Think Romney-Ryan won’t try to privatize Social Security? Bush didn’t run on it in 2005 either, but that was the first thing he tried to do after he won the election.
Sahil Kapur reports on Paul Ryan’s enthusiastic defense of Social Security privatization during last night’s debate:
The Wisconsin congressman and House Budget Committee chairman talked up the concept when asked about his and Romney’s backing of President George W. Bush’s failed Social Security privatization plan.
“For younger people,” Ryan said. “What we said then and what I’ve always agreed is, let younger Americans have a voluntary choice of making their money work faster for them within the Social Security system. That’s not what Mitt Romney’s proposing. We say no changes for anybody 55 and above.
“And then the changes we talk about for younger people like myself is don’t increase benefit for the wealthy people as fast as anybody else, slowly raise the retirement age over time,” he said. “It wouldn’t get to the age of 70 until the year 2103, according to the actuaries.”
Ryan championed plans in 2004 and 2010 that would shift Social Security funds into the private market. Participants would be permitted to invest one-third of their Social Security taxes in stocks and bonds. Although the plans contained mechanisms to protect payouts to beneficiaries against market fluctuations, nonpartisan studies found that it could destabilize the program’s solvency in the long-term. Bush tried and failed to enact a altered version of the plan at the beginning of his second term.
The framework Ryan is describing is the 2005 Bush plan. And then as now, the problem is that if young people are diverting money into private accounts, that money is not going toward paying current retirees’ benefits. The money can’t be in two places at once. Reporters need to ask Paul Ryan where the money to pay current benefits will come from if young people get to take money out of the system.
To pay current retirees they would either have to raise the FICA tax or take the money from the treasury or redeem the existing bonds. Also, we have been paying income tax on our social security retirement benefit since 1984. All that tax revenue will be lost as future retirees might have invested in tax exempt venues but more importantly this is money that wall street is salivating over. The safety net should never be put at risk of private investment.