Romney and Ryan Both Supported Privatization of Social Security
Though not yet 24 hours old, the Republicans' Romney-Ryan ticket is already drawing fire for both men's plans for the "voucherization of Medicare." As it turns out, there's another reason Mitt Romney and Paul Ryan should worry America's seniors and the millions more soon to join them. Both supported President Bush's aborted scheme to privatize Social Security, only to run away from their past positions after its staggering unpopularity and the 2008 meltdown of the U.S. financial system revealed that Republican path to be political suicide.
As Ryan Grim and others highlighted, Rep. Ryan was at the forefront of George W. Bush's 2005 effort to divert contributions from the Social Security trust fund into private accounts. (He would later agree with Texas Governor Rick Perry that Social Security is "a Ponzi scheme.") To enable their Republican colleagues sell the concept to their skeptical constituents, Senator Rick Santorum (R-PA) and Rep. Deborah Pryce (R-OH) authored a presentation full of helpful talking points, such as:
"Your audience doesn't know how trillions and billions differ. They know these numbers are large, but not how large nor how many billions make a trillion. Boil numbers down to 'your family's share.' Also avoid percentages; your audience will try to calculate them in their head--no easy task while listening to a speech--and many will do it incorrectly."
As it turned out, of course, it was the Republicans who were doing the math wrong. As Matthew Yglesias summed it up last year:
What privatizers want to say is that current retirees will keep getting benefits and future retirees will be okay despite our lack of benefits because we'll have private accounts. But current retirees can't get benefits if my money is in a private account. And my account can't be funded if I'm paying benefits for current retirees.
Vice President Al Gore made the same point during his presidential debates against then Governor George W. Bush in 2000, noting that "the trillion dollars that has been promised to young people has also been promised to older people," adding, "And you cannot keep both promises." By 2005, the Center on Budget and Policy Priorities estimated President Bush's plan to let younger workers divert a quarter of their payroll taxes into private accounts would add $17.7 trillion to the national debt by 2050.
But as Jonathan Chait recounted in April, Paul Ryan made George W. Bush's "fuzzy math" seem brilliant in comparison:
In 2005, when Bush campaigned to introduce private accounts into Social Security, Ryan fervently crusaded for the concept. He was the sponsor in the House of a bill to create new private accounts funded entirely by borrowing, with no benefit cuts. Ryan's plan was so staggeringly profligate, entailing more than $2 trillion in new debt over the first decade alone, that even the Bush administration opposed it as "irresponsible."
And even more irresponsible after the implosion of Wall Street in the fall of 2008. As ThinkProgress reported at the time, studies estimated that private accounts would lose money a third of the time. That fall, the Center for American Progress calculated that "that if a worker had retired on October 1, 2008 after 35 years of contributions to private retirement accounts, that retiree would have lost nearly $30,000 in retirement funds because of the downturn in the stock market over the last two years." And while retirees would face the risks inherent in the market, according to a 1997 analysis their Wall Street money managers would reap an estimated "$240 billion in fees during the first 12 years of a privatization scheme- this number is undoubtedly much higher now." And all the while, the Social Security Trust Fund which currently helps offset the yawning federal budget deficits would be depleted by trillions over the next several decades.
Nevertheless, even after the near-collapse of the American financial system, Paul Ryan stuck with his Social Security privatization gambit. With the rollout of the first version of his "Roadmap for America's Future" in February 2010, Ryan merely reduced from half how much of their Social Security payroll taxes Americans could shift into their own private accounts. As TPM explained:
Rep. Paul Ryan, (R-WI) the ranking Republican on the budget committee, recently detailed the Republican plan for Social Security that preserves the existing program for those 55 or older. For younger people the plan "offers the option of investing over one-third of their current Social Security taxes into personal retirement accounts, similar to the Thrift Savings Plan available to federal employees."
But Ryan's boss, then House Minority John Boehner, was having none of it. Sensing the political danger, Boehner said of Ryan's Roadmap v1.0, "it's his." And with that, Social Security privatization disappeared from Roadmap 2.0 and the 2011 House Republican budget based on it.
And also vanished, it turns out, from Mitt Romney's second run for the White House.
This February, Romney offered his audience at an empty Ford Field in Detroit the same brief description of his plans for Social Security as you can find on his web site:
"When it comes to Social Security, we will slowly raise the retirement age. We will slow the growth in benefits for higher-income retirees."
But "we" won't, Romney now insists, privatize the Social Security system. Obviously touchy on the subject, Mitt told a New Hampshire town hall audience last year that he supported no such thing:
Q: I have a question on Social Security...one way of doing it is privatizing, that people can invest their money, is that correct?
ROMNEY: I didn't say that here.
Q: Well, I saw it online, so maybe it's -
ROMNEY: I didn't mention that - there are - I didn't mention that. I described the three major one. There have been other ideas about people investing. You know, the disadvantage, I mean, the privatization of Social Security that doesn't make sense, the so-called privatizing of Social Security. There have been some who have said, "Let people save some of their money and invest it." The market goes up and down. I kind of like the system that we have in that regard.
It's no wonder Romney emphasized, "I didn't say that here." Because as his questioner rightly pointed out and as ThinkProgress has documented at length, for years Mitt Romney supported the very private accounts he now claims to oppose.
In his 2010 book, No Apology, Governor Romney proclaimed, "I also like the fact the individual retirement accounts would encourage more Americans to invest in the private sector that powers our economy." During a 2008 GOP presidential debate, Romney explained that "the president said let's have private accounts and take that surplus money that's being gathered now in Social Security and put that into private accounts. That works." The year before, Mitt frequently repeated his preference for private accounts:
June 2007: When a college student asked Romney how he, as president, planned to solidify Social Security's future, he endorsed private accounts: "One thing that the president proposed [on Social Security] that is a good idea is to take some of that money, or all of that surplus money and allow people to have a personal account. So they can invest in things that have a higher rate of return than just government debt. They can invest in things like our stock market or the world's stock market...so that they can get a better return, and maybe that would make up for some of the shortfall. That's a good idea."
October 2007: At a town hall, Romney said there were "two major paths" lawmakers could take to shore up Social Security. The first, he said, was "to raise taxes on people, which I don't want to do. And the other is to allow some portion of people's money that they're now having taken out of their salaries to be invested in Social Security." When an attendee told him his plan was "privatization," Romney replied, "You call it privatization. I call it a private account."
As they have made clear for years, Americans call it a terrible idea. Which is why Romney-Ryan 2012 won't be saying anything in public about Social Security privatization.
People forget the number one problem with private accounts is that you may outlive your money. What do you do when that happens?