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American Morning
Are Women Hurt by Privatization of Social Security?
Aired August 22, 2001 - 09:17 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DARYN KAGAN, CNN ANCHOR: Remember the debate over whether or not you should be allowed to make private investment decisions over your Social Security fund? Well, that debate will heat up again today in Washington.
And our Jeanne Meserve is in the nation's capital to tell us more about that -- Jeanne, good morning.
JEANNE MESERVE, CNN CORRESPONDENT: Good morning, Daryn.
The President's Commission on Social Security will be meeting here this morning, their third meeting. The members of this commission support privatization. What that means: that instead of government investing all payroll taxes, workers would be allowed to invest a small portion of it under carefully controlled situations.
The idea is, they might get a better return on their money and it might help address the looming shortfall in Social Security. There are questions, though, about how this might impact women, in particular.
Joining me here to discuss this: Kim Gandy, president of the National Organization for Women, and David Johns of the Heritage Foundation.
Kim, let me start with you.
Why is this debate of such importance to women?
KIM GANDY, PRESIDENT, NATIONAL ORGANIZATION FOR WOMEN: Well, women, as you know, tend to live longer than men as a group and are less likely to have pensions. They also earn less money over their lifetime.
So women are much more likely to be dependent in their old age on Social Security.
MESERVE: Why is privatization a bad idea for them?
GANDY: Because privatization puts at risk some portion of their retirement insurance. This is supposed to be an insurance program, not an investment program. And if we look at the last 30 or 40 or 50 years, we've seen the stock market go up and down. And we can't afford to have someone's retirement benefits, their -- literally their livelihood for women -- rest on the vagaries of the stock market.
MESERVE: David Johns, your response to that? I know you disagree.
DAVID JOHNS, HERITAGE FOUNDATION: Well, I do, actually. But my grandfather got three times the amount for her Social Security taxes as my 15-year-old daughter is going to get when she retires.
Basically, the trust fund will be gone for 12 years when Meredith (ph) retires. So her options are either a third less retirement benefits. And, as Kim has already said, that's not acceptable. She can pay higher taxes. And, of course, that's not acceptable. Or, basically, we can try something that's been tried in 20 countries.
MESERVE: Why do you think privatization is the answer for women?
JOHNS: Because we can set this up so that when Meredith is home caring for her children -- if she does -- that part of her husband's contributions continue to go into her account. The average marriage in this country lasts for seven years at the moment. And Social Security doesn't recognize one unless it lasts for at least 10.
MESERVE: Doesn't the current system have disadvantages, like the one David Johns has mentioned?
GANDY: Yes, the current system has terrible disadvantages. There's no question that we need to fix Social Security. Not only are women's pay inequities counted against them, but women's caregiving years, which average 11.5 years over a woman's lifetime, are counted as zero earning years, which means that her average earnings over her lifetime are lower because it's divided by all of those caregiving years, which are zeroed out.
So women don't even get the full benefit of what they do earn during their earning years. And that's something that needs to be fixed whether we privatize or not.
MESERVE: I've got a press release from NOW which said that this privatization debate was -- quote -- "a scam by Wall Street moguls."
(LAUGHTER)
MESERVE: David Johns, I'd love to get your response to that.
JOHNS: There actually isn't much profit in what we're talking about. We're talking about letting people put their money in the same type of thing that their congressmen and senators in. So it's very low cost and it's very safe.
GANDY: And all of the lobbyists for the investment banking industry and the financial services industry are putting millions and tens of millions of dollars into lobbying this because they stand to gain enormous profits from turning all of this money.
And we would be much better off having that money go into the system and not into the pockets of the stockbrokers. MESERVE: Quick
(CROSSTALK)
JOHNS: Actually, they are scared of the issue and they run away if they possibly can.
(LAUGHTER)
MESERVE: And we have to leave it there.
Kim Gandy and David Johns, thank you both for joining us here today.
And next hour, we're going to be talking about minorities and how privatizing Social Security may affect them -- now back to you in Atlanta.
KAGAN: All right, Jeanne, thank you so much.
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