Blacks Give Social Security Plan Chilly Reception

The Flipside

Opponents of private accounts say such arguments ignore or gloss over other facts, among them the redistributive effect of Social Security. In other words, Social Security replaces a higher percentage of lower wages, and a smaller percentage of higher wages. Because African Americans make on average less than whites, they benefit disproportionately under the current system.

Jason Furman, a New York University economist and senior fellow at the left-leaning Center for Budget and Policy Priorities, said in an interview: "Retirement benefits have two features. The lower your income the more generous they are, and the longer you live the more generous they are.

"Several very careful quantitative studies show that the rate of return on Social Security retirement is slightly higher for African Americans. That's because the progressivity of the retirement benefits slightly outweighs the regressivity of the life expectancy issues."

That's a policy wonk's way of saying the story is more complicated than private account advocates would have you believe. Yes, it's true that blacks die on average a few years earlier than whites. But overall, that's balanced by the fact that blacks benefit compared to whites in their rates of return on Social Security.

Furman also argues that black mortality rates are distorted by higher infant mortality and homicide rates. The disparity in life expectancy, therefore, is based in part on younger people dying at a greater rate -- younger people who have not lived long enough to contribute anything or much to Social Security in the first place. The mortality gap decreases for blacks who live until their 40s or 50s, and the remaining difference can be explained by higher rates of cancer, strokes, heart disease and other medical problems -- problems that GOP critics say are rooted in income and health disparities that Republicans historically have ignored.

But even if the mortality argument were to stand, there are other reasons for African Americans to be skeptical of private accounts, critics say.

The Republican argument is based "on a faulty premise [that] Social Security is strictly a retirement program," said Maya Rockeymoore, vice president of research and programs at the Congressional Black Caucus Foundation. Rockeymoore and others point out that Social Security is also a disability program and a survivor inheritance program, again areas where blacks benefit disproportionately.

In a widely distributed article she wrote for The Black Commentator magazine, she argues:

"Combined with the high risk associated with individual account investments, the outlook for African Americans, especially those on a low or fixed income, is dire.

"The inheritance argument is similarly misleading, Currently, Social Security provides benefits for the surviving dependents of a worker who passes away in the prime of his or her working years. Because blacks have lower life expectancies, African American widow(er)s and young surviving children have a higher reliance on these benefits when compared to whites. Indeed, Social Security Administration figures show that 48 percent of African Americans receiving survivor benefits are children.

"However, under a system of individual accounts, an African American male dying at a young age is unlikely to have enough funds accumulated in his account to offset the deep cuts in Social Security benefits that are likely to accompany these accounts. As a result, young child survivors, who are the least able to fend for themselves, are likely to face the possibility of extreme poverty"