82R3346 BPG-D
By: Raymond H.C.R. No. 34
CONCURRENT RESOLUTION
WHEREAS, When U.S. stock market indexes plunged in 2009, the
value of American retirement accounts was shrunk by half; 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 10 percent of the elderly fall below the poverty line; nearly
90 percent of those 65 and older receive social security benefits,
without which almost half of them would have incomes below the
poverty line; and
WHEREAS, Social security is the most successful domestic
program in the nation's history, yet the last presidential
administration sought to dismantle it through privatization; this
rejected proposal has resurfaced in Congress in the guise of H.R.
4529, the Roadmap for America's Future Act of 2010, which would
weaken the solvency of the social security trust funds by allowing
workers under the age of 55 to divert a portion of their payroll
taxes to individual investment accounts in exchange for smaller
guaranteed social security benefits; and
WHEREAS, This measure would undermine the economic security
of the elderly, especially that of the least well-off, for whom
social security provides nearly 80 percent of income in retirement;
moreover, permitting current contributors to channel funds out of
the general social security fund would exacerbate the shortfall in
revenues for current retirees as well as for current and future
recipients of disability or survivors insurance payments, and it
would ultimately require large increases in federal borrowing; and
WHEREAS, Traditional social security benefits provide a
guaranteed, predictable source of retirement income, indexed for
inflation, but any savings in private accounts would be subject to
the volatility of investment markets; in addition, even if workers
could convert their private accounts into an annuity at retirement,
it is unlikely that they could purchase one that protects against
inflation; and
WHEREAS, Privatization has proven disastrous in a number of
other countries; in Great Britain, it brought enormous
administrative costs that 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 high cost of
establishing the new accounts would further weaken social
security's long-term finances and require some combination of
federal borrowing, tax increases, and benefit cuts; and
WHEREAS, The privatization of social security would be 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 fluctuated more precipitously 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 82nd 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
president of the Senate and the speaker of the House of
Representatives of the United States Congress, and all the members
of the Texas delegation to Congress with the request that this
resolution be entered in the Congressional Record as a memorial to
the Congress of the United States of America.