"Andre Cadogan says blacks should embrace personal retirement accounts for Social Security as a way to create wealth within their community..."
By Larry Lipman
Palm Beach Post, Washington Bureau
Sunday, January 30, 2005
Andre Cadogan says blacks should embrace personal retirement accounts for Social Security as a way to create wealth within their community.
Robbie T. Littles says blacks should oppose private investment accounts because they would cause reductions in Social Security benefits and programs that aid the poor.
Blacks are being targeted by both sides in the debate over President Bush's effort to restructure Social Security to include individual accounts.
Bush touted his Social Security goals at a White House meeting with black religious and business leaders last week. The president has not offered a specific plan, but is expected to highlight the issue in Wednesday's State of the Union address.
The Congressional Black Caucus Foundation met two weeks ago to review a report by its Center for Policy Analysis and Research warning that private accounts "are a threat to African-American families."
But Cadogan, 36, an engineer from Boynton Beach who chairs Palm Beach County's Black Republican Caucus, said blacks "are definitely underserved... by Social Security" because they have a shorter life expectancy than whites.
"Most African-Americans won't see more than two or three years of retirement benefits in Social Security," he said.
Even those who die in their 50s or early 60s generally have children older than 18, the cutoff point for most survivor benefits, he said. As a result, blacks are unable to use Social Security to generate personal wealth.
Littles, 61, a former West Palm Beach city commissioner, described individual investment accounts as a "hustle" designed to benefit the rich.
"The folks who are going to make the most money off privatization don't look like me and don't come from the stock I come from," Littles said. "In a word, they're white folks and some misguided black folks."
The debate about whether blacks would be better off under the current program or with individual accounts boils down to four areas: life expectancy, survivor benefits, disabled benefits and wealth.
Bush says blacks' shorter life span short-changes their benefits.
But William Spriggs, a senior fellow with the Economic Policy Institute, said it is misleading to think of black men working until they're 64 and then dropping dead without leaving survivor benefits or enjoying retirement benefits.
About one out of five blacks receiving Social Security benefits get them for being a survivor. Among whites its about one out of eight. Nearly half of all blacks receiving survivor benefits — 48 percent — are children. By comparison, less than one-fourth of whites receiving survivor benefits are children, according to the Congressional Black Caucus Foundation. Blacks also are far more dependent on Social Security disability benefits than whites. Among blacks who receive Social Security, more than one in four get disability benefits. Among whites, it's one out of eight. Barely half of black beneficiaries — 54 percent — receive retirement benefits; about three-fourths of whites receive retirement benefits. Critics of individual accounts argue that they won't produce enough money to cover disabilities.
William Beach, director of the Heritage Foundation's Center for Data Analysis, said Social Security's restructuring could leave disability benefits untouched, although again it remains unclear what Bush will propose. Out of the 12.4 percent payroll tax that finances Social Security, 1.8 percent goes into a separate Disability Insurance trust fund and the remaining 10.6 percent goes into the Old Age and Survivors Insurance trust fund.
Spriggs argues that it's not feasible to separate the two trust funds because disability benefits expire when a person reaches retirement age. At that point the disabled worker would be left with reduced Social Security benefits and a miniscule investment account, he said.
Bush and other individual account advocates argue that private investments are a way for people to accumulate wealth that can be passed on to future generations. They say that is particularly important to blacks, who generally have less access to job-related investments such as 401(k) plans.