AMENDED IN ASSEMBLY
SENIOR SENATE FEDERAL PROPOSAL NO. 4
INTRODUCED BY SENATOR BENSON
LEGISLATIVE COUNSEL'S DIGEST
SFP 4: RELATING
TO SOCIAL SECURITY.
UNDER EXISTING LAW, THE SOCIAL SECURITY SYSTEM PROVIDES
FOR THE COLLECTION OF REVENUES FROM EMPLOYERS AND EMPLOYEES BASED UPON EMPLOYEE
EARNINGS UP TO A SPECIFIED CAP.
THIS MEASURE WOULD MEMORIALIZE THE CONGRESS AND THE
PRESIDENT TO ENACT LEGISLATION TO ENSURE THE CONTINUED SOLVENCY OF THE SOCIAL
SECURITY SYSTEM BY, AMONG OTHER THINGS, REPEALING THE CURRENT CAP ON EMPLOYEE
EARNINGS SUBJECT TO SOCIAL SECURITY TAX, AND BY LIMITING SOCIAL SECURITY
INVESTMENTS TO GOVERNMENT INVESTMENTS IN SPECIAL TREASURY BONDS AND NOTES.
VOTE: MAJORITY.
SFP 4:
RELATING TO SOCIAL SECURITY.
WHEREAS, SOCIAL SECURITY WAS ESTABLISHED BY THE U.S.
GOVERNMENT IN 1935 TO PROTECT THOSE PEOPLE WHO RETIRED WITHOUT AN ADEQUATE
PENSION PLAN OR OTHER MEANS OF ADEQUATE REMUNERATION, BY PROVIDING THOSE PEOPLE
WITH A MINIMUM STANDARD OF LIVING. THE
LAW PROVIDED THAT SOCIAL SECURITY FUNDS BE INVESTED IN SPECIAL TREASURY PAPER,
AND NOT BE INCLUDED IN THE FEDERAL GOVERNMENT BUDGET.
THESE TREASURY BONDS WERE TO PAY INTEREST COMPARABLE TO THE GOING RATE,
WHICH OVER THE YEARS VARIED FROM A LOW OF 2 PERCENT TO A HIGH OF 13 PERCENT.
THE CURRENT INTEREST RATE IS IN THE 5 PERCENT RANGE; AND
WHEREAS, IN THE LAST SEVERAL YEARS VARIOUS PROPOSALS HAVE
BEEN INTRODUCED TO PRIVATIZE SOCIAL SECURITY TO GAIN THE BENEFIT OF HIGHER
EARNINGS FROM THE STOCK MARKET, AND A PRESIDENTIAL COMMISSION WAS INAUGURATED TO
ESTABLISH A PLAN. THE COMMISSION
MADE THREE PROPOSALS, EACH REQUIRING HEAVY FUNDING FROM THE TREASURY BEFORE THEY
COULD BE IMPLEMENTED WITHOUT CUTTING BENEFITS TO CURRENT RECIPIENTS.
NONE OF THE PROPOSALS ADDRESSED THE RISKS OF INVESTING IN ANY MEDIUM
OTHER THAN
WHEREAS, PRIOR TO 1980 ONE OUT OF TWO AMERICANS HAD TWO
DEFINED BENEFIT RETIREMENT PLANS, (A PLAN WHERE THE MONTHLY RETIREMENT BENEFITS
ARE INDEPENDENT OF THE FLUCTUATIONS OF THE STOCK MARKET AND TRANSFERABLE FROM
JOB TO JOB). ONE TYPE OF DEFINED
BENEFIT PLAN WAS A COMPANY PLAN, WHICH IN SOME CASES INCREASED MONTHLY BENEFITS
WITH INFLATION. THE SECOND TYPE OF
DEFINED BENEFIT PLAN WAS SOCIAL SECURITY, WHERE THE BENEFITS INCREASED SOMEWHAT
ACCORDING TO INFLATION. FEW OF THE
COMPANY PLANS STILL EXIST, AS THE COMPANIES HAVE SHIFTED TO 401K'S, WHERE THE
BENEFITS WILL FLUCTUATE OR DISAPPEAR WITH THE STOCK MARKET.
ONLY SOCIAL SECURITY REMAINS AS AN INCOME GUARANTEE FOR WORKERS WHO
CONTRIBUTED TO THE FUND IN THEIR WORKING YEARS.
THIS FACT MAKES IT EVEN MORE IMPERATIVE TO PRESERVE INTACT THE CURRENT
SOCIAL SECURITY SYSTEM, WHICH ALSO BENEFITS NONSENIORS, INCLUDING WIDOWS AND
ORPHANS AND DISABLED PEOPLE; AND
WHEREAS, THE NUMBER OF AMERICANS PAYING INTO THE SOCIAL
SECURITY TRUST FUNDS RELATIVE TO THE NUMBER WHO ARE RECEIVING SOCIAL SECURITY
BENEFITS IS DECLINING; AND
WHEREAS, IN THE LATE 1950'S, THERE WERE APPROXIMATELY 16
PEOPLE PAYING INTO THE SOCIAL SECURITY TRUST FUNDS FOR EACH BENEFICIARY, WHILE
TODAY, THERE ARE ONLY FIVE PEOPLE PAYING INTO THOSE FUNDS FOR EACH BENEFICIARY;
AND
WHEREAS, THE SOCIAL SECURITY TRUST FUNDS ARE INVESTED IN
SPECIAL TREASURY BONDS AND NOTES THAT ARE STILL SOLVENT AND INCREASING IN VALUE,
AND THE PROJECTED VALUE OF THE TRUST FUNDS IN THE YEAR 2022 IS 4.2 TRILLION
DOLLARS; AND
WHEREAS, THE SOCIAL SECURITY TRUST FUNDS EARNED 43.8
BILLION DOLLARS IN 1997 AT THE RATE OF 7.5 PERCENT; AND
WHEREAS, WHEN THE SOCIAL SECURITY ACT WAS ENACTED IN
1935, IT SEPARATED SOCIAL SECURITY TRUST FUNDS FROM THE FUNDS SUBJECT TO THE
FEDERAL BUDGET, ALTHOUGH THAT REQUIREMENT HAS BEEN IGNORED IN RECENT YEARS IN
ORDER TO OBSCURE THE INCREASING FEDERAL BUDGET DEFICIT; AND
WHEREAS, FOR 2002, THERE IS A $84,900 CAP ON EMPLOYEE
EARNINGS THAT MAY BE TAXED FOR PURPOSES OF SOCIAL SECURITY;
WHEREAS, EMPLOYER PENSION PLANS THAT PROVIDED A FIXED
INCOME AND COLA'S ARE GRADUALLY BEING ELIMINATED IN FAVOR OF 401K'S; AND
WHEREAS, 401K'S DO NOT PROVIDE A GUARANTEED INCOME; AND
WHEREAS, CONTRIBUTIONS TO 401K'S ARE FREQUENTLY NOT
MATCHED BY THE EMPLOYER; AND
WHEREAS, EMPLOYERS ARE CONSTANTLY REPLACING OLDER WORKERS
WITH YOUNGER ONES; AND
WHEREAS, SOCIAL SECURITY COLA'S ARE BEING REDUCED,
FORCING MORE PEOPLE TO FORGO OBTAINING NECESSARY MEDICATION; NOW, THEREFORE, BE
IT
RESOLVED, BY THE SENIOR SENATE AND THE SENIOR ASSEMBLY,
JOINTLY, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA AT ITS 2002
REGULAR SESSION, A MAJORITY OF THE MEMBERS VOTING THEREFOR, HEREBY PROPOSES THAT
SOCIAL SECURITY INVESTMENTS REMAIN PUBLIC INVESTMENTS IN SECURE TREASURY
OBLIGATIONS, THAT SOCIAL SECURITY FUNDS BE KEPT OUT OF FEDERAL BUDGET
CALCULATIONS, THAT THE CAP ON EARNINGS SUBJECT TO SOCIAL SECURITY TAX BE
ELIMINATED AND THAT BENEFITS AT RETIREMENT BE CAPPED AT AN AMOUNT EQUAL TO THE
CURRENT TAXABLE EARNINGS CAP, ANNUALLY INCREASED BY 2 PERCENT; AND BE IT FURTHER
RESOLVED, THAT THE SENIOR LEGISLATURE OF THE STATE OF
RESOLVED, THAT A COPY OF THIS MEASURE BE TRANSMITTED TO
THE PRESIDENT AND VICE PRESIDENT, THE SPEAKER OF THE HOUSE OF REPRESENTATIVES,
THE CHAIRPERSONS OF THE HOUSE AND SENATE COMMITTEES ON AGING, AND TO EACH
SENATOR AND REPRESENTATIVE FROM CALIFORNIA IN THE CONGRESS OF THE UNITED STATES.
PU
RN0220071
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