Paul Ryan Just Can’t Quit His 2005 Social Security Privatization Scheme

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.

Comments

  1. John says:

    You’ve whined incessantly that you want your social security in 40 years when you retire. “I pay in, I want out” and all that crap.

    Well, you might want to sign on to privatization then, because it’s the only way there will be anything there for you.

    • Mitchell says:

      Seems like the definition of a ponzi scheme to me

      • John says:

        Which one Mitchell, the current system or privatization?

        • Mitchell says:

          social security as it stands now. Ignoring for instance the loss of purchasing power via inflationary costs, social security is purely a ponzi scheme in which today’s workers will never get back the total of what they put in.

          The boomers could have helped with this situation many times via larger social security taxes during their higher earning years (80s/90s); However, with the exception of the slight increase in the early 80s, they chose to kick the can down the road and let the next generations pay for it and keep that tax income for themselves.

    • Jon Geeting says:

      LOL it’s not “the only way”. The other way is to raise the cap on taxable income. Social Security is not in serious trouble, and there is no need to reinvent the program.

  2. John says:

    There you go again – “throw more money at it.” Do you ever give anything any real thought?

    At a minimum we need to means test and raise the retirement age. I don’t understand why you would resist taking a federal entitlement away from rich people?

    Social Security is not a savings plan. You don’t ‘pay in and get out’ any more than any other tax. It’s a tax designed to fund retirement support for people who need it.

    • Jon Geeting says:

      I’m against means testing it because it messes up the politics of SS and turns it into a welfare program in the eyes of the right wing tribe. The fact that its’ not redistributive is a key reason SS politics are so toxic, and I like it that way. Everybody needs to get it for the politics to work. The reason you can just throw money at this problem is that the projected funding shortfall is small. It’s also decades in the future, where today’s projections are bound to be wrong.

  3. John says:

    And if when you actually start thinking about retirement (which will be tough for you if it’s more than 90 days away), if you count on SS income being there you’re a maroon.

    I’m in my 50s and I’m not counting on it.

    • Jon Geeting says:

      Over time I want to see Social Security benefits get much more generous, not less. The task for my generation’s politicians will be to turn it into a Universal Basic Income over time, by continually lowering the eligibility age.

      • John says:

        One of the worst ideas you have ever had, and that’s a pretty damn high bar.

        I know you don’t want to work all that hard (and never get your hands dirty or, God forbid, sweat) but you do know that it takes people working to pay for all this stuff, right?

        • Jon Geeting says:

          We will all be richer in the future. Some people will prefer to have more money, and others will prefer to have more free time. We should make it easier to choose more leisure with a UBI.

          • John says:

            Absolutely not. It is not the responsibility of the taxpayer to pay for someone to sit on their ass when they could be productive and taking care of themselves.

            If you want to sit on your ass, then you figure out a way to pay for it which doesn’t include me paying you.

          • Jon Geeting says:

            Non-market production does not equal sitting on your ass. There’s plenty of socially useful stuff worth doing that people don’t get paid for. Raising kids for example.

  4. kelly says:

    john we all pay social security tax. people are entitled to thier own money if you have not paid into ss when you retire you do not recieve benefits.

    • John says:

      Kelly your position is privatization. Your money in = your money. That’s not the way it is structured.

      Many people receive SS benefits – disability and SSI are two examples – that either did not pay in or paid much less than they are drawing out.

      It is a tax, pure and simple. When you pay it, the money belongs to the government to do with what it wants.

      Social Security needs to go back to its roots – as a safety net for those who need it. And if you’re fortunate enough to not need it, that’s great for you and for society.

  5. kelly says:

    and jon. your supposed to raise your own kids. nobody should pay you for your own choices. you do not have a right to other peoples money for the mere fact you exist. how do tell do you propose social security to remain solvant if you no longer have productive members of the economic engine to pay into it?

  6. Mitchell says:

    Jon: Your last response sums up the fundamental flaw libs have regarding their view of society, that people will work just as hard and pay just as much tax (revenues) while having these revenues go to somebody who does not work, but in the libs eyes, is doing something good like “raising kids”

    As Kelly has pointed out, why should a guy who works hard, and probably has children of his own, have his income redistributed to somebody who does not have a job or does not work hard but has kids? That right there is a disincentive to work hard.

    When you start redistributing income and raising taxes, the incentive to work hard goes down and people actual work/produce less because it is not worth their time and aggravation to lose a bigger piece of the pie the harder they work

  7. John says:

    And I would add that Jon changed his tune pretty quickly – he went from “free time” to “socially useful stuff” like “raising kids.”

    Unfortunately, it is comments like these that he shows his true colors.

    I mean it – I thank God every day that people like him are part of the 5% fringe. UBI is beyond unworkable, it would destroy our economy in very short order.

    • Jon Geeting says:

      I think raising kids and other household production is real work that should be remunerated. The fact that many don’t consider this “real” work shows how sexist our institutions are. Lots of people think it’s respectable when rich wives are full-time professional homemakers, but think poor single moms are lazy if they don’t do market work. A universal basic income would end this unfortunate disparity.

      • John says:

        It is real work, hopefully you’ll learn that soon enough.

        You have kids when you can afford to have kids. If you can’t afford it, don’t have them. It is not the taxpayer’s responsibility to pay you for having them – that’s been tried (back before you were born, in the 1980′s) and was a fucking disaster.

        Real simple.

        • Jon Geeting says:

          Actually, I think that’s a fine idea. We need to start producing more young people to pay for the benefits we’ve promised the old people. We need to start channeling the procreativity of the American people.

    • Jon Geeting says:

      And no, I’m not changing my tune. I think that rather than redistributing money to people via all the various tax deductions, anti-poverty programs, and all the rest, it would be better to just zero all that out and give people the cash – a basic income. By the way, this isn’t just some lefty idea. Plenty of libertarians support UBI too, on the grounds that it would do less to distort market preferences, and would stop the “welfare trap” where poor people face high marginal tax rates for trying to earn more money.

      • John says:

        Ok, then it’s a total of 10% fringe players, I’ll include you and the Libertarians. Still glad you have no shot even on a combined basis.

        To have cash to give someone, someone else has to earn it first. You want to provide an incentive to sit on your ass (call it what you want, you changed your tune when called on it). So what’s my incentive to work to support you?

        So your position must be that Greece is as close to Nirvana on Earth as has ever happened – they pay millions of people to sit on their asses. And it’s worked out great!

  8. kelly says:

    john and mitch we actually agree on several fronts here however i am against privatization. if you had of had your social security in the private market in 2008 and were nearing retirement you would be eating alpo by now. jon is right that social security was never designed to be the governments piggy bank.we could lower the age to receive benefits back down to 62 so citizens would receive more of what they actually pay in and have plenty enough left in the coffer if government stopped borrowing against it.

    • John says:

      Kelly privatization and investment options are two different things. Privatization simply means your money in is your money period. You can have privatization and restrict investment options.

      Actually though, if you had stayed in the stock market past the crash to today, you’re fine. You can thank the illegal activities of Presidents Bush and Obama and Treasury Secretaries Paulson and Geithner for the market rally.

      You’ll also never be able to lower the retirement age, people are living too long the actuarial models don’t support it.

      • Jon Geeting says:

        If we get more people paying in, through more immigration or higher birth rates, we can lower the retirement age. Look at the historical trends on economic growth over time John. The country is going to be much richer in the future. There’s nothing wrong with spending a portion of that wealth increase on increased leisure time.

      • Jon Geeting says:

        How would you pay today’s beneficiaries? That’s the problem confronting every SS privatization plan.

  9. kelly says:

    sorry meant to say j o h n john is right not j o n jon lol. you know that really does get confusing you two lol

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