The big news coming out of last night’s GOP presidential debate is that Rick Perry is standing by his assertion that Social Security amounts to a “Ponzi Scheme”. Mitt Romney attacked him for it, and his campaign immediately began churning up the media to go after Perry on that issue. So what is the truth about where the candidates stand on Social Security?
To understand this, you have to understand that the current system is set up a lot like a pension fund. You put money into the fund, through the payroll tax. When you pass retirement age, you receive money out of the fund in some proportion to the amount that you put in. Right now, the money in the fund is completely invested in United States Treasury Bonds.
Mitt Romney wants to “privatize” Social Security. Romney wants to instead make Social Security into a mandated IRA program. Instead of everyone putting their money into a single pension fund, you would essentially be required by the government to place money into a personalized retirement account. You would then have the authority to manage your own retirement account as you saw fit, although possibly with some restrictions on it to make sure that you don’t waste it.
The GOP establishment has been pushing privatization for awhile, despite the fact that it is a bad idea. The whole point of Social Security is to ensure that people have some amount of money when they retire. We could get a substantially better return on Social Security as a fund, by allowing the Social Security Administration to diversify their holdings–personally, I think we should do this immediately, and I am continually stumped as to why no one at the federal level has ever taken this idea seriously. But to carve that huge chunk of money into 80 millions really small chunks of money, and then to let people invest that as wisely or stupidly as they want defeats the entire point of the system. At that point, why bother with mandated retirement insurance at all?
So what does Rick Perry want to do? He won’t say. His campaigns response, and I kid you not, is that “he’s only been running for president for three weeks, so he hasn’t had time to figure this out yet”. Apparently Perry believes that one should be elected president first, and then come up with good ideas later. That being said, my guess is that he eventually toes the GOP establishment line on this, just like Romney.
Oh sure, he might have a slightly different take on privatization, regarding the particular restrictions that government should put on the system. But look, even Rick Perry isn’t stupid enough to actually try to abolish Social Security completely; he does want to actually WIN the election, after all. And he certainly can’t come down to the left of Romney on this issue, not after being so vehement in his attack on the status quo. So if he can’t go significantly to the Right of Romney, and he can’t go Left of Romney, then the only position left is Romney’s.
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