Thank you very much for joining me in this Louisiana conversation on the future of social security. I thank our public officials and our distinguished panelists for joining us this afternoon. I will introduce them to you momentarily.
It is worth noting as we begin this dialogue today, that some seeds of social security were sown by the people of Louisiana themselves. For, on February 5th, 1934, Louisiana Senator, Huey P. Long went to the floor to introduce to the nation his plan to make "Every Man a King." A national pension system was one of the hallmarks of his agenda. In expressing his intent to provide a $30 pension to everyone over 60, he said, "everyone has begun to realize that something must be done for our old people who work out their lives, feed and clothe their children, and are left penniless in their declining years. They should be made to look forward to the mature years for comfort, rather than fear." And so, Huey Long, spurred on by citizens right here in LA, planted the seeds for Social Security in fertile soil of a nation desperate for certainty, weary of risk, and in great need of economic reform. It is indeed fitting, then, that we would meet here to hold this important conversation in Baton Rouge -- our state's capital -- in the chamber of the Old State Capitol Building, where Senator Long himself held forth. I hope what is said here today will bring light rather than heat to the important debate about strengthening and improving what has become one of the most successful and popular programs in the history of America.
What makes Social Security unique and popular is that it is the only universal, portable, defined-benefit retirement plan for American workers. Over 95% of all workers in America are covered by it. In contrast, less than 50% of workers are covered by an employer pension through their jobs.
Social security is primarily an insurance program. It guards against some of life's most tragic, but common circumstances. It protects against the risk of poverty in old age, against the economic risk of a career ending disability and premature death by providing benefits to the surviving spouse and children of the deceased breadwinners. And it does all of this while spending only one penny of every dollar it takes in to keep the program up and running. That overhead of 1% is not just enviable by government standards, but compares favorably against any similarly sized program in the private sector.
One out of every four households, or 731,000 people, in Louisiana receives benefits from Social Security. The vast majority of those, 532,000, receive these benefits as retirement benefits. In 2003, the typical retired worker in Louisiana received a monthly social security check of $830 amounting to $9,960 per year. For many individuals, this check represents their only source of retirement income. For others, it serves as a dependable foundation for their retirement portfolio. Without this assistance, nearly 200,000 of our parents and grandparents would be living in poverty.
In addition to these individual benefits, it is also worth noting that in 2002, $6.6 billion flowed into the Louisiana economy in the form of Social Security checks. That amount is equal to one third of our entire state budget in Louisiana. It is no wonder that with outcomes like these that Social Security is considered so important. In fact, seventy years after its creation, it is the single largest source of retirement income in the United States.
While Social Security is an important component of Louisiana's economic security, it is not the only way people in our state save for later years. 125,000 retirees in Louisiana are currently receiving benefits from one of our twenty public retirement systems, separate and apart from Social Security. In addition, 294,000 have private employer pension plans, 103,000 have 401(k)s and 100,000 have IRAs. This year alone, 2.8 million workers in our state will make investments in their future through social security contributions, private pension plans, public pension plans and private options involving 401(k)'s or IRA's.
Clearly, the program has served our parents and grandparents well, but young people are asking themselves, will it still work for me? The answer is yes. Here is how.
At 22, young Joe or Jane Boudreaux graduates from LSU and begins working, making $30,000 a year. At age 65, he or she retires, and his income at this time has risen to $150,000. A successful life by most standards. Let's say he lives to the age of 85. When all is said and done, Joe would have paid $250,000 in social security taxes, but over the twenty years of his retirement, he would receive $526,800 in benefits. That is approximately $2,000 a month, $26,000 dollars a year. Add this amount to what he has saved in his 401(k) or private employer pension plan, and he will have a secure retirement.
The president has described Social Security as "flat bust" and "bankrupt." But that is not what they Congressional Budget Office or the Board of Trustees for Social Security tells us. According to analysts at CBO, a non-partisan group of economic analysts, "America's Social Security system will be able to pay all of the benefits promised to workers now paying into the system until the year 2052." In other words, without an infusion of cash the system will remain solvent for some 47 years into the future, when President Bush will be 106 years old.
So if it is not going broke tomorrow, what can we do today to secure its future? This will be one of the many topics talked about by our panelists today.
So there is a problem on the horizon, and the beneficial part of the President's call for privatization is that it has riveted the nation's attention on Social Security at a time when incremental steps taken today could have significant payoffs in the future. In fact, there have been minor and major amendments to the Social Security program all along the way, including most recently, an effort led by President Reagan and Senators Dole and Moynihan in 1983. With a few adjustments, such as stalling the cost of living increase and slowly raising the retirement age, they were able to not only save the program, but to generate surpluses that continue to this day. So this afternoon, we will discuss whether we should essentially continue down the tried and tested road of making incremental changes that strengthen Social Security, or whether we should take the more radical -- and some would say risky -- approach that the President has laid out.
To help facilitate this discussion, and address your questions, I am pleased to be joined today by a panel of experts who can help guide us in our discussion, but most importantly, I am glad to have the opportunity to hear from all of you about what you think should be done. In the words of the grand architect of the social security program, President Franklin Delano Roosevelt, "We have come a long way. But we still have a long way to go. There is still today a frontier that remains unconquered--an America unclaimed. This is the great, the nationwide frontier of insecurity, of human want and fear. This is the frontier--the America--we have set ourselves to reclaim."