February 01,2005

Baucus Expresses Concerns Over Report on Social Security

Poverty Rate Could Rise Among Seniors According to New Study Senator Says

(WASHINGTON, D.C.) Today, U.S. Senator Max Baucus said that a Social Security proposal being seriously considered by the Bush Administration would have pushed seven million seniorsinto poverty this year, had the plan been in effect since the Social Security program began in1940. Baucus is ranking member of the Senate Finance Committee, which has jurisdiction overthe Social Security program. This information was contained in a new report Baucus requestedfrom the non-partisan Congressional Research Service (CRS).

Currently, there are 3.5 million seniors who are living in poverty in the U.S. The reportindicates, however, that 10.5 million seniors would be in poverty this year if the plan beingseriously considered by the White House had been initiated in 1940, the first year in whichSocial Security benefits were issued.

“Social Security is a crucial program for our seniors,” Baucus said. “Had this proposalbeen in place since 1940, it would have pushed many of our seniors into poverty. As thePresident and Congress work on ways to strengthen Social Security, we need to keep in mindthis program is critical to protect seniors from poverty.”

The proposal the Bush Administration has suggested it might support would change theway Social Security benefits are calculated. Under the proposal, Social Security benefits paid inthe first year of retirement would be indexed to price growth in the economy, not wage growth.This would result in deep cuts in benefits of 25% to 50% for workers with average earnings whoretire in the future. If this proposal had been in place since the Social Security program began,workers with average earnings who retire at age 65 would be receiving benefits that are 60%lower than those that that are currently being paid to them.

Baucus noted that, currently, about 10% of our seniors are living in poverty. If thisproposal had been in place since 1940, 30% of our seniors would now be in poverty.

“The results in this report should serve as a warning that we must protect seniors from theeffects of devastating cuts in their Social Security benefits,” Baucus said. “America’s seniorsand future retirees deserve the benefits that they paid for and were promised. We cannot allowour future generations to have cuts in benefits drive them into destitute conditions. SocialSecurity has saved many from the depths of poverty. I will work to ensure that this programcontinues to do so in the future.”