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Herman Cain on Social Security

Republican Businessman & Talk-Show Host


Old ideas prolong problem; use personal retirement accounts

Q: What about Social Security Reform?

CAIN: I am a firm believer in solving problems. Old ideas have prolonged the problem. I am a strong proponent of an idea that Bush introduced, these optional personal retirement accounts. 30 countries have optional personal retirement accounts. Look at the Chilean model--why can't we do that? We can do it if we fight the demagoguery and fight all those who don't want the current system to change. We need to educate the public so they understand this. 30 years ago, Chile had a social security system like we do--and the system was broken. When they gave people the option--within 3 years, 90% of people said we want the option because it became their money on an account with their name on it and they don't have the problems we have dealing with social security. If older Americans who have paid into the system, they have a choice to continue on, or they can take the option of controlling it yourself.

Source: Head-to-head debate between Herman Cain & Newt Gingrich , Nov 5, 2011

Let people decide how to invest their Social Security

GINGRICH: Let's talk about Herman's role in turning around Godfather's pizza. He came in & totally transformed that business.

CAIN: It is going to take a long time to work ourselves out of this mess that has been created for decades. We can't deal with unfunded liabilities, we have to say: Starting from now all social security contributions will go towards social security benefits only. What the money is collected for, let's put it towards that only.

GINGRICH: Private sector money in a personal social security account [should go] into the private sector. We need to have separate money between social security and what would be in the private savings account.

CAIN: In the private sector, most companies have moved to a defined contributions account. Th

Source: Head-to-head debate between Herman Cain & Newt Gingrich , Nov 5, 2011

Cut payroll tax from 15.3% to 9%, to balance 9% sales tax

Q: Your 9-9-9 plan would be slapping a 9% sales tax on food and medicine. Why should all Americans should be paying more for milk & bread & beer & pizza?

CAIN: I don't buy beer. You have to start with the biggest tax cut a lot of Americans pay, which is the payroll tax, 15.3%. That goes to 9%. That's a 6 percentage point difference, and the prices will not go up. So they've got a 6 percentage point difference to apply to the national sales tax piece of that, and in doing so they have the flexibility to decide on how much they want to spend it on new goods, how much they want to spend it on used goods, because there is no tax on used goods.

BACHMANN: From my experience in Congress but also as a tax lawyer, the last thing you would do is give Congress another revenue stream, and this gives Congress a pipeline in a sales tax. Once you get a new revenue stream, you're never going to get rid of it. When you take the 9-9-9 plan and you turn it upside down, I think the devil's in the details.

Source: 2011 GOP debate at Dartmouth College, NH , Oct 11, 2011

Chilean personal retirement model has worked for 30 years

May I offer a solution for Social Security, rather than continuing to talk about what to call it? I have proposed the Chilean model. It's been around 30 years, and it works.

It's a personal retirement account. And in the last 30 years, not only has Chile succeeded with that model, but 30 other countries have done so. I don't think we're doing a service to the American people to keep bantering about what you call it and what you don't call it. The solution is: Fix it.

Source: 2011 GOP Google debate in Orlando FL , Sep 22, 2011

Let younger workers opt into personal retirement accounts

Q: Is Social Security a Ponzi scheme?

CAIN: I don't care what you call it, it's broken. And here's my solution. Start with optional personal retirement accounts. In 1981, the Galveston County employees, they opted out because that was a very short window of opportunity. They took it. Today, when people retire in Galveston County, Texas, they retire making at least 50% more than they would ever get out of Social Security. Secondly, allow younger workers to have personal retirement accounts as an option. Current seniors will not be affected. It's to give the option to the younger workers. The Galveston County model worked, and it also worked in the small country of Chile. Instead of giving it to the states, let's give it back to the workers. That's what personal retirement accounts will do.

Source: 2011 GOP Tea Party debate in Tampa FL , Sep 12, 2011

Chilean model: they fixed the same broken system as US

PERRY: [to Cain]: You cannot keep the status quo in place and not call it anything other than a Ponzi scheme. That is what it is.

CAIN: I happen to believe that yes, Social Security, it needs fixing, not continuing to talk about it. I believe in the Chilean model, where you give a personal retirement account option so we can move this society from an entitlement society to an empowerment society. Chile had a broken system the way we did. Thirty years ago, a worker was paying 28 cents on a dollar into a broken system. They finally awakened and put in a system where the younger workers could have a choice. A novel idea. Give them a choice with an account with their name on it, and over time we would eliminate the current broken system that we have. That is a solution to the problem. Rather than continuing to talk about how broken it is, let's just fix it using the Chilean model.

Source: 2011 GOP debate in Simi Valley CA at the Reagan Library , Sep 7, 2011

Restructure entitlement programs instead of reshuffling them

Q: How would you avoid continually raising the debt ceiling?

Cain: I would focus on restructuring entitlement programs instead of reshuffling them. I support personal accounts as an alternative for younger workers to invest in. It worked in Chile and TX. I would make targeted cuts to federal spending with vertical & horizontal cuts across many programs, as I did in business.

Q: What entitlements would you go after?

Cain: I would focus on major entitlement reform, focusing on Social Security.

Source: 2011 Republican primary debate on Twitter.com , Jul 21, 2011

Phase out of system with personal retirement plans at age 40

Q: Can you be specific regarding ages and income levels? What is your specific Social Security reform plan?

CAIN: Let's restructure Social Security. I support a personal retirement account option in order to phase out the current system. We know that this works. It worked in the small country of Chile when they did it 30 years. I believe we can do the same thing.

Q: Are you going to raise the retirement age as president?

CAIN: I don't have to raise the retirement age, because that b itself isn't going to solve the problem. If Congress decides to do that, that's a different matter. Let me give you one another example where this approach has worked. The city of Galveston, they opted out of the Social Security system way back in the '70s. And now, they retire with a whole lot more money. Why? For a real simple reason--they have an account with their money on it. We've got to restructure the program using a personal retirement account option in order to eventually make it solvent

Source: 2011 GOP primary debate in Manchester NH , Jun 13, 2011

Modernize entitlements; nothing should be off the table

Though it might not be politically popular to modernize and eliminate some of our entitlement programs, responsible leaders should be willing to do it all the same. They must be prepared to make tough choices and learn to simply say "no." This can only happen when our elected officials stop being politicians and start being leaders.

Nothing should be off the table. Every federal agency and expenditure must be reviewed with a keen eye and a red pen. Leaders should be willing to shrink budgets by targe percentages, and those charged with implementing those changes must be held accountable.

And it works! I have served as an executive of several major corporations. When times were tough and money was tight, I asked our employees to cut back drastically and explained why it was necessary, and they did. We have all had to make difficult decisions in our own household or work place. Serious but responsible belt tightening can save businesses, and it can also save our country with the right leadership.

Source: Campaign website, www.hermancain.com/ "Issues" , May 21, 2011

Government was never intended to be in retirement business

One change by Congress in the 1980s was legislation to gradually increase the retirement age for full Social Security benefits. Like most people in their 40s, I was not paying attention to a law that would affect me 20 years later, and would cause my retirement benefits to start at age 66 instead of 65. And for those born after 1960, your retirement age for full benefits is now 67, and it does not stop there as more and more baby boomers file for benefits.

The federal government was never intended to be in the business of encouraging one behavior over another, or favoring one group of people over another. This goes beyond providing assistance to the needy. And government was never intended to be in the business of taking people's money for a retirement system, and then increasing the retirement age as the money starts to run out.

Source: Political column, THE New Voice, "Fair Tax Will Fix This" , Aug 20, 2007

Divert forced payroll tax to personal retirement accounts

If members of Congress are serious about preserving the Social Security program without needlessly increasing payroll taxes or reducing benefits, they must immediately take the following three steps
  1. Stop denying Social Security faces a solvency crisis. To deny the solvency crisis is literally akin to denying that the sun rises in the east.
  2. End the raid on the surplus and pass the DeMint amendment.
  3. Pass HR 1776, "The Ryan-Sununu Social Security Personal Savings Guarantee and Prosperity Act." HR 1776 would allow workers to divert a portion of their forced payroll tax contributions to a personal retirement account they own and control. In 75 years the entire system would be solvent, without having to reduce benefits or raise taxes.
The need for "new batteries" to fix our dysfunctional Social Security system is painfully obvious. But first we must have new members of Congress who have the integrity to be honest with the public and the courage to lead.
Source: Herman's Column Archive, North Star Writer's Group , May 17, 2006

Throwing more money at broken system is simply stupid

Is throwing more money at a broken Social Security system a wedge issue? No, it is simply stupid. Are raising taxes and taking more of peoples' hard-earned money to fund inefficient government programs wedge issues? No, it is insane, and people are sick & tired of it.

A number of systems have been offered to save Social Security, including Pres. Bush's proposal to enact an optional system of personal retirement accounts. Instead of working on a solution to the looming Social Security crisis, however, Congress continues to shirk its responsibility to the public by increasing the retirement age and decreasing benefits to future retirees.

Liberals do not want to face the reality that the Social Security structure is insolvent. Congressional liberals view the Social Security payroll tax as another mechanism designed to relieve you of your money and provide you nothing in return. Millions of citizens should question why we keep in place a retirement system that is not funded at the necessary levels.

Source: They Think You're Stupid, by Herman Cain, p. 74&82-83 , Jun 14, 2005

Congress is in gross denial; system is broken for decades

The candidates who get elected to Congress quickly lose focus and spend time working on the wrong problems. Worse they are forced into trying to fix some of the wrong solutions to the wrong problems of the past. The best example is the Social Security system. It has been broken for decades and we are still not anywhere close to fixing it. One of my opponents, a congressman, said, "Congress does not act until there's a crisis." I wonder what the definition of a crisis is in Congress when we are talking about the Social Security system. Someone is in gross denial. The current Social Security structure is headed for certain bankruptcy. Social Security must be totally restructured. It does not make sense to pay into a broken structure. For too long, though, millions have been told that Republicans want to rob their Social Security benefits and give the money to the rich in the form of tax cuts. Of course, this deceptive rhetoric could not be farther from the truth.
Source: They Think You're Stupid, by Herman Cain, p. 2 & 5 , Jun 14, 2005

Establish optional personal retirement accounts

A number of solutions have been offered to save Social Security, including Bush's proposal to enact an optional system of personal retirement accounts. Instead of working on a solution to the looming Social Security crisis, however, Congress continues t shirk its responsibilities to the public by increasing the retirement age and decreasing benefits to future retirees.

Three fundamental changes must be made if we are to keep the promise of benefits to our seniors & the soon-to-be-retiring baby boomers while providing more benefit options to future generations. First, we must establish a system of optional personal retirement accounts. Individual citizens--not the federal government--will have the power to decide how a portion of their Social Security contribution is invested. Second, benefits must no longer be reduced based on secondary or supplemental incomes. Third, seniors must be allowed to leave the balance of their personal accounts to their widows, children, and any other heirs they designate.

Source: They Think You're Stupid, by Herman Cain, p. 82&139-140 , Jun 14, 2005

Payroll tax is highly regressive

The highly regressive Social Security payroll tax only taxes wages, the primary source of income for most of the poor. Workers making more than $90,000 do not pay payroll taxes on their income over that limit. The entire salaries of workers making less than the limit are therefore subject to Social Security payroll tax.

Our so-called progressive system of taxation at the federal level is based on the premise that those who make the highest incomes should pay proportionately the most for the government services that benefit all citizens. Those at the lowest income levels are in fact hit the hardest by our system of taxation. 100% of their wages are subject to the Social Security and Medicare taxes, which are of course automatically withheld from their paychecks. When they retire and begin receiving their monthly Social Security benefits, they are taxed again because our government considers your Social Security benefits income--even though you already earned the money decades ago.

Source: They Think You're Stupid, by Herman Cain, p. 83&175 , Jun 14, 2005

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Page last updated: Feb 23, 2012