangerously exposed to market risks; stocks,
commodities, and real estate have become more volatile over the
past decade, and most Americans can ill afford to exchange social
security's guaranteed minimum retirement income, indexed to the
rate of inflation, for a chance to roll the dice in the financial
markets; now, therefore, be it
RESOLVED, That the 81st Legislature of the State of Texas
hereby respectfully urge the United States Congress not to
privatize the social security program; and, be it further
RESOLVED, That the Texas secretary of state forward official
copies of this resolution to the president of the United States, the
speaker of the house of representatives and the president of the
senate of the United States Congress, and all the members of the
Texas delegation to the congress with the request that this
resolution be officially entered in the Congressional Record as a
memorial to the Congress of the United States of America.