Romney/Ryan: Missed Debate Opportunities on Social Security
It's in crisis right now, not decades from now. Also read: Obama to Hit Romney on Bain During Debate
October 14, 2012 - 10:36 am
Surely you jest. That “trust fund” consists almost entirely of IOUs from the rest of the government, which in case you missed it, has officially run its fourth consecutive fiscal year deficit of over $1 trillion. That’s because past congresses and presidents have “borrowed” (i.e., siphoned off and spent) previous system surpluses. To prop up the already broken system, the rest of the government has to cover the system’s cash deficits — today.
Despite that clear and present reality, Romney remained totally vague about Social Security, only saying that “I’ve got proposals to make sure Medicare and Social Security are there for them without any question,” while Ryan acted as if the problem is decades down the road:
… if we don’t shore up Social Security, when we run out of the IOUs, when the program goes bankrupt, a 25 percent across-the-board benefit cut kicks in on current seniors in the middle of their retirement.
No sir. The problem is now — and I should also note that we will, using Ryan’s words, “run out of IOUs” in only a decade or so if the economy continues to perform as badly as it has during the past four years.
If the majority of the American people knew (as they currently don’t) that we are burdening our grandchildren and generations yet unborn with hundreds of billions of dollars a year in debt right now so that current and future Social Security recipients can continue to receive uninterrupted and unaffected benefits, the political landscape surrounding the program and federal finances in general might be vastly different. We’ll never find out unless and until those who know the truth make the necessary points and arguments publicly.
As to Biden’s blithe blather about the dangers of privatization and the stock market, George W. Bush’s partial privatization proposal never involved forcing current seniors to invest in the stock market; in fact, it never required anyone to do so. Instead, it gave current workers well over a decade away from retirement the ability if they so wished to invest two percent of their gross pay in one or more passively managed stock, bond, or cash-equivalent mutual funds which would replicate the overall returns of their underlying indices.
As seen here, if someone making $50,000 a year had begun investing that 2% of earnings at the beginning of 2007 in an S&P 500 index fund, at the end of 2011 they would have had an estimated account value of over $5,200. That’s an annual return of less than 1 percent, but it’s not some kind of disastrous loss — and it occurred, as noted earlier, during the worst economy since Franklin Delano Roosevelt. Imagine how that account value could grow with a combination of several decades of continued investment and responsible leadership genuinely interested in growing the economy in Washington.
There is a significant political benefit to instituting partial privatization. Giving people the opportunity to invest a portion of their Social Security taxes could dramatically change the mindset of voters, who would become more interested in having the government pursue policies that would unshackle and grow the economy, better enabling their investments to continue growing.
Rest assured that the policies favored by the new investor class would not include continuing to give food stamps to people with more than adequate financial assets or whose incomes are way above the poverty line, passing out “Obama Phones” like candy to people who can afford to buy their own, and easing work requirements associated with traditional welfare. That’s what Obama, Biden, and Democrats, who do not hold “a somewhat similar position” to Romney and Ryan, really fear — an end to almost five decades of relentless Democratic vote-buying and cronyism.