Fred Thompson on Social Security

Former Republican Senator (TN)

Allow individual retirement accounts with government match

Q: You say one of the ways that you would pay for your multiple tax cuts is by revamping Social Security and cutting benefits for Social Security.

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.

Source: 2008 Fox News NH Republican primary debate Jan 6, 2008

FactCheck: Slower growth of benefits for future retirees

Moderator Chris Wallace misstated matters while questioning Thompson about his proposal to reduce the growth of future Social Security benefits, saying “This would reduce the cost of living increase from what they currently are, if you change the index.”

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.

Source: FactCheck.org on 2008 Fox News NH Republican primary debate Jan 6, 2008

Reform entitlements now so our grandkids don’t have to

I want to take a chance on telling the truth to the American people. Our entitlement programs--by 2040 or so we’re going to eat up our entire budget. Now we’ll go all day here and nobody else will talk about that obvious problem that we’ve got we’ve got to address.

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.

Source: 2007 Des Moines Register Republican debate Dec 12, 2007

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

Q: We crunched the numbers about your new tax plan--it would cut federal revenue by more than $2.5 trillion in the next 10 years. That’s roughly 10% of the government’s budget per year. How would you cut federal spending to offset this huge revenue loss?

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].

Source: Fox News Sunday: 2007 “Choosing the President” interviews Nov 25, 2007

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

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. I put out a proposal to save Social Security and save money for the government at the same time and allow individuals to set forth 2% of their payroll into a private personal account, with the government matching that.

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.

Source: Fox News Sunday: 2007 “Choosing the President” interviews Nov 25, 2007

Present mandatory spending cycle is unsustainable

Q: You suggested that we could change the indexing method for the growth of benefits in Social Security.

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.

Source: 2007 GOP primary debate in Orlando, Florida Oct 21, 2007

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

Q: What about long-term solvency of Social Security?

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.

Source: 2007 Republican debate in Dearborn, Michigan Oct 9, 2007

Index benefits to inflation instead of indexing to wages

One thing that could be done would be to index benefits to inflation for future retirees. It would not affect current or near-retirement people. But for future retirees, instead of having nothing--which is what they’re headed for under the current unsustainable situation--they would have protection, indexed to inflation instead of wages as it is today. And it would solve the problem for several years. It wouldn’t solve it indefinitely, but it would be a major step in the right direction.
Source: 2007 Republican debate in Dearborn, Michigan Oct 9, 2007

FactCheck: Yes, inflation-index pushes imbalance years away

Thompson was correct about the effect of restraining growth of Social Security benefits for future retirees. Thompson said, “One thing that could be done would be to index benefits to inflation for future retirees. It would not affect current or near retirement people. It would be indexed to inflation instead of wages, as it is today. And it would solve the problem for several years; it wouldn’t solve it indefinitely, but it would give us a window of opportunity to get our arms around the problem.”

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

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

Before long we will have spent the Social Security surplus and will see the “baby boomers” begin to retire. On our present course, deficit financing will saddle future generations with enormous taxes, jeopardize our economy and endanger our retirement programs. This path is economically unsustainable. We must address this issue, remembering that those yet to be born also have a seat at the table. After all, it’s their money that we are spending, and it is economic security that’s in the balance.
Source: Candidacy announcement speech Sep 6, 2007

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

We’re growing older as a society, thank goodness, thank God. But we’re not producing enough young people in the workforce to pay for the retirement plans that we have in this country, to pay for our Social Security and Medicare obligations. It’s simply a matter of demographics. If we continue on the present pace before too long, it will sap all the revenues of the government, & our government will be nothing more than a transfer agent, transferring wealth from one generation to the next. And the taxes necessary to fill that gap are going to be so backbreaking and astronomical that young people trying to start out, buy that first home and pay their mortgage, that it will absolutely ruin our economy.

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.

Source: Address at the Lincoln Club 45th Annual Dinner Aug 3, 2007

Social Security & Medicare are generational wealth transfers

There is nothing more urgent than the fate that is awaiting our Social Security and Medicare programs. The good news is that we are living longer. However, we don’t have enough young working people to finance these programs from their taxes.

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.

Source: The Fred Factor, by Steve Gill, p.173-174 Jun 3, 2007

Voted YES on Social Security Lockbox & limiting national debt.

This vote limited debate on the amendment offered by Sen. Abraham (R-MI) that would have created a Social Security "lockbox" and establish limits on the public debt. [A YES vote was for a lockbox]. This vote failed because 3/5 of the Senate did not vote.
Status: Cloture Motion Rejected Y)54; N)45; NV)1
Reference: Motion to invoke cloture on Amdt #254 to S. 557; Bill S. 557 ; vote number 1999-90 on Apr 22, 1999

Voted YES on allowing Roth IRAs for retirees.

Senator Roth (R-DE) offered this amendment to the IRS Restructuring and Reform Act to allow people older than 70.5 with incomes over $100,000 to move funds from an Individual Retirement Account into a Roth IRA.
Status: Amdt Agreed to Y)56; N)42; NV)2
Reference: Roth Amdt #2339; Bill H.R. 2676 ; vote number 1998-120 on May 6, 1998

Voted YES on allowing personal retirement accounts.

Vote on an amendment expressing the sense of the Senate that the Finance Committee should consider legislation to use the federal budget surplus to establish personal retirement accounts as a supplement to Social Security.
Reference: Bill S.Con.Res.86 ; vote number 1998-56 on Apr 1, 1998

Voted YES on deducting Social Security payments on income taxes.

Vote on an amendment to establish an income tax deduction for Social Security taxes paid by employees and the self-employed.
Reference: Bill S Con Res 57 ; vote number 1996-140 on May 22, 1996

Other candidates on Social Security: Fred Thompson on other issues:
GOP: Sen.John McCain
GOP V.P.: Gov.Sarah Palin
Democrat: Sen.Barack Obama
Dem.V.P.: Sen.Joe Biden

Third Parties:
Constitution: Chuck Baldwin
Libertarian: Rep.Bob Barr
Constitution: Amb.Alan Keyes
Liberation: Gloria La Riva
Green: Rep.Cynthia McKinney
Socialist: Brian Moore
Independent: Ralph Nader
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Page last updated: Feb 08, 2010