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Government Relations: Social Security Reform's Impact

Reprinted from PN February 2002
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PVA Associate Advocacy Director Susan Prokop took part in a November 29 press conference when the National Committee to Preserve Social Security and Medicare announced publication of "The Impact of Social Security Privatization on the Disability Program," a study by the Center for Economic and Policy Research.

The event took place during a meeting of the President's Commission to Preserve Social Security. The commission offered a number of options for creating private retirement accounts using a portion of individuals' Social Security payroll taxes. The study addresses disability-community concerns that this commission is overlooking the impact of certain proposals for changing the Social Security retirement program.

Dean Baker, the study's author, noted that establishing private retirement accounts in the fashion suggested by the commission would likely force changes in the Social Security Disability Insurance (SSDI) program as well. This results from the fact that the retirement program and SSDI use the same formula for computing benefits. Reducing the retirement formula, which would be necessary to maintain trust-fund solvency, would likely mean cuts in the disability-insurance (DI) benefit formula as well.

One of the options the President's commission offered for private retirement accounts would offset the accumulation in those accounts with a reduction in the guaranteed Social Security retirement benefit. Baker's study reports workers who have spent a significant period of time collecting DI benefits are unlikely to have accumulated enough in their accounts to withstand the cuts in the guaranteed retirement benefit.

Baker's report is reinforced by results from a study PVA underwrote several years ago exploring the economic consequences of SCI. According to this research, the average earnings loss attributed to SCI was estimated at slightly more than $12,000 annually.

Prokop observed, "Clearly, many people with a spinal-cord injury, or any significant disability for that matter, could be at a disadvantage in achieving the savings in the private market expected by some reform advocates."

 

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Government Relations: Social Security Reform's Impact

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