GOP Candidates Revive Private Social Security Idea

WASHINGTON (AP) — Most of the top Republicans running for president are embracing plans to partially privatize Social Security, reviving a contentious issue that fizzled under President George W. Bush after Democrats relentlessly attacked it.

As President Barack Obama sidesteps ways to keep the retirement system viable, his would-be rivals are keen on letting younger workers divert part of their payroll taxes into some type of personal account to be invested separately from Social Security.

Former Massachusetts Gov. Mitt Romney has a version. Reps. Michele Bachmann of Minnesota and Ron Paul of Texas have said younger workers should be allowed to invest in alternative plans. Texas Gov. Rick Perry has raised the idea of letting whole groups, such as state and local government workers, opt out of Social Security.

These proposals are popular among conservatives who believe workers could get a better return from investing in publicly traded securities. But most in the Republican race have been careful to say they would fight to preserve traditional Social Security for current retirees and those approaching retirement. Younger workers, they say, should have more options.

Romney says the stock market collapse in 2008 shouldn’t scare workers away from investing in private accounts, but acknowledges it’s an issue.

“Given the volatility of investment values that we have just experienced, I would prefer that individual accounts were added to Social Security, not diverted from it, and that they were voluntary,” Romney wrote in his book, “No Apology.”

Any kind privatization, however, is sacrilegious for liberals and many moderates. They say it would drain resources from the more than 50 million people who now receive benefits. Social Security experts say raising the privatization issue could give Democrats a potent political weapon.

“Any Republican who pushes personal accounts too hard will ensure Obama’s re-election,” said Kent Smetters, a business and public policy professor at the University of Pennsylvania’s Wharton business school. “That’s bad news for the Social Security system because President Obama refuses to take a leadership position in dealing with the nation’s entitlement overspending.”

In 2005, Bush made a push to give workers the option to privately invest a portion of their payroll taxes to provide a supplement to government benefits. Republican lawmakers were reluctant to jump aboard as Democrats argued that Bush was trying to “end Social Security as we know it.”

“We’ll fight that fight anytime,” said Rep. Sander Levin of Michigan, the top Democrat on the House Ways and Means Committee, which oversees Social Security. “Bad policy is usually terrible politics, and that’s terrible politics.”

Perry has helped make Social Security a leading issue in the campaign by writing in his book, “Fed Up!” that the program is a “Ponzi scheme” and a “failure.”

Perry boasts that his provocative language is forcing the candidates to talk about an important issue. “Other candidates in this race were content on continuing to sweep it under the rug and continuing the status quo,” Perry spokesman Mark Miner said.

Obama mostly has avoided the issue in the first three years of his presidency, arguing that Social Security has not been a major contributor to the nation’s fiscal problems. As a candidate in 2008, Obama proposed increasing payroll taxes on high-income workers to help shore up the system, but he hasn’t pushed the idea since taking office.

All the top Republican candidates have denounced tax increases.

Despite Perry’s rhetoric, he hasn’t released a comprehensive plan to address Social Security’s financial problems. Perry says personal accounts “ought to be on the table,” along with raising the retirement age.

Perry says state and local governments should be able to opt out of Social Security and enroll workers in alternative retirement plans. As an example, Perry talks about a plan in Galveston, Texas, that allows county employees to invest a portion of their income in annuities and bonds.

Nationwide, about 4 percent of workers, mostly state and local government employees, are in alternative retirement plans.

Social Security is facing long-term financial problems largely because aging baby boomers are starting to retire, leaving fewer workers to pay into a system that is supporting a growing number of retirees. In 1950, more than 16 workers paid into Social Security for every person who received benefits. Today, the ratio is down to three workers paying in for every beneficiary taking out.

Social Security already pays out more in benefits than it collects in payroll taxes. The system has built up a $2.6 trillion surplus, which was invested in Treasury bonds. But that surplus is projected to run out in 2036, unless Congress acts. At that point, Social Security will collect only enough payroll taxes to pay about three-fourths of benefits, according to the trustees who oversee the program.

Experts say allowing people to opt out of Social Security, or to divert a portion of their payroll taxes into private accounts, would drain even more resources from the system, at least in the short term.

“If you’re looking at narrow self-interest, then there is an argument that can be made for being out of it,” said Alicia H. Munnell, director of the Center for Retirement Research at Boston College. “But it’s a national program. The reason that unfunded liability is there is that all our grandparents got benefits in excess of what they put in, and so everybody should be in and contributing to pay that off.”

(© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

  • Citizen

    Yeah, let’s give the 2.6 trillion social security surplus to Wall Street to invest. Just what those bozos need, more money to play with, lose, or reroute to unscrupulous traders that make a million dollars an hour. So, when the GOP finally bankrupts 85% of the the US population, then what? Turn the U.S. into the farm fields of China?

  • Do it already

    Citizen, the more you post the more it is clear you are regretting your life choices to hate those who are better off than you from your former government job. Try to stay a little more to the center and people may take you more serious. You sound like a little child wildy stretching every statement to get attention. I’m in my 30’s, and hope they privatize it. even 10 cents on the dollar is better than zero and a poke in the eye.

    • Citizen

      @Do it. And you sound pretty ignorant. Why don’t you go and talk to people who lived through the 1930’s and experienced what it was like to see PRIVATE investments evaporate during the Wall Street Crash of 1929. And you will get your money at retirement, I promise. And why are you attacking me personally? My life choices have been phenomenal. What I’m trying to do is keep ignoramuses like you from biting off their noses to spite their faces because you don’t have a clue about what will happen if social security is privatized–NOT A CLUE!

      • Yikes

        Citizen, you see I’m in my 30’s but am and have been a millionaire for a number of years. All without government telling me what to do. Yes it took hard work and determination. Came up from the very bottom to do it. I don’t want to hear your comparisons to the 30’s or 40’s or whenever. You as an indian and a former government worker have two of the three legs of the stool covered already. I simply want the money I put into the system plus an appropriate rate of return. I’m willing to ride the ups and the downs and if I have nothing because of my choices, then so be it. The fact that you couldn’t make it without the gov and their assistance has no bearing on how the responsible people live and want to have the choice to live. Citizen, you are truly a disgrace to America. Everything that made this country is absent in you. I can only imagine the entitlement mentality of your kids.

        • Citizen

          @Yikes. How many people did you extort and exploit to make your money? I EARNED (remember that word “earned”) my pension and retirement money by working from the age of 16 on and working my way through college, coming out with ZERO debt–both my sons did that, also. No government loans for education in my family, and both my children are very successful professionals who give back to their communities. If you think the 1930’s and 1940’s are so irrelevant, just wait around and keep your arrogant attitude. If you own a business, I bet your’re just a real “peach” to work for.

        • oh boy!!!!!!!

          Good for you Yikes! I have about 5-6 years to go before I can assume that title– Now, protect it! And do good things. Congrats.

    • Facts of Life

      Do it already…ever hear of a Roth IRA

    • oh boy!!!!!!!

      Citizen has stripped us of our ability to comtemplate choice, and offered to save us because we are of a very ignorant generation. I don’t want to be saved by Citizen and her ways of thinking. Don’t try to save us Citizen, we happen to have a clue. You and all the upper generationals will be dead when our turn at social security comes around and we won’t get it. We already know that. Unlike you, our ignorant and irresponsible generation starts saving and investing in our 20’s not because we want to but because we know we need to.

      • Citizen

        Well, good, oh boy, because between your personal saving and social security you will have two legs of the three-legged stool needed for retirement. By the way, both my sons are of your generation and know the value of social security and back the program completely. They read history and have learned from it. By the way here is some news from The Dismal Political Economist about the latest bank scandal (you know–where you want to put ALL your money). Personally, I trust the full faith and credit of the U.S. government until your generation gets its hands on it!

        “UBS said on Thursday that a rogue trader in its investment bank had lost $2 billion, delivering a fresh blow to the beleaguered Swiss bank.

        The new impetus in bank regulation has been on the trading activities that large banks do for their own account. Banks have said they are on top of things but

        The case could also bolster the efforts of regulators who have been pushing in some countries to separate trading from private banking and other less risky businesses.

        Of course, if politicians will not put new, stronger regulations in place they can always go back to the old system where bankers lose billions, get bailed out by taxpayers and get to keep their jobs and their great salaries and bonuses. That’s worked well in the past.”

        • oh boy!!!!!!!

          Yeah, I know all about it. I still don’t agree. The program is dead in the water, will eventually become a welfare program sponsored by all that paid in (a tax). That’s a fact. If you invest and have your own retirement, the government will “means test” the assets and say, “thanks for all the years of cash flow, you don’t qualify. Get poor and come back tomorrow”. I trust my self directed style over the full faith and credit of the U.S directed system.

          • Citizen

            Well, oh boy, I wish you luck with your plans. With the latest Wall Street and bank antics, if I were young, I’d put my money under a rock out in the garden. At least make sure you print out your bank account paperwork and keep it somewhere safe, because “electronic” deposits can disappear and you will have to prove what the bank owes you–if it’s still around. You see, that was a lesson from the Great Depression that a lot of older people learned–they saved money in banks, and the banks folded, and, guess what, they got cents on the dollar–if that. That is why a retirement plan is three-pronged: investments/savings, social security, and life insurance. Two safe, and one risky (investments). It is sad to me that you have so little faith in the U.S. Government (the greatest the world has ever seen), that you can’t support it and social security. But, like I said, good luck. Remember those THREE legs.

            • oh boy!!!!!!!

              I support it for you. Investing isn’t for everyone. It’s a ton of time in information gathering and keeping up. Not everyone can do it. All of my assets are in “hiding” right now until after the election. So, I sit on the sidelines making less than 2% here , some dividends there, and bond interest over there. But, it’s safe. If the government offers the choice, I would take it. I do trust my ability over theirs. I don’t borrow from me and sweep it elsewhere.

              • Citizen

                @oh boy. Please try not to be a victim of the GOP’s weapon of mass cynicism against the U.S. Government. Of course, both parties are culpable and the reasons/excuses are many. Here is a quote from Robert Reich’s blog (whether you like him or not is irrelevant here because he makes a valid point). I feel sad that you feel you can only trust your own ability. John Donne said it best in the 17th Century, “No man is an island…”

                “The Civil Rights and Voting Rights acts, Medicare, an American landing on the moon – and before that an interstate highway system, expansion of higher education, GI Bill – and before that, The New Deal and World War II – all had engraved in the public’s mind the sense that government was something to be proud of, an entity that we could rely on when times got tough.

                Times are tough again, but the Weapon of Mass Cynicism has convinced most Americans they can’t rely on government to help them out now. The nation is even entertaining the possibility of cutting Medicare and Medicaid, college aid, food stamps, Head Start. Perry calls Social Security a Ponzi scheme, and many are ready to believe him.

                But if we can’t trust government at a time like this, whom can we trust? Corporations? Wall Street? Bill Gates and Warren Buffett?”

                • oh boy!!!!!!!

                  “…the Weapon of Mass Cynicism has convinced most Americans they can’t rely on government to help them out now.” I will never be of sound mind to want government to help me out. I will help myself out. How can anyone trust the government? Look at it. It’s a mess. I love America, I have great optimism and respect. I don’t want to NEED anything from my government. I want it to function in the least invasive means and responsibly so. For once!

                • Citizen

                  Yes, oh boy, you do need your government and its military, and the highways that it builds, the water and air that it keeps clean. We have already seen the havoc wreaked on a population that uses a lot of mass-produced food by the greatly reduced food processing plant inspections. You may not WANT to need things from government, but you do and that is an incontrovertible fact. You really don’t have optimism. I urge you to go out and work to make things better. You and Yikes who brags about his millions need to remember that money is just paper, you can’t eat paper, and if our monetary system becomes the Chinese yen, all bets are off the table. I’ve talked to enough international business people to know that China is the future, that our businesspeople are making their fortunes there, and the Chinese millionaires/billionaires are sending their families to American to live and have more children. The consequences of not supporting the government of the U.S. could be dire.

                • oh boy!!!!!!!

                  I speak of social welfare, not the military, clean air, etc. And it’s the Chinese yuan—the Japanese yen. When a Chinese businessman speaks to a German businessman, they speak ENGLISH. I think you need a little optimism. Did I ever say I didn’t “support” my government? I don’t think so. I said, I don’t rely on it for my monetary care.

                • Citizen

                  Also, oh boy, the Chinese were thrilled to see the debt ceiling fight in the U.S. because they want their currency to be the world’s currency–not the U.S. dollar and that is their goal. Try reading what economists have to say about what will happen if that happens. I find it appalling that the GOP/Republicons/and right wing tea partiers are selling out the country.

            • Citizen

              @oh boy. I quote you, “I don’t want to NEED anything from my government.” You didn’t add a caveat to that. I don’t have much optimism when I hear the 30-something generation like you and Yikes talk trash about the government the way you do and feed into the cynicism being promoted right now about how bad government is and forgetting all the past accomplishments of the U.S. Good thing our soldiers are fighting for you millionaires. There is a reason Red Chinese millionaires/billionaires are sending their families here and that hardly makes me negative–makes me a realist.

  • frozenrunner

    Considering that there are people out there that contend President Obama is in the pockets of Wall Street it would be proof of their belief if privatizing social security plans came from Obama. One could invest their social security in government bonds. Monitoring how well your retirement portfolio is doing is something that most Americans do not do as well as they should. The GOP is playing to the notion that people think they can get rich quick of their money if they but put it in the stock market.

    • I'm not against it

      Obama won’t touch this. That’s why he skirts it and says that somethings got to be done but doesn’t say what. Doesn’t want to scare the old people. He scared my parents half to death with his health care so he can’t take another obvious hit. I don’t think private investment is a notion of quick money. Day traders are aplenty but out of style. A TIPS bond/high dividend quality stock mix can take a person a long way. I assume the options would be conservative and means tested.

  • oh boy!!!!!!!

    @ Citizen. Truce. I feel like I’m supposed to apoligize, but for what I don’t know. Look, if the choice of personal investment were given I would take it. I’m not cynical. I’m not trashing the government. If anything, you should look upon people like me with optimism, I am not in need and there is plenty of need out there. I don’t indict anyone in need for their need. Your generation didn’t have easy opportunities to invest (no internet, info hard to get, etc). My grandma had social security and a bunch of Ma Bell bonds or stock—whatever form it came in. I’m not a bad person. You’d probably like me. In fact, my favorite past time is gobbling up anything in regard to the revolutionary war, civil war, and WWII. You’re probably younger than that, but hopefully this will give you some glimpse that my generation isn’t composed of the stupid, ignorant, and irresponsible in total. I’m doing what I can to stay out of need so the truly needy can get the help they need. Not a lot of people can afford to save like I do.

    • oh boy!!!!!!!

      No disrespect about the Revolutionary war and civil war. I was only making reference to WWII

      • frozenrunner

        The exchange of well written ideas is never a bad thing. It so rarely occurs here. The limiting factor on privatizing social security is the ability of people to do investing for themselves. Congrats to mastering the skill. One would have to only go so far as the bankruptcy files to see how poorly many do with money. It would be an interesting study if on average people would come out ahead with social security or private. For every one of you there are how many who would lose?

        • Citizen

          Yes, frozenrunner, there is rarely an exchange of well written ideas on this site which is why I often feel compelled to post against the ignorance. When I shop the grocery store with other seniors, we all talk, and there are so very many elderly who live on only social security. People forget that there are still many spouses who did not work and acquire social security credits who need the deceased spouse’s coverage to survive. I know people who live on $800 a month of social security and manage not to participate in any social services programs. There is just no way any more that most middle class and poorer can save much for retirement. I predict that the 30-something generation will need the little inheritance they get from boomer parents to make it because I don’t think the U.S. is going to EVER recreate the prosperity it once had.

  • gloria

    There’s nothing wrong with SS that a little tweaking won’t cure. All the people who want private accounts will be crying like babies if they become disabled and don’t have enough money to live on. And private accounts most likely will not be large enough to cover the account holders’ children in the case of disability or death. I have a 33-year-old and a 26-year-old. I would advise them to stay with SS and not divert any money to private accounts.

    • A little tweaking????

      Needs more than just a liitle tweaking, but you would know that if you were better informed. How about buying inexpensive accidental death/disability insurance? And/or an inexpensive term life policy? There are plenty of options out there to cover your concerns that are personally accountable. America can’t afford SS payments to kids of deceased parents that only paid in maybe 10-15 years of payments. Not reasonable in our situation to think like you do.

      • gloria

        And what happens when people don’t buy those policies? The government will take care of the kids anyway. And then people like you will be whining about welfare. It’s a good program that just needs a little tweaking. Yes, a little tweaking. And you would know that if you were better informed.

        • A little tweaking????

          Well if you don’t have the cheap policies in place to protect your family then they enjoy a liife of EBT and housing subsidy. If you can’t afford the cheap insurance, you can’t afford a family anyway. There are other ways to look at the problem. It needs more than a little tweaking, you know that.

          • Citizen

            @A little tweaking. CHEAP policies? Excuse me. Have you looked at the cost of private disability policies or private nursing home insurance policies? Talk about Ponzi schemes! The “tweaking” that needs to be done to social security is to make EVERYONE pay in and then means test those who draw out. Raising the age limit does nothing because, even though people are living longer, those longer years are not years when many, many people are able to work. As any working person who has done physical labor (plumbers, carpenters, construction workers, even office workers sitting at a desk for years), and they can tell you that their bodies are shot before age 65. Rare is the person who gets to 60 without some chronic health problems or physical limitations. Only the rich would think everyone should be able to work to 70!

            • A little tweaking????

              Yes, cheap. You are talking about long term care policies. Those are expensive. I was using the example of accident/dissability, which is about 20 a month and term life which is about the same for the age group I was using in Gloria’s kids example. These policies increase with age and desired coverage amount. It was a point being made of how people can protect themselves on the cheap if SS were to no longer exist.

              • Citizen

                Term life is no longer cheap and ends at age 80. So, if you are still alive, then what? You have spent thousands upon thousands of dollars for nothing. The only cheap accident/disability policy is one that is employer-sponsored. Again, if a spouse never worked, they won’t have that or even afford that. Most of these policies also have time limitations, too, as does Medicare. The only true solution is to take the age limit off Medicare, adjust the premiums, negotiate drug discounts with big pharma, take the income limit off SS, and then means test at retirement. Really easy fixes. If private insurance companies (both life and health) could solve the problems–they would have. They are PART OF THE PROBLEM!

                • A little tweaking????

                  Obama is going to address this issue tomorrow in another speech. I guess we will see. This is not going to be an easy fix because there are people like you who defend it whole heartedly. Any change will seem like a failure. I’m a go with the flow kind of voter on this issue because I understand the enormity of the mess. Not saying you don’t. Seriously, it’s a mess and has been for so long that any fixes now will need to be extreme rather than the little tweaking that could have been years back.

                • A little tweaking????

                  Oh, and to answer your question, in Gloria’s example, she used her kids event of death to protect the grandkids. So, if her son died, who was to take care of his kids? Cheamp term life that wouldn’t be needed at 80 as the kid would then be around the age of 60 and I would think have his own at that point. The spouse would be coverd by the term policy. If, in this example, disability were to happen a cheap policy would cover the bills until they could figure something out. These were specific remedies to a specific “gloria” example.

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