Idea of Social Security Privatization Revived by GOP Candidates

The majority of the top Republican candidates running for presidency are embracing plans to partially privatize Social Security.

Texas Governor Rick Perry has made a major contribution in making 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." Photo: GovRickPerry/Flickr

This intention reminds of a contentious issue that failed under President George W. Bush after Democrats relentlessly attacked it.

Former Massachusetts Governor Mitt Romney and Texas Governor Rick Perry have sparred over Social Security’s future during Monday’s Republican presidential debate. Each of them were pointing to passages in the other’s book that could be damaging in a general election.

Mitt Romney says that the stock market collapse in 2008 shouldn’t frighten 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. No Apology,” Romney wrote in his book

Perry has made a major contribution in making 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.”

Rick Perry boasts that his provocative language is forcing the candidates to talk about this important issue.

Perry’s spokesman Mark Miner said: “Other candidates in this race were content on continuing to sweep it under the rug and continuing the status quo.”

Mr. Perry says that he would guarantee the program for older Americans but adds that the program also should be adjusted for younger workers.

Romney says the program is essential and is vowing to defend it.

“Any Republican who pushes personal accounts too hard will ensure Obama’s re-election. 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,” said Kent Smetters, a business and public policy professor at the University of Pennsylvania’s Wharton business school.

Rick Perry says that state and local governments must be able to opt out of Social Security and enroll workers in alternative retirement plans.

Ron Paul of Texas won a round of applause during last week’s GOP presidential debate when he said: “What I would like to do is to allow all the young people to get out of Social Security and go on their own! Now the big question is, how would the funding occur?”

While President Obama avoids ways to keep the retirement system workable, his potential rivals are eager to let younger workers divert part of their payroll taxes into some type of personal account to be invested separately from Social Security.

As for Michele Bachmann, she made the case for personal accounts in a television interview last year. She said that young workers “need to have some options in their life, so that going forward they can have ownership of their own Social Security, their own retirement, something that they can pass on to the beneficiary of their choice.”

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

Social Security is now facing long-term financial problems mostly because aging baby boomers are starting to retire, leaving fewer workers to pay into a system that is supporting a growing number of retirees.

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 expected 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. [via Huff Post, Yahoo! and Fox News]

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