(The AFL-CIO issued the following on March 23.)
WASHINGTON — Today’s trustees report confirms that Social Security is in good shape for decades to come. There is no need to rush into a reckless scheme to divert trillions of dollars out of the Social Security trust funds and into private accounts. Under the president’s privatization plan, Social Security’s revenue will fall below benefit payouts even earlier than projected and will mean huge cuts in benefits even for those who do not choose private accounts.
Let’s take the time to get it right. Our families deserve proposals that will protect and strengthen their retirement savings, not plans that will create needless uncertainty for their children. We strongly believe the system’s long-term financial challenges should be addressed with commonsense solutions that will strengthen Social Security. But privatization will only make matters worse, with steep cuts in guaranteed benefits and a federal debt of nearly $5 trillion over two decades alone.
The slight change in the projected financial outlook resulted in part from current economic conditions including higher than expected inflation and low interest rates. Beginning in the late 1990s, strong labor markets helped improve Social Security’s status. Today’s report reflects, in part, the weak labor market workers have faced since the 2001 recession.
The trustees’ projections about Medicare’s uncertain long-term financing strengthen what is already a compelling case that Medicare faces a markedly different situation than Social Security. In fact, the costs of the Medicare program are expected to grow fivefold over the next 75 years, driven in large part by surging health care costs. Instead of seeing aggressive action to control health costs, however, much of the focus has been on policies that will only make matters worse, such as proposals to privatize Medicare and overpayment policies enacted as part of last year’s Medicare prescription drug legislation.