Paul Ryan wants to privatize Social Security
Paul Ryan–the man who will be the House Budget Chairman when the new Republican led Congress is sworn in–wants to privatize Social Security! At least that will be the battle cry from the Democrats over the next two years if Paul Ryan moves forward with his Social Security plan.
According to this article, Paul Ryan will introduce a plan that would allow Americans to choose to allocate some of the money they are already paying into the Social Security system to private retirement savings accounts instead. Under his plan Americans would be allowed to invest up to 5% of the money they are already paying into the system into investment plans that the people actually own. By 2042 the total amount of the FICA taxes that Americans would be able to privatize would rise to 8%.
“Initially, workers are allowed to invest 2 percent of their first $10,000 of annual payroll into personal accounts, and 1 percent of annual payroll above that up to the Social Security earnings limit,” reads Ryan’s plan. “The $10,000 level will be indexed for inflation. After 10 years, the amount that workers can invest will be increased to 4 percent up to the inflation-adjusted level, and 2 percent above that. After 10 more years, these amounts will be increased to 6 percent and 3 percent.”
“Eventually, by 2042, workers will be able to invest 8 percent up to the inflation-adjustment level, and 4 percent of payroll above that, for an account averaging 5.1 percent,” Ryan wrote in his Roadmap.
The accounts would be owned by the individual investor, meaning that they won’t be affected if an investor changes jobs, nor would they be dependent on one particular employer for management, as are some private retirement funds.
Each personal account is the property of the individual, and the resources accumulated can be passed on to the individual’s descendants,” reads the plan. “This contrasts with current government Social Security benefits, which are subject to reductions or other changes by Congress, and which cannot be passed on
As Social Security benefits become an individual’s property, the government no longer will be able to raid this money to pay for spending on other programs
Democrats have long used the word privatization as a tool to scare senior citizens into voting for Democrats by claiming that Republicans want to alter their Social Security benefits and risk their money in the stock market where they could lose everything. They point to the current recession and use it as proof that Social Security should be left as is and not privatized.
But Paul Ryan’s plan is voluntary, those that wish to participate can while those that (for some reason) think that the current Social Security system is fine can opt to have no money diverted to personal accounts.
I happen to think that this is a great idea, but I have to admit that I don’t think it goes far enough (but then again I am one of those selfish people who believe I am entitled to actually keep the money that I earn.) In a perfect world the government wouldn’t be taking any of my money and saving it for me for a later date, but if we are going to be forced to hand over money to the federal government in order to help provide for us in our golden years, I would prefer the option of having all of that money being paid into my own personal account. At least Paul Ryan’s plan is a start. This option would not be right for everybody, but those people who are not comfortable with the idea would not have to participate in Paul Ryan’s plan, they could opt to keep the status quo.
The fact that Paul Ryan’s plan is voluntary will not stop the Democrats from taking the offensive against this proposal with the economic fear mongering they have long employed. It will not matter to the Democrats that those who do not wish to participate in private accounts will not have to. They will simply revert to the arguments of the past and scare senior citizens into believing that only Democrats have their best interests at heart, when in reality, shouldn’t ever American have to right to decide what to do with their own money in the first place?
America's Watchtower 
I agree with you. In the long run 5% of FICA taxes (which is not very much) still means 95% of that money is going to the Fed.
To me this just seems like a foot in the door to a more comprehensive privatization plan, which I hope it is.
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I would love to see the whole thing privatized, but then again I would love it more if the government wasnt’ taking my money in the first place! I hope that if this plan ever passes that it will lead to more privatization, but that is probably the same argument that the left is going to use to scare the seniors into opposing this legislation.
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I think this is a start. The one thing that Paul Ryan needs to emphasize is this is voluntary. He also needs to sell the potential growth of this fund as compared to social security. If people can see real numbers it becomes tough to argue against it. It becomes difficult to scare people. This is what they did in Texas and people are on board with it. This is definitely a step in the right direction…the private option! Great post Steve.
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I think this is a step in the right direction also, and I think you are right, the Republicans need to drill it into the heads of the American people that this plan would be voluntary. I don’t see how anyone can oppose this plan if Americans are allowed the choice as to whether or not they participate in this program.
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Maybe Ryan realizes that a comprehensive privatization plan is out of the question right now, but maybe he can get some Dems on board for something this small. Ryan is a smart guy. Get it established and go from there.
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That sounds like the plan to me, start small and work from there. Obama would have been better off if he followed those guidelines!
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Social Security was never intended to be a retirement savings plan, it was meant to be an insurance policy. I give credit to those who’ve labored hard to change the national understanding of Social Security’s purpose, but the fact is it’s misdirection and disinformation. When Wall Street does it, I see the motivation – millions and millions of small-dollar accounts, amounting to trillions in the aggregate, over which Wall Street would have ultimate control and for which it would have to offer no guarantees. In fact, wasn’t it Wall Street’s shame-faced admission, a few years back, that it wouldn’t guarantee privatized Social Security investments, followed by a significant decline in the market, that led to the evaporation of the privatization movement some years back?
Let Wall Street guarantee the funds against loss, and more Americans will be willing to entertain the idea.
As for the national government borrowing from Social Security, I thought it was shameful when then-President Bush talked about being shown the filing cabinet in West Virginia where the Social Security Administration stored the debt instruments – “worthless IOUs,” I think he and the conservative cabal called them. Is this how we refer to the securities issued by our government?
At any rate, may God bless us all!
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“Let Wall Street guarantee the funds against loss, and more Americans will be willing to entertain the idea.”
You mean “make” Wall Street guarantee the funds against loss. Interesting how one little word changes your argument, isn’t it?
If government securities which are IOU’s are worthless, I don’t think calling them anything else would serve a purpose, unless you just want to bash Bush, which is getting a little old by now.
The best part about your comment is you didn’t actually admit social security has a problem with funding. I assume you are one of the progressive deniers? How much evidence needs to be put forth before you will believe this program is going bankrupt? Hate to steal a global warming phrase, but seriously dude, the “science is settled”.
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There is no need to guarentee the funds if it is voluntary; those that are not comfortable with the gamble will not have to invest in Wall Street while those that are can have that option.
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For the whole story on Ryan, who, along with cantor and McCarthy, gives us great hope, gp tpp “Young Guns” or get the book by that name. You’ll be delighted !
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I love this guy. My guess is that the slow approach is better with the seniors and it will be easier to sell when the progressives go all crazy about it. I’m on social security so I’m guessing I can’t be part of this? Anyway, I love this idea. Totally agree with you all that this is a great start. What’s that saying, “one step at a time”.
Sometimes I wonder if I want things done quickly because so much is wrong and things can change so darn fast in Washington.
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I am not sure how that would work for you, but I would think that if the plan is voluntary you should be allowed to participate.
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Clearly the idea here is to open the door. I’m sure Ryan has grander ideas in mind than a voluntary 5% but he is taking a pragmatic approach. Honestly I’m somewhat amused and pleasantly surprised that so many conservatives think this “one step at a time” is acceptable since the entire mantra has been a principled “this is the way it needs to be, and right now” approach. I wonder if that patience extends to other areas? Republicans seems to acknowledge that health care reform won’t be overturned in the next two years. Is it also okay to make pragmatic changes to the existing law in the interim?
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