L.A. City Council Passes Resolution Against Social Security Privatization

Resolution passed 13-0. (emphasis added)

File Number 05-0002-S20 Last Changed Date 07/08/2005 Title PRIVATIZING social security Initiated by Villaraigosa Mover 2005 / Weiss Subject Resolution - WHEREAS, social security is our country's most important and successful income insurance program providing economic security to retired Americans and their families; persons with disabilities and their families; and surviving spouses and children of deceased workers; and WHEREAS, social security provides essential benefits to over 46 million Americans, 63% of whom are over the age of 65; 13% of whom are disabled workers; 6% of whom are the wives and husbands of retired and disabled workers; 10% of whom are aged widows and widowers; and 8% of whom are children; and WHEREAS, social security has reduced the poverty rate of older Americans from over 30% forty years ago to 10.2% today; and WHEREAS, proposals are being considered in Washington, D.C. that would partially privatize social security - to the great detriment of current beneficiaries as well as future generations; and WHEREAS, partial privatization worsens social security's financial outlook and requires larger benefit cuts or revenue increases than would otherwise be necessary for solvency; and WHEREAS, the purpose of social security is to assure basic income when it is most needed. No private account can achieve that goal because, unlike social security, there is always a risk that the asset values of private accounts will fall; and WHEREAS, in 2000-2001, when the NASDAQ fell more than 70% and the S&P 500 fell nearly 50%, Americans witnessed just how risky and unpredictable market investments are. For income that is relied upon to such an extent as social security, this risk could mean catastrophe for citizens on the eve of retirement; and WHEREAS, not only are privately managed accounts too risky for the social security system, but post-retirement inflation erodes private pensions. social security, in contrast, fully protects against inflation; and WHEREAS, the federal budget deficit over the next decade is estimated at over $5 trillion. Diverting payroll taxes from social security into individual accounts would, according to President Bush's own commission on privatizing social security, add $4 trillion to the deficit by 2040. This kind of debt could be detrimental to the U.S. economy and would almost certainly drain the social security Trust Fund. Benefit cuts would soon follow; and WHEREAS, social security is not in crisis, and there are other options for reinforcing social security and protecting future beneficiaries. Such proposals do not undermine the system, rather they address the deficit and keep social security viable beyond 2050; and WHEREAS, rejecting the privatization of social security in no way prevents private citizens from creating their own market-responsive investment accounts. THEREFORE, BE IT RESOLVED that with the concurrence of the Mayor, the City of Los Angeles declares its OPPOSITION to the partial or total privatization of social security and urges Congress to reject these proposals.

New Mayor Tony Villaraigosa is off to a great start!