by Mary A. Cooper

July 13, 2005 — It is unclear what, if anything, Congress will do to remedy the problems, both real and perceived, of the Social Security program. Public distaste for the President's plan, which has never been fully spelled out, has taken some of the steam out of the drive to overhaul the program.

The House Ways and Means Committee appears to favor creating a temporary system of private accounts for retirees, using funds drawn from the current temporary surplus in the Social Security account. The Senate Finance Committee, despite having no agreement on how to proceed, has begun drafting legislation that will, at least in the beginning, include permanent private accounts.

Attention has focused primarily on the White House proposal to divert part of each worker's contribution to Social Security into a personal account, which would be invested in the stock market. If the market performs well, annuitants might receive higher benefits than they would under the current program. If it performs poorly, of course, retirees would be worse off than they are now.

Overlooked in the discussion about privatizing the nation's primary pension program for retired workers, however, is the role Social Security plays in the lives of millions of children. According to the U.S. Census Bureau, more than five million children lived in families that received Social Security benefits in 2002. Some of these children live in families where someone else receives benefits that are shared, but many of the children themselves qualify for Social Security because they are the survivors or dependents of a deceased, disabled, or retired person who worked long enough to qualify for Social Security.

The Census Bureau report shows that in 2002, benefits from this program raised one million children under 18 above the poverty line, more than double the number lifted out of poverty by Temporary Assistance to Needy Families (TANF), the nation's primary welfare program.

Funds available to help these very needy children would be jeopardized by the current proposals to divert part of Social Security's future income into the stock market. Such proposals do not address the real problem confronting the program, which is that the population is aging and living longer on Social Security benefits, while the income going into the program in future years will not be sufficient to cover the benefits for which the government has an obligation.

There are two immediate ways to address this problem: One is reducing benefits; the other is increasing income to the program. The Bush Administration and congressional leaders favor reducing benefits and regard increasing income to the program as a tax increase, since the most obvious way to do it is to require current and future workers to put more of their earnings into the program.

Workers now invest 6.2 percent of their salaries, up to $90,000 per year in earnings, in the Social Security programs. Their employers contribute a like figure. Several congressional proposals involve raising the base figure to various levels, ranging from $140,000 to $200,000, while some would remove it altogether. The Administration is vigorously opposed to making this change, as are many business groups - who oppose requiring employers to make increased contributions.

Congress appears to be in complete disagreement over the nature and extent of the problems facing the Social Security program, as well as over the ways to address the problems they have identified. With no progress this year, and with congressional elections in 2006, it is possible that the nation's pension program will remain essentially unchanged for another few years.

TANF - Temporary Assistance to Needy Families

Congress has extended the funding for the current TANF program through September 30. Neither the House nor the Senate has considered reauthorization legislation, although the program technically expired nearly three years ago and has only been kept alive by a series of 10 short-term extensions.

Since there is considerable disagreement between Congress and the Administration over how the program needs to be changed, by far the simplest course would be a 'clean' extension of the current program for a period of several years. This course is highly unlikely, however, because House Republicans adamantly oppose it. They are determined to add increased work requirements and a significant diversion of funds from program benefits into marriage promotion schemes in any future version of TANF.

If Congress does not pass legislation to reauthorize TANF before adjourning on August 5 for the summer recess, it is likely that reauthorization will be folded into the Budget Reconciliation legislation that must be approved before October 1, in order to avoid a shutdown of government functions. Inclusion in Reconciliation would be the worst possible outcome because it would almost certainly lead to a reduction in funds for TANF, the dropping of improvements in child care provisions in the Senate bill, and inclusion of many of the more regressive features of the House bill.

Housing

On May 25th the House Financial Services Committee approved HR 1461, a bill making changes in law governing government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac. The bill requires both GSEs to set aside 5 percent of after-tax profits to expand housing for very low- and extremely low-income families. Estimates are that between $400-$600 million will go into the Affordable Housing Fund in its first few years, perhaps rising to as much as $1 billion annually. The funds would be used to build, preserve, and rehabilitate housing and meet housing needs in underserved areas.

Although the measure passed overwhelmingly in Committee (65-5), and an attempt to remove the low-income provisions was defeated 57-17, there is strong opposition from some House members who promise a floor fight. Sen. Richard Shelby (R-AL), Chair of the Senate Banking Committee, which has jurisdiction over the bill in the Senate, is also an opponent of the Affordable Housing Fund.

On June 30th the House approved the Fiscal Year 2006 appropriation for the Department of Housing and Urban Development, HR 3058. President Bush had requested a slash of 11.5 percent in HUD's budget, as well as elimination of the Community Development Block Grant (CDBG) and deep reductions in public housing and housing for people with disabilities. Most of his cuts were rejected by the Committee with jurisdiction over HUD spending. Funding for the CDBG was reduced by $240 million. Housing vouchers were increased by less than the amount requested by the Administration.

Poverty Data

Every year the U.S. Census Bureau conducts the American Community Survey (ACS), a large study that measures income, poverty, housing quality, and other data for states and some counties. Among other things, the ACS provides data on racial/ethnic distribution of income and poverty on a state-by-state basis.

The Senate Appropriations Committee has approved legislation (HR 2862) that would significantly reduce funding available for the ACS. The Committee's funding level of $727.4 million for the entire Census Bureau is $150 million less than the President requested and $85 million below the House-approved figure. The Committee also called for a reduction in the size of the sample used to measure national poverty estimates, the Current Population Survey.

General Assembly

Resolution On Reaffirming the Importance of Our Nation's Social Insurance System (Social Security and Medicare). Approved by the 216th General Assembly (2004).

The 216th General Assembly (2004) of the Presbyterian Church (U.S.A.)

1. Reaffirms the importance of our nation's social insurance system, specifically Social Security and Medicare that were enacted to promote the general welfare, and to assure a guaranteed income and health care for the workers of the United States.

2. Urges our nation's leaders to support and maintain the fundamental structure and intent of Social Security, expressly that it continue to be

a. universal, covering all persons in paid employment and their families,

b. compulsory, requiring all working Americans to contribute to our future security,

c. an earned right, based on contributions out of past earnings rather than charity,

d. contributory and self-financed, out of dedicated taxes, e.g. wage-related rather than means tested,

e. protected against inflation, by periodic, guaranteed, cost-of-living adjustments, and

f. backed by the full faith and credit of the United States, rather than depending on the erratic performance of the stock market or the unpredictable financial stability and profit interests of a private company.

3. Requests the Advisory Committee on Social Witness Policy, in concert with the Office of Health Ministries U.S.A., to review the PC(USA) position paper, "Economic Security for Older Persons," approved by the 195th General Assembly (1983), in order to update the changes in laws affecting mandatory retirement, Social Security, and pension policies; and to reexamine the interpretations of some of these policies. Request that the Advisory Committee on Social Witness Policy, in concert with Office of Health Ministries U.S.A., make a report of this review to the 217th General Assembly (2006).

4. Disseminates this overture immediately to members of Congress, to the president's administration, and to the media, synods, presbyteries, church congregations, and individual Presbyterians.

5. Instructs the Office of the General Assembly to communicate immediately with the National Council of Churches of Christ and with other ecumenical partners to express concern of the Presbyterian Church (U.S.A.) on issues surrounding our national insurance system; and inviting them to participate in developing a shared position and action strategy to affect public policy. Request that a report of these actions be made to the 217th General Assembly (2006).

The Presbyterian Church (U.S.A.) has recently published its latest Church & Society magazine on Social Insurance. Church & Society is published bimonthly by the PC(USA); for more information, call (888) 728-7228 x5810; (502) 569-5810 or send an email.