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Newt Gingrich on Social Security

Former Republican Representative (GA-6) and Speaker of the House


Establish Social Security savings accounts, like Chile

Q: In your plan for addressing Social Security, you suggest that younger workers should be allowed to put their tax money into private accounts. But that plan also says that if those private accounts don't pay out as much as the government program would, Washington should cut a check to make up the difference?

GINGRICH: Well, it is, as a historian, a fact-based model that has Galveston, Texas, and the entire country of Chile as testing grounds. Chile has done this for over 30 years. It's totally voluntary. If you want to stay in the current system, stay in it. If you are younger and you want to go and take a personal savings account, which would be a Social Security savings account, you can take it. The historic record in Chile is the average young person gets two to three times the retirement income. In 30 years they have never written a single check, because nobody has fallen below the minimum payment of Social Security, and these are historic facts.

Source: Fox News debate on MLK Day in Myrtle Beach, SC , Jan 16, 2012

Take Social Security off federal budget; give young a choice

GINGRICH: You deal with Social Security as a free-standing issue. And the fact is, if you allow younger Americans to have the choice to go to a Galveston or Chilean-style personal Social Security savings account, the long-term effect on Social Security is scored by the Social Security actuary as absolutely stabilizing the system and taking care of it.

The key is there is $2.4 trillion in Social Security which should be off budget, and no president of the United States should ever again say because of some political fight in Washington, I may not be able to send you your check. That money is sitting there. That money is available. And the country ought to pay the debt it owes the people who put the money in there.

Source: 2011 CNBC GOP Primary debate in Rochester MI , Nov 9, 2011

Get social security out of budget; make personal accounts

Pres.Johnson scored a cheap political point by sucking social security into the budget to try to show a balanced budget. Johnson began the problems of giving people the idea that they could steal this money. Senior citizens should not be scared like this Get social security out of the budget and make it a freestanding retirement account again.

If you have your own personal social security savings account and you want to retire early why would Congress tell you not to? Let's get back to allowing Americans to control own lives.

It is a fraud and a lie the way that Congress deals with social security. The American people have put money into a trust fund. But every politician wants to find a gimmick to balance the budget off the backs of working Americans. If you take it off budget, you could solve social security. Since Johnson, we have been hiding the real size of our budget deficit by obscuring it with social security. We need to be honest and separate these two things and deal with them.

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

Take away politicians' power & control over our retirement

Q: Would you raise the retirement age for Social Security recipients?

GINGRICH: No, not necessarily.

Q: What would you do to fix Social Security?

GINGRICH: President Obama twice said recently he couldn't guarantee delivering the checks to Social Security recipients. Now, why should young people who are 16 to 25 years old have politicians have the power for the rest of their life to threaten to take away their Social Security? Now, I just want to make two simple points about Social Security and how you save it. The first is, you get back to a full employment economy. The second is, everybody who is older and wants to be totally protected, fine, no change. But if you're younger and you would like a personal account, you would control instead of the politicians. And you know you'll have more money at the end of your lifetime if you control it than the politicians. Why shouldn't you have the right?

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

Capital markets return more that Social Security promises

A key concept for positive, structural entitlement replacement is personal accounts for Social Security, which would let workers substitute savings & investment accounts for at least part of the current system.

Beginning at any size, accounts could be expanded over time until workers can choose to substitute them for all their Social Security retirement benefits. This could be accomplished using just the 6.2% employee share of the Social Security payroll tax, still leaving workers with close to twice the benefits Social Security promises under current law (but which in the future it will not be able to pay).

A bill introduced by Rep. Paul Ryan maintains the current social safety net in full by including a federal guarantee that if any retiree's account cannot pay at least what Social Security would under current law, the federal government would pay the difference. Because capital market returns are so much higher, however, it's unlikely the government would ever have to pay off this guarantee.

Source: To Save America, by Newt Gingrich, p.192-195 , May 17, 2010

50% offset on the FICA tax, to stimulate economy

You want to stimulate the American economy? The first step is easy. Don't give any money to politicians and bureaucrats. Have a 50% offset on the FICA tax, the social security tax, and Medicare tax for every American and every small business, and overnight, you want to put lots of money back into this economy? Put it back with the American people and let them decide which companies ought to survive and which companies ought to grow. That's called being a customer and not being a bureaucrat.
Source: Speech to 2009 Conservative Political Action Conference , Feb 27, 2009

Invest 50% of payroll taxes in personal accounts

We will have to rethink Social Security because of our new ability to live longer. Everyone knows Social Security is going bankrupt. By 2017 Social Security will start running cash deficits. The trust funds run out in 2042.

Suppose that workers were free to save and invest, in their own personal accounts, up to roughly 50% of what they currently pay in payroll taxes. Employers would contribute the same amount to their workers' personal accounts out of the payroll taxes they currently pay on behalf of their employees. This plan was proposed in a bill by Rep. Paul Ryan (R-WI) and Sen. John Sununu (R-NH). Lower income workers would be allowed to invest a slightly higher percentage of what they currently pay in payroll taxes, and higher-income workers a little less.

If a personal account pays more than the Social Security benefits it replaces, [the taxpayer] gets to keep the gain. If the account is insufficient to pay for all the benefits it replaces, the government pays the difference.

Source: Real Change, by Newt Gingrich, p.149-152&158 , Dec 18, 2007

Move retirement plans to personal savings plans

There is a $2 trillion "fiscal hole" in unfunded retirement benefits and retirement health benefits for state and local workers. One issue is fairness: not only are we being unfair to our children and grandchildren, but we're also being unfair to today's taxpayers and retirees. [Analysts] say the obvious: "The only good options are to cut benefits and move state and local retirement plans to a pre-funded basis with personal savings plans"--the unreformed Left doesn't understand this at all.
Source: Real Change, by Newt Gingrich, p. 31-32 , Dec 18, 2007

Modernize via personal social security savings accounts

Modernizing Social Security through personal social security savings accounts would raise take-home pay and free workers to put billions of dollars in savings and investment; that would be a huge benefit to our economy. The accounts indeed represent a new, very large tax-free shelter for saving and investment. It adds up to a dramatic increase in savings and investment-and an economic boom.

The Ryan-Sununu bill provides for a personal social security savings account option for Social Security and solves the long-term problems of the program. Under this bill, workers & employers would still contribute a total of 6.4% [of income]. But this is money that belongs to the workers in their own individual accounts, so it is not a tax that goes to the government. The Ryan-Sununu plan would be effectively the largest tax cut in world history.

Personal social security savings accounts will in fact fulfill the promise that the Social Security system cannot deliver: a guaranteed retirement account.

Source: Gingrich Communications website, www.newt.org , Dec 1, 2006

Retirement policies & tax policies ARE health policies

21st century healthcare would break down barriers of isolation & encourage people to stay active. In a very real sense national retirement & tax policies ARE health policies When these policies make it harder to stay active and easier to become indolent, we are fostering illness, decline, and actually increasing our health expenses. Good health is about a lot more than health policy.

69% of workers aged 45 to 74 reported that they plan to work in some capacity in their retirement years, even if they won the lottery. For those aged 33 to 52, the younger boomers, 75% said they would work into their retirement years.

The baby boomerís desire to stay active is good news for the economy. We must recognize that rethinking government rules for retirement and reforming Medicare to encourage economic activity are key steps toward a better future. The policies that may have made sense in earlier eras when people died younger are simply not applicable in an era when more people are healthier longer.

Source: Saving Lives and Saving Money, by Newt Gingrich, p.193-194 , Sep 22, 2003

Show true cost of FICA--double what is shown on paychecks

The social security system was originally based on the principle of a low rate of return per dollar invested because there were so many workers and so few retirees that the system could transfer wealth from the worker to the retiree without anyone noticing or complaining. It was fine for 1935, when it was devised, but now, we are entering a very different era. The generation known as the baby boomers is so big that if we retain the 1935 system, the boomers will bankrupt the retirement system their children and grandchildren will turn to in about 30 years.

One of the steps we need to take is to amend the law so that an individualís paycheck reflects the amount of money that is actually being paid into the FICA system. People will realize that they are paying twice the tax they believed they were paying. For over half the American population the total FICA tax they are paying is bigger than their income tax.

Source: Lessons Learned the Hard Way, by Newt Gingrich, p.209-210 , Jul 2, 1998

Convert to IRA-based system

We are now able to develop a personal, modern, social security system. Information technology makes it possible to handle each personís retirement account separately. For another, the growing understanding that the system we have is in crisis makes people more willing to discuss new proposals than they used to be. Not that many years ago, few people who understood the true, underlying predicament of the social security system dared to be candid about it in public. Our ability to keep track of individual accounts combined with the power of compound interest creates the possibility for new workers to have four or five times as much money for their retirement as they would have if we kept the present system. One estimate is that for a 20-year old today, a system of individual retirement accounts would provide $975,000 in retirement as compared with the current systemís $175,000. Why would anyone want to cheat a young person out of the possibility of one day having an additional $800,000?
Source: Lessons Learned the Hard Way, by Newt Gingrich, p.210 , Jul 2, 1998

Reduce taxes on Social Security earnings.

Gingrich wrote the Contract with America:

[As part of the Contract with America, within 100 days we pledge to bring to the House Floor the following bill]:

The Senior Citizens Fairness Act:
Raise the Social Security earnings limit, which currently forces seniors out of the workforce; repeal the 1993 tax hikes on Social Security; and provide tax incentives for private long-term care insurance to let older Americans keep more of what they have earned over the years.
Source: Contract with America 93-CWA9 on Sep 27, 1994

Other candidates on Social Security: Newt Gingrich on other issues:
Incumbents:
Pres.Barack Obama
V.P.Joe Biden
GOP Candidates:
Rep.Newt Gingrich(GA)
Rep.Ron Paul(TX)
Gov.Mitt Romney(MA)
Third Party Candidates:
Rep.Virgil Goode(C)
Gov.Gary Johnson(L)
Gov.Buddy Roemer(AE)
Jill Stein(G)
C.G.David Walker(AE)

GOP Withdrawals:
Rep.Michele Bachmann(MN)
Herman Cain(GA)
Gov.Chris Cristie(NJ)
Gov.Mike Huckabee(AR)
Gov.Jon Huntsman(UT)
Rep.Thaddeus McCotter(MI)
Gov.Sarah Palin(AK)
Gov.Tim Pawlenty(MN)
Gov.Rick Perry(TX)
Sen.Rick Santorum(PA)
Donald Trump(NY)
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Page last updated: May 31, 2012