Policy Order O-1

WHEREAS: It has come to our attention that many financial services firms have supported initiatives that may undermine the retirement security of our citizens and employees in the City of Cambridge; and

WHEREAS: Social Security’s income protections-guaranteed, lifelong benefits, cost-of-living adjustments to guard against inflation, increased benefits for families, greater income replacement for low-income workers, and disability and survivor benefits are the backbone of retirement security and family protection in the United States; and

WHEREAS: Social Security provides crucial, often indispensable income protection for 1,061,665 retired citizens, 138,622 disabled workers and an estimated 66,443 minor children living in Massachusetts; and

WHEREAS: Social Security is the nation’s most successful and most important family income protection program, but it has long-term funding needs we should address; and

WHEREAS: Some policymakers propose to address these needs by cutting guaranteed benefits and privatizing Social Security, that is, diverting a third or more of workers’ payroll tax contributions out of the Social Security Trust Fund and into private investment accounts; and

WHEREAS: Privatization will worsen Social Security’s funding needs by draining resources from the Trust Fund into private accounts, increasing the federal deficit by $2 trillion over the first decade alone and more in the future and putting us in deeper hock to foreign creditors; and

WHEREAS: Some federal administration officials have suggested the federal government will not pay back the money it has taken from the Social Security Trust Fund over the past 20 years and used for other things, thereby denying working families the money they paid into Social Security and leading to further benefit cuts; and

WHEREAS: Privatizing Social Security will cut guaranteed benefits by 30 percent for young workers, even for those who do not participate in private accounts, costing them $152,000 over their retirements, denying them benefits they have earned and imperiling their economic security; and

WHEREAS: Cutting guaranteed benefits will hurt the elderly because Social Security is the only secure source of retirement income for most Americans, providing at least half the income of nearly two-thirds of older American households and lifting more than 11 million seniors out of poverty; and

WHEREAS: Cutting guaranteed benefits will hurt women and people of color, as they are more likely than white men to rely on Social Security for most of their retirement income, they earn less than white men and are thus less able to save for retirement, and they are less likely than white men to receive job-based pensions in retirement; and

WHEREAS: Diverting resources from Social Security to fund private accounts will threaten guaranteed survivor and disability benefits, thus harming working families – particularly African-Americans -, as roughly one in five workers dies before retiring and nearly three in 10 become too disabled to work before reaching retirement age; and

WHEREAS: Privatizing Social Security will burden state and local governments, as cuts in guaranteed benefits will increase demands for public assistance at the very moment growth in the federal deficit due to privatization induces the federal government to shift greater responsibilities onto states and localities; and

WHEREAS: A number of financial services firms and industry associations have joined or contributed to organizations that are promoting the privatization of Social Security.  These organizations include the Cato Institute, the Alliance for Worker Retirement Security, COMPASS, and the Club for Growth; and

WHEREAS: The Securities Industry Association has recently estimated that privatization of Social Security would be worth “39-279 billion in fees” and the University of Chicago economist Astan Goolsbee issued a higher estimate of $940 billion.  This potential windfall for the financial firms is unmistakably a motive in the story of Social Security privatization; now therefore be it

RESOLVED: That financial services firms in Massachusetts fully disclose any ties their firms have to organizations such as think tanks, lobbying organizations, or industry associations that have promoted privatization of Social Security; and be it further

RESOLVED: That financial firms in Massachusetts voluntarily eliminate actual or perceived conflicts of interest by severing such ties; and be it further

RESOLVED: That financial firms in Massachusetts publicly affirm support for preserving Social Security and defined benefit pension plans and reject proposals to divert money out of Social Security to fund private accounts; and be it further

RESOLVED: That the City Clerk be and hereby is requested to forward a suitably engrossed copy of this resolution to the Massachusetts Congressional  delegation, the Cambridge Legislative delegation, the Massachusetts General Court and the appropriate federal and state agencies.