Fred Thompson on Social Security Former Republican Senator (TN)

Allow individual retirement accounts with government match

A: I never said that I was cutting Social Security. What I suggested with regard to Social Security is that it’s going bankrupt. The alternative with regard to Social Security is losing Social Security as we know it. So it’s a plan to save Social Security. It would do two things: allow people to set up an individual retirement account where the government would match their funds. It would save government money in the process, if you did one other thing, and that is index initial retirement benefits to inflation, instead of to wages, as they are now.

Q: If the Democrats, as they almost certainly would, block that in Congress, isn’t that whole plan pretty impractical? What do you do when the Democrats say no?

A: Well, you fight them. You take the case to the American people.

FactCheck: Slower growth of benefits for future retirees

Actually, Thompson’s proposal would not affect the annual cost of living increases for Social Security beneficiaries. Those would continue to be calculated as they are now, both for current and future beneficiaries. What Thompson’s proposal would do is slow the growth of benefits for future retirees, changing the way that the initial benefit is calculated. These benefits would grow at the rate of inflation. Currently initial benefits are pegged to the growth in wage levels, which rise faster. The result is that somebody retiring in the future would get less to start than the current formula promises. However, after that, the checks would get annual cost of living increases under the same formula that now applies.

Reform entitlements now so our grandkids don’t have to

The thing about it is that we can do it now without hurting those programs--actually strengthening those programs so that our kids and grandkids have [what they need]. I don’t think we as American people are so selfish that we’re going to put this off the table, kick the can down the road and let everybody else solve that problem, you know, when our grandkids get to be working age. That’s not America; that’s not what makes us strong.

And specifically, as far as Medicare is concerned, we need to tell people that are in Warren Buffet’s category we’re not going to take care of all your Medicare in the future; we can’t afford it.

Revamp Social Security to pay $2.5T for new tax plan

A: First, I’ll say I hope your estimates are better than the professionals who estimated that we would get so much less in capital gains revenue if we lowered the capital gains rate. They were totally wrong about that. They were wrong as to the amount of tax revenue we would lose under the 2001 tax rate cuts also. They always overestimate the losses to the government.

Q: So give us three specific things you would cut.

A: Well, let me give you one big one, that’s worth about $4.7 trillion--my Social Security plan. I have put out a Social Security plan that basically faces up to the fact that Social Security is going bankrupt and we’re going to have to do something about it [by allowing 2% of your payroll into a private personal account].

Allow 2% into a private personal account, with 2% match

In the long run, the government would come out ahead. A person would have a nest egg at the end of his retirement time.

And if you do that in conjunction with indexing the initial Social Security benefit to inflation instead of wages, at the end of the day you’re going to save Social Security. You’re going to put it on a sustainable basis. And it will save the government $4.7 trillion at the end of the day. So eventually you do have to address the spending side, but the spending is going to have to be addressed on the basis of our entitlement difficulties.

Present mandatory spending cycle is unsustainable

A: There’s no reason to run for the presidency if you can’t tell the truth. The fact of the matter is we’re bankrupting the next generation. We’re spending the money of our grandkids & those yet to be born. They don’t have a seat at the table. Our present mandatory spending cycle leaves us in an unsustainable position. Can you imagine something that’s unsustainable and threatens our economy for our grandchildren & those yet to be born not being discussed more on the campaign trail? [We can] avoid future generational warfare, where we have to fight over a lot higher taxes or big benefit cuts, if we do some responsible things now. And the indexing of benefits in the future, from wages to prices, is one way to do that. Current retirees or for those near retirement wouldn’t be affected. Those retiring in the future would get the same benefits in real dollars as those retiring now, but not more.

Benefits ok in short-term, but we’re eating our seed corn

A Looking at the short-term economic situation, it’s very good news. But if you go out a little bit, you will see that we’re not going to have Social Security and Medicare as we know it into the future. Our children and our grandchildren certainly are not. We are eating our seed corn. We are spending their money. We’re pitting one generation against the next. We’ve got to do some things better than that, even though the choices are difficult.

Index benefits to inflation instead of indexing to wages

FactCheck: Yes, inflation-index pushes imbalance years away

Source: FactCheck.org on 2007 Republican debate in Dearborn MI Oct 9, 2007

Deficit financing is unsustainable; it’s the future’s money

Obligations will sap revenues; can’t pass that to kids

I think if a credible case is made to the American people that mom & dad & grandmom & granddad will be more than happy to make the adjustments necessary to protect their kids & their grandkids in the next generation, if they’re just given a chance.

Social Security & Medicare are generational wealth transfers

People say the programs are going bankrupt. They won’t go bankrupt, [because] Washington will raise the taxes necessary to cover the problem. At this rate the federal government is going to wind up as nothing more than a transfer agent--transferring wealth from one generation to another. It will devastate our economy.

[Some believe] that our generation is too greedy to help the next generation. I believe just the opposite is true. If grandmom and granddad think that a little sacrifice will help their grandchildren, they will respond to a credible call to make that sacrifice--if they don’t think that the sacrifice is going down some government black hole.

It’s clear that we need bipartisanship to have any chance at real reform in any of these areas.

Voted YES on Social Security Lockbox & limiting national debt.

Voted YES on allowing Roth IRAs for retirees.

Voted YES on allowing personal retirement accounts.

Voted YES on deducting Social Security payments on income taxes.