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A Project of The Annenberg Public Policy Center

Social Security Silliness

Prior to the GOP debate in Florida, Republicans and Democrats alike floated false statements on Social Security. The Florida Democratic Party incorrectly says in a web ad that Mitt Romney "would privatize" Social Security, while Romney wrongly claims in a campaign flier that Rick Perry "wants to end Social Security."

It's true that Romney has expressed support for allowing younger workers to voluntarily invest a portion of their Social Security taxes in private retirement accounts. But that's not the same as privatizing Social Security, as we have written before when Democrats have made similar attacks. And while it's true that Perry has called Social Security a "failure," he has not advocated ending it. He has called for a national conversation on how to change it.

Democrats Right on Perry, Wrong on Romney

Florida, where 17 percent of the population is 65 years old and over, is the site for the Sept. 12 Republican presidential debate. The Florida Democratic Party welcomed the Republicans with a 30-second web ad warning seniors in particular about two of the front-runners, Texas Gov. Rick Perry and former Massachusetts Gov. Mitt Romney.

The web video correctly says that Perry called Social Security a "failure" and a "Ponzi scheme." As we wrote after the Sept. 7 debate, Perry called Social Security a "failure" in his book "Fed Up!" (page 62) and a "Ponzi scheme" in the debate. But the ad is wrong to say Romney supports "privatization."

Florida Democratic Party, Sept. 12: Mitt Romney would privatize it [Social Security.] Gambling with Social Security in a volatile stock market.

That's not true. In his book "No Apology," Romney lays out what he calls "at least four ways one could repair Social Security" (beginning on page 173). He rejects one of the four: raising payroll taxes. The other three he is willing to consider:

  • Increase the retirement age with exceptions for people "physically unable to work beyond today's retirement age;"
  • Use the consumer price index, instead of the wage index, to determine Social Security benefits for "high-income individuals" — a change that would reduce future benefits for those individuals;
  • Allow younger workers the option "to direct a portion of their Social Security tax to a private account."

Romney says "one or a combination of these last three options will put Social Security on track to sustainably meet its obligations to current and future retirees."

It's the last option — the creation of private accounts — that Democrats have mischaracterized as privatization ever since President George W. Bush first proposed "personal accounts," as he called them, back in 2005. Bush's plan was voluntary and it would have allowed less than one-third of anyone’s Social Security taxes to be put into private accounts. Currently, Social Security payroll taxes amount to 12.4 percent of taxable wages, and Bush would have allowed up to 4 percent of that to go into private accounts. That's not at all like Chile, which did privatize its Social Security system in 1981.

Romney spoke highly of Bush's plan during the 2008 campaign. At a town hall meeting four years ago, Romney said "personal accounts would be a big plus." He also embraced Bush's plan at a presidential debate, saying "that works," after describing what the president wanted to do. He has tempered his support for private accounts, but still supports them. In his book, he writes that he does not want to "divert" money from Social Security.

"No Apology," 2010: But given the volatility of investment values that we have just experienced, I would prefer that individual accounts were added to Social Security, not diverted from it, and that they were voluntary. Former commerce secretary Peter Peterson has proposed that such individual accounts be mandatory, pointing out that voluntary savings programs like 401(k)s and IRAs tend to be underutilized. But if the accounts were linked with Social Security, set at 1 percent of wages as the annual contribution, and required an annual "opt-out" by both the individual and his or her spouse to be inoperative, I believe they could be effective, while at the same time giving taxpayers personal choice.

As described in his book, Romney supports a plan that would be even more limited than Bush's proposal and not at all like Chile's. In fact, it bears some resemblance to the private Social Security accounts proposed by Al Gore in his 2000 presidential campaign as an "add-on" to traditional Social Security, rather than as an optional "carve-out" as Bush proposed.

Romney Wrong on Perry

The Romney campaign, however, isn't immune to exaggeration when it comes to Social Security. In a flier being circulated in Florida, the Romney campaign goes too far when it attacks Perry on the issue.

The Washington Post reported Sept. 11 that the Romney flier attacks Perry for calling Social Security "unconstitutional" and a "failure." Both claims are true. That's what Perry wrote in his book "Fed Up!" But the Romney campaign goes beyond the facts when it claims that Perry wants to get rid of Social Security.

Romney for President: End Social Security? Rick Perry does not believe Social Security should exist. In fact, Perry’s campaign doesn’t deny that Perry wants to end Social Security.

During the Sept. 7 debate, Romney made a similar false claim when he warned that "our nominee has to be someone who isn't committed to abolishing Social Security," when discussing Perry's book. But, as we wrote, Perry's book doesn't propose any changes to Social Security.

As proof of Perry's desire to end Social Security, the Romney campaign cites a Sept. 8 article on the Huffington Post. The left-leaning political website wrote that Perry spokesman Ray Sullivan "refused to explicitly deny that Perry wants to 'end' the program, despite repeated attempts by HuffPost to clarify Perry's stance."   

However, Perry speaks for himself in a Sept. 12 op-ed in USA Today. In that publication, Perry wrote that he wants to start a "national conversation" on how to "fix" Social Security, "so today's beneficiaries and tomorrow's retirees really can count on Social Security for the long haul." 

We can't predict the future, but Perry's statement makes it clear that he doesn't want to "end Social Security."

— Eugene Kiely and Michael Morse