Rick Perry - Social Security
Summary
Throughout the years, Governor Perry has not been vocal on social security. Starting in 2010, he began to discuss the program in the context of a book he had written on the expansion of the federal government. On several news programs, Governor Perry stated that social security was a ponzi scheme, and that his children were in their 20's and aware that social security would not be there for them if nothing was changed.
When he has been pressed to discuss possible solutions to addressing the shortfalls, Governor Perry has stated that he would consider letting the states decide their own social security implementation.
In October of 2011, Governor Perry introduced his plan for Social Security. The plan consisted of the goals of preserving benefits for current and near-term retirees, stopping the raids on the Social Security trust fund, and giving younger workers a true ownership stake in their contributions to Social Security.
- No change for those at or near retirement
- Prevent politicians from raiding the Social Security Trust Fund
- Allow young workers to place a portion of their SS funds into private account
- Raise retirement age for chosen workers
- Gradual phased-in raise for the Social Security retirement age
- Leave the early-retirement age at 62
- Exceptions for those in labor-intensive jobs, such as mining
- Means Testing
- A blended index where low wage earners and those near retirement receive the same benefits
- High wage earners receive lower benefits
- Allow state employees to opt out of Social Security
Heritage Foundation
In November of 2010, Governor Perry was speaking at the Heritage foundation and stated that social security was a ponzi scheme. He stated that his children in their 20's were aware that social security would not be around for them.
There have been a lot of political figures, totally and absolutely afraid to talk about [the fact] that Social Security is a Ponzi scheme. My eldest child is 27, my baby is 24 and they know, they know that Social Security is not going to be there for them. So let's talk about it. What are some of the options out there? And I think that is one of the great roles that governors can play, leading that conversation. Many of us would like to be in charge of those pension programs.
The message from John Boehner is very clear, that he was listening Tuesday night and that finding the solutions to the challenges that face us as a country emanate from the states.
CNN Appearance
On November 10, 2010 Governor Perry appeared on CNN with Eliot Spitzer to promote his new book. He discusses social security but avoids giving specific solutions. He notes that there are counties in Texas that have opted out of social security and that one solution would be to let states handle it.
Rick Perry: Let’s talk about it, but let’s not put it over there and say, “we can’t talk about that—that’s the third rail of politics”. I don’t believe that that’s wise and thoughtful.
Eliot Spitzer: You’ll forgive me if I’m going to push you a little on this. You’ve been the governor of the great state of Texas for a decade now
RP: Ten years
ES: A decade now, you’ve run social welfare programs, saying, “let’s make it part of the discussion” is fine, but begs for the follow up: are you for it. You’ve studied this question. You have a book here complaining about government obligations.
RP: I’m for having, I’m for pushing…
ES: Yes or no, do you want to raise the retirement age?
RP: I’m on with two very bright, capable commentators having this discussion with the American people. I don’t put in that book “Fed Up” that I have all the answers, but I think we ought to have this conversation…
ES: But you’ve got to have an answer. I don’t expect anybody to have all the answers, but you’ve got to have an answer. So, having a conversation isn’t an answer. Having a conversation is a political punt. What is the answer? What is the answer? Will you raise the retirement age or not?
Kathleen Parker: I have no control over him.
RP: Well, I’m not going to be the President of the United States, but I’m going to be engaged in…
ES: No, but you’ve been the governor for ten years and you’ve written a book harshly criticizing…
RP: Well, last time I checked…
ES: Harshly critical of federal policies…
RP: Here’s what I think would be a very wise thing. In 1981, Matagorda, Brazoria, and Galveston Counties all opted out of the Social Security program for their employees. Today, their program is very, very well-funded and there is no question about whether it’s going to be funded in the out years. It’s there. That’s an option out there.
ES: So, you want to let people opt out?
RP: I think, let the states decide if that’s what’s best for their cities.ES: So the states will let people opt out of Social Security.
RP: They should, I think it’s a discussion…
ES: I haven’t seen anybody propose that before because that’s going to be…
RP: Well, we just laid that on the table so let’s talk about it.
ES: OK, so that’s your plan?
RP: That’s not my plan, Eliot.
ES: But, governor, I’m trying to get you, look, you’ve written a book…
RP: I know, you’re trying to get me in a corner and I don’t corner very good. What I’m trying to do is have a discussion with the people of this country on an issue…
KP: I think that’s a brand-new idea. Nobody has said that before.
ES: That’s because it doesn’t work.
RP: That nobody, nobody is willing to talk about.
ES: No, no, here is the problem I have, the Tea Party, and we’ve had everybody from Dick Armey to Richard Viguerie, folks who have been leading this movement, dodging and dancing, unable to give a single answer about what they actually support. Having a conversation is to push it someplace else.
RP: Right.
ES: I want to know if there’s an answer. Will you: raise the retirement age? Are you saying you want private accounts? You can say it, we’ll disagree, but at least it’s an answer.
RP: Sure.
ES: OK. So.
RP: I think all of those are legitimate options out there, but let the states decide. Don’t force us from Washington, DC to say, “here is the size of tube socks that you’re gonna wear down in Texas. Put ‘em on.”
Fox News Appearance
On November 21, 2010 Governor Perry appeared on Fox News with Chris Wallace and referred to social security as a ponzi scheme. He did not state that he would seek to end the program, but stated that the country should deal with Medicaid first and then address social security.
PERRY: What I'm saying is that between Social Security, Medicaid and Medicare, there's $106 trillion of unfunded liabilities and not one dime saved to pay for them.
My children who are in their 20s know that Social Security is a Ponzi scheme. Medicaid -- we think we can save substantial dollars for the federal government and for the states if they'll allow us to implement that program.
For instance, it's $30 billion a year between the state and the federal government for one year of Medicaid in the state of Texas. We think we can cut that substantially, help our colleagues in Washington, D.C. balance the budget up there, and substantially help with us our budgetary issues here if they'll just trust the states to do what the states that -- our founding fathers actually foresaw was letting the states being the laboratories of innovation.
WALLACE: Would you do the same with Social Security? Would you end Social Security as a federal program?
PERRY: Let us work on Medicaid first. And while we're doing that, they can have the discussion on how to put our Social Security program on better and more solid footing.
WALLACE: But you know, I mean, when you say a Ponzi scheme, I mean, the fact is it's just a demographic fact -- I mean, when Social Security started in the 1930s -- and I forget the exact numbers, but there was -- there were seven or eight workers for every one retiree.
It just so happens now, because of the baby boom, that there are...PERRY: It's the other way around.
WALLACE: ... more retires and fewer workers out there. I mean, it's not a Ponzi scheme in the sense of Bernie Madoff.
PERRY: Well, it probably is a -- is a program that even makes Mr. Ponzi feel pretty bad if he were still alive. The fact is our children know that the money that they're putting into Medicaid they'll never see. And they need to fix it.
And it is a Ponzi scheme. I don't know how you would explain it any other way than what you just did. There are fewer people paying into it and our kids are never going to see any benefit from it. Fix it and fix it today.
Monstrous Lie
In August of 2011, Governor Perry spoke at numerous campaign events in Iowa. At one of those events, Governor Perry referred to social security as a monstrous lie in the idea that it would be solvent for future generations.
It is a Ponzi scheme for these young people. The idea that they're working and paying into Social Security today, that the current program is going to be there for them, is a lie. It is a monstrous lie on this generation, and we can't do that to them.
Op-Ed: Honest with the American People
On September 12, 2011 Governor Perry published an op-ed in USA Today discussing his views on social security and pledged to secure the program for older Americans.
Rick Perry: I am going to be honest with the American people
By Rick PerryThe first step to fixing a problem is honestly admitting there is a problem. America's goal must be to fix Social Security by making it more financially sound and sustainable for the long term. But Americans deserve a frank and honest discussion of the dire financial challenges facing the nearly 80-year-old program.
As I said at the Reagan Library recently, Social Security benefits for current recipients and those nearing retirement must be protected. For younger workers, we must consider reforms to make Social Security financially viable.
These are the hard facts: Social Security's unfunded liability is calculated in the trillions of dollars. Last year, annual Social Security outlays exceeded annual revenues for the first time since 1983. The Congressional Budget Office projects that outlays will be roughly 5% greater than revenues over the next five years, worsening as more and more Baby Boomers retire.
By 2037, retirees will only get roughly 76 cents back for every dollar that is put into Social Security unless reforms are implemented. Imagine how long a traditional retirement or investment plan could survive if it projected investors would lose 24% of their money?
I am going to be honest with the American people. Our elected leaders must have the strength to speak frankly about entitlement reform if we are to right our nation's financial course and get the USA working again.
For too long, politicians have been afraid to speak honestly about Social Security. We must have the guts to talk about its financial condition if we are to fix Social Security and make it financially viable for generations to come.
Americans must come together and agree to address the problems so today's beneficiaries and tomorrow's retirees really can count on Social Security for the long haul.
We must have a frank, honest national conversation about fixing Social Security to protect benefits for those at or near retirement while keeping faith with younger generations, who are being asked to pay.
TEA Party Debate
Governor Perry participated in the TEA party debate in Tampa Bay , Florida in September of 2011. He was asked about his previous statements on social security and about his recent op-ed ensuring that he would protect the system. He stated that it was an iron-clad guarantee that social security would be there for those in the program or already in the program.
QUESTION: (OFF-MIKE) Tea Party, Jacksonville, Florida. My question: How will you convince senior citizens that Social Security and Medicare need to be changed and get their vote?
BLITZER: Good question. Let me begin with Michele Bachmann. Congresswoman, how do you do that? How do you go ahead and change, reform Social Security, Medicare, while at the same time getting votes?
BACHMANN: Well, one thing that we need to let senior citizens know is, for those who are currently on the Social Security system, the United States government made a promise to senior citizens, and we have to keep that promise to them.
But we also need to know that for those who are not yet on the system, the system simply has to be reformed in order for it to work. The same goes with Medicare. We know that President Obama stole over $500 billion out of Medicare to switch it over to Obamacare. We also know that Medicare hospital trust fund will be bankrupt within nine years. These are programs that need to be saved to serve people, and in their current form, they can't.
So we need to have someone who understands these programs, who -- who understands the solutions to these programs. I'm a person that's had feet in the private sector and a foot in the federal government. I've been there long enough to know the problems, but not long enough to become a part of the system. I know what to do, and I have the core of conviction to be able to make the changes that senior citizens can count on.
BLITZER: Governor Perry, speaking of Social Security, you've said in the past it's a Ponzi scheme, an absolute failure, unconstitutional, but today you wrote an article in USA Today saying it must be saved and reformed, very different tone. Why?
PERRY: Well, first off, the people who are on Social Security today need to understand something. Slam-dunk guaranteed, that program is going to be there in place for those. Those individuals that are moving towards being on Social Security, that program's going to be there for them when they arrive there.
But the idea that we have not had the courage to stand up and look Americans in the face, young mid-career professionals or kids that are my children's age and look them in the eye and said, listen, this is a broken system. It has been called a ponzi scheme by many people long before me. But no one's had the courage to stand up and say, here is how we're going to reform it.
We're going to transform it for those in those mid-career ages, but we're going to fix it so that our young Americans that are going out into the workforce today will know without a doubt that there were some people who came along that didn't lie to them, that didn't try to go around the edges and told them the truth.
BLITZER: Governor Romney, you said that Governor Perry's position on Social Security is, quote, unacceptable and could even obliterate the Republican Party. Are you saying he could not, as Republican nominee, beat Barack Obama?
ROMNEY: No, what I'm saying is that what he just said, I think most people agree with, although the term ponzi scheme I think is over the top and unnecessary and frightful to many people. But the real issue is in writing his book, Governor Perry pointed out that in his view that Social Security is unconstitutional, that this is not something the federal government ought to be involved in, that instead it should be given back to the states.
And I think that view, and the view that somehow Social Security has been forced on us over the past 70 years that by any measure, again quoting book, by any measure Social Security has been a failure, this is after 70 years of tens of millions of people relying on Social Security, that's a very different matter.
So the financing of Social Security, we've all talked about at great length. In the last campaign four years around, John McCain said it was bankrupt. I put in my book a series of proposals on how to get it on sound financial footing so that our kids can count on it not just our current seniors.
But the real question is does Governor Perry continue to believe that Social Security should not be a federal program, that it's unconstitutional and it should be returned to the states or is he going to retreat from that view?
BLITZER: Let's let Governor Perry respond. You have 30 seconds.
PERRY: If what you're trying to say is that back in the '30s and the '40s that the federal government made all the right decision, I disagree with you. And it's time for us to get back to the constitution and a program that's been there 70 or 80 years, obviously we're not going to take that program away. But for people to stand up and support what they did in the '30s or what they're doing in the 2010s is not appropriate for America.
ROMNEY: But the question is, do you still believe that Social Security should be ended as a federal program as you did six months ago when your book came out and returned to the states or do you want to retreat from taht?
PERRY: I think we ought to have a conversation.
ROMNEY: We're having that right now, governor. We're running for president.
PERRY: And I'll finish this conversation. But the issue is, are there ways to move the states into Social Security for state employees or for retirees? We did in the state of Texas back in the 1980s. I think those types of thoughtful conversations with America, rather than trying to scare seniors like you're doing and other people, it's time to have a legitimate conversation in this country about how to fix that program where it's not bankrupt and our children actually know that there's going to be a retirement program there for them.
ROMNEY: Governor, the term ponzi scheme is what scared seniors, number one. And number two, suggesting that Social Security should no longer be a federal program and returned to the states and unconstitutional is likewise frightening.
Look, there are a lot of bright people who agree with you. And that's your view. I happen to have a different one. I think that Social Security is an essential program that we should change the way we're funding it. You called it a criminal...
PERRY: You said if people did it in the private sector it would be called criminal. That's in your book.
ROMNEY: Yeah, what I said was...
(APPLAUSE)
ROMNEY: Governor Perry you've got to quote me correctly. You said it's criminal. What I said was congress taking money out of the Social Security trust fund is like crimial and that is and it's wrong.
Michigan Economic Debate
In November of 2011, Governor Perry participated in the Michigan economic debate. He discussed his views on social security.
BARTIROMO: Governor Perry, name the top programs that you would cut in terms of long-term deficit reduction. Include Medicare, Medicaid, Social Security, and defense spending in the order you see fit.
PERRY: Well, every one of those -- and by the way, that was the Department of Energy I was reaching for a while ago.
(APPLAUSE)
PERRY: So here what's we have to look at as Americans. And it's the entitlement programs that are eating up this huge amount of money that's out there.
And it's also the spending, Congressman Paul. And when you look at Medicaid, Medicare, Social Security, and those unfunded liabilities, I think are over $115 trillion just in those three programs. Those are the places where you go where you have to make the really hard decisions in this country.
BARTIROMO: So what is your order? And you didn't mention defense spend.
PERRY: Well, obviously, Social Security is one of those where we either can go to a blended type of a program where we blend price and wages, and come up with a program, and can save billions of dollars there. But the people who are on Social Security, they need to understand something today. It's going to be there for them.
Those that are working their way towards Social Security, we've made a pledge to them. Those individuals are going to have those dollars there for them.
But the young people out there, who is going to stand up for the young people in this country, those that are at the workforce today, and stand up and say, we are going to transform this program so it's going to be there for you? I will do that. I will stand up for the young people in this country and put a program into place that will be there for them.
HARWOOD: Speaking of young people, a quick answer. Do you agree with Congressman Paul that we should kill the federal student loan program?
PERRY: I happen to think there are a substantial number of ways. As a matter of fact, I've called for a $10,000 graduate program --
HARWOOD: But would you kill the federal student loan program?
PERRY: I don't think the federal government should be in the business of paying for programs and building up huge debt out there. I think we need to look at, how do you --
HARWOOD: So get rid of it?
PERRY: -- force these universities to be efficient? And one of the ways is that the governors who appoint the trustees, they step in and they basically say, listen, you are going to have graduation rates that are moving upwards, you're going to have tuition that is moving down. You have to have control over those boards of regents, of that's how you do that, or the legislature has to have control.
But the bottom line is, we have to put powerful economic forces into place. And one of those is using our technology --
HARWOOD: Thank you, Governor.
PERRY: -- to be able to let our kids have the opportunity to get an education through long distance learning, for instance.
2012 Presidential Campaign Plan
PRESERVE SOCIAL SECURITY FOR ALL GENERATIONS OF AMERICANS
Regardless of the phrases one uses to characterize Social Security, nearly everyone agrees that the program is broken. If no changes are made to the system, benefits will immediately be slashed by 23 percent in 2036 when the program officially runs out of money to fund promised benefits.39 Such an outcome would be a disaster. Sensible reforms to the system must be made to ensure that future generations of retirees can rely upon Social Security’s safety net just as their parents and grandparents did. Social Security is a vital safety net that has protected millions of retirees for several generations, but the safety net is beginning to fray.
The financial problems facing Social Security have been well-documented by the Trustees of the program. Vastly different demographics compared to when Social Security was first created are largely responsible for the $17.9 trillion in unfunded liabilities of the program.40 In 1945, there were 42 workers per Social Security beneficiary. Today there are barely 3 workers per beneficiary, and by 2060 that number will dwindle to only 2.41 Thanks to amazing medical advances made over the last 75 years, Americans are living much longer than they used to. Total life expectancy from birth in 1940 was 61 years for men and 65 years for women.42 As of 2010, those numbers had increased to 76 years for men and 80 years for women.43 But because the wonderful increases in life expectancy have not been matched by gradual and phased-in increases in the full retirement age for Social Security benefits, the program has experienced greater financial strain.
Constant raids on the Social Security trust fund by Washington have also worsened Social Security’s financial position. For decades the program collected more in revenues from the payroll tax than it disbursed to Social Security recipients. Instead of safely storing that money away for future retirees or giving American taxpayers ownership of their contributions to the Social Security system lawmakers raided the trust fund to pay for their own pet projects.
Social Security Reform PrinciplesSocial Security reform that makes the program sustainable for the long-term should follow three simple principles:
- Preserve benefits for current and near-term retirees,
- Stop the raids on the Social Security trust fund, and
- Give younger workers a true ownership stake in their contributions to Social Security.
Preserve Benefits for Current and Near-Term Social Security Beneficiaries
The U.S. government must honor its commitments to current senior citizens receiving benefits from Social Security and those rapidly approaching retirement. Hard-working Americans who made retirement plans years ago based on promises made to them about benefits available today do not deserve to have the rug yanked out from under them.
Protect the Social Security Trust Fund
When the Social Security system collects more in receipts than it pays out in benefits, the surplus funds should be off-limits to Washington politicians. The current Social Security trust fund balance of over $2.6 trillion represents each and every dollar pilfered from Social Security by spendthrift Washington politicians who treated the program as their own personal piggy banks.
The concept of protecting trust fund assets from being used for other purposes is not new. The federal Highway Trust Fund is the model for how to protect funds in a pay-as-you-go system from being used for unrelated purposes. There is no reason for federal highways to have greater protections than Social Security beneficiaries. To protect the integrity of the Social Security system program going forward, the trust fund raids must be stopped forever.
Give Younger Workers the Opportunity to Own Their Social Security Contributions
The best way to prevent Congress from stealing money from the Social Security trust fund is to allow young Americans to contribute a portion of their earnings to an account with their names on it – a personal retirement account that can never be raided by Washington politicians. Young workers deserve the opportunity to have ownership of their Social Security contributions, to seek a market rate of return if they so choose, and to leave their retirement savings to their dependents when they die. When individual Americans have ownership of their Social Security contributions, their benefits cannot be held hostage or used as bargaining chips by Washington politicians who cannot figure how to pass a budget or keep the government running.
Gradually Increase the Full Retirement Age Due to Longevity Increases
Thanks to marvelous innovations in medical care since Social Security was first created, Americans are now living far longer than anyone expected in the 1930′s. Average life expectancy has increased by 14 years for men and by almost 15 years for women since 1940. This increase in longevity has also placed a greater strain on Social Security’s finance. A gradual, phased-in increase in the full retirement age, while leaving the early retirement age at 62 years, can help strengthen Social Security for future generations. There would be common-sense exceptions for those in labor-intensive jobs, such as mining.
Institute Blended Indexing to Improve the Solvency of Social SecurityUnder current law, Social Security benefits are paid out based on the rate of U.S. wage growth that occurred during the worker’s years of employment. Changing how benefits are calculated based on a system of blended indexing would allow Social Security to grow for the next generation of Americans. Under a blended index, low-wage earners, in addition to those in or near retirement, would continue to receive the present schedule of Social Security benefits. Benefits for high-wage earners would be based on the rate of U.S. price growth that occurred during the workers’ years or employment, while benefits for middle earners would be based on a combination of wage and price indexing. Because wages grow more than one percent faster than prices per year, it is estimated that blended indexing could close 70 percent of the long-term deficit of Social Security.
Allow State Employees to Opt Out of Social Security
In January of 1981, the county of Galveston, Texas, opted out of the Social Security system and enrolled its employees in a county-run plan. Instead of relying on Congress to protect their retirement contributions, Galveston asked financial advisors to bid on administration of the fund. Like Social Security, county employees contribute 6.2% of their earnings to the system. But unlike Social Security, members of the Galveston plan also receive a term life insurance plan worth up to $215,000. Most importantly, the Galveston plan faces no long-term unfunded liability – it is fully funded through the contributions of its members. State employees across the country deserve the same opportunity to pursue true retirement security through plans that are not facing trillion-dollar deficits.
References
[1] Website: Fox News / Huffington Post Article: Rick Perry Insists Social Security is Worse than a Ponzi Scheme Author: NA Accessed on: 07/19/2011
[2] Website: Huffington Post Article: Rick Perry: GOP Is Too Timid To Call Social Security A Ponzi Schemern Author: Sam Stein Accessed on: 07/26/2011
[3] Website: Houston Chronicle Article: Perry calls Social Security 'monstrous lie' Author: PEGGY FIKAC, AUSTIN BUREAU Accessed on: 09/13/2011