‘Social Security reform will affect NMI’

The Social Security Administration Saipan Field Office is preparing to support President Bush’s plan to transform Social Security from a social insurance program into an investment plan.

SSA Saipan manager Michael G. Newman said his office is currently studying a proposal to divert tax money into private savings accounts.

He said the American public needs to decide whether it wants to preserve Social Security’s traditional role or to transform it into something very different.

Social Security was one of the great moral successes of the 20th century by providing a critical foundation of income for retired and disabled workers. For a third of Americans over 65, Social Security benefits constitute 90 percent of their total income.

Newman said the proposed reform would affect all those who pay Social Security or who are potential Social Security beneficiaries. If such a reform is implemented in the CNMI, all nonresident workers would be affected, except for Filipino and Korean contract workers who are exempted from Social Security. But when these Filipino and Korean contract workers marry somebody from the CNMI then they would become a beneficiary as a result of that marriage. “So potentially everyone is affected,” said Newman.

But Newman said there are really two issues involved in this concern. One would be Social Security funding. He said Social Security trustees now estimate that at current benefit and tax levels, benefit expenses will exceed tax revenues beginning in 2042.

“That means that if no changes are made, the government will no longer be able to pay benefits beginning 37 years from now,” he said, adding that this may seem far off into the future but the problem must be fixed now.

The second issue, Newman said, is Social Security reform. He said the issue revolves around whether or not Social Security should remain a social insurance program designed to protect individuals, families and communities from the loss of income that happens due to death, disability and old age.

He said the program was born during the Depression in the 1930s when millions of Americans became impoverished due to unemployment, bank failures and the massive devaluation of equities and stocks.

People lost spending power, which caused businesses to fail and the economy to plunge in an ever-widening downward spiral, said Newman.

He said Social Security is just one of many federal programs, which are designed to preserve spending power so that families could support themselves and continue to participate in the economy of their community.

He said that almost everyone is going to be affected by such reform because Social Security is a large part of the economy, and Social Security benefits are spent and are circulated throughout the community. So the amount benefits being paid affects everybody who participates in the economy, he added.

Newman said the problem with this long-term funding shortfall is that, for young people, they think that the problem is still too far off into the future, while for older people, they would be dead by the time the funding shortfall comes about.

“It is difficult to get people to get concerned about it,” Newman said.