Newt Gingrich on Social Security

Last Updated : Dec 17, 2011

Summary

Congressman Gingrich has been a vocal supporter of the need to reform social security for several years. In 2007, he authored a book that stated that social security would have to be rethought to address increasing life expectancies. He advocated for a system where workers could invest up to 50% of their money into their own accounts. If the personal account pays more than the Social Security benefits it replaces, the taxpayer would get to keep the gain. If the account is insufficient to pay for all the benefits it replaces, the government pays the difference.

In late November of 2011 Speaker Gingrich introduced his plan to reform Social Security, Welfare, and Health Care. He called it the "Unleashing Growth and Innovation to Leave Behind the Welfare State" plan. The plan is expansive, specific, and would completely change Social Security.

The text of Speaker Gingrich's plan has three main points. First, it points out the unsustainability of the current social security system. The second portions discuss alternatives. This includes the plans proposed by Congressman Paul Ryan and Congressman John Sununu and the plan proposed by Congressman McCotter. It also discusses successes using private accounts here in the US and in Chile. The final section addresses Congressman Gingrich's specific plan.

Both the plan introduced by Paul-Sununu and the McCotter plan transition social security to Chilean model. All citizens (over a certain age for the McCotter plan) are allowed to fully transition to a plan where their money for social security is held in a private account, managed by a government approved private agency and invested according to set parameters and the desires of the individual. Each person can contribute more than the minimum, determine their own retirement age, and pass their money to their children when they pass away. In this manner, the system is litle more than a forced retirement account. The main difference is that everyone will still be able to remain on the old style system if that is their desire and the government would guarantee a certain amount of income from these private accounts as in the Chilean model.

The main difference in the two plans Congressman Gingrich supports is in how they allocate funds. Once a person opts for a private account, the Paul-Sununu plan allocates people's tax funds directly to accounts for them and uses taxes from the general revenue fund to pay for those already on social security. The McCotter plan funds the individual accounts with general revenue funds equivalent to the amount they are saving and then continues using the social security tax to continue paying for the system. Speaker Gingirch does not specifically endorse either model.

In proposing his plan, Congressman Gingrich outlines mechanisms to move from a taxing system that pays out benefits immediately to one that creates savings accounts. He acknowledges that younger people will need to be taxed an additional amount to pay for those already in the social security system. He states that the American people should not look at this as a tax, but rather a down payment on higher future returns and being free from the system.

Congressman Gingrich states in his plan several times that people in private accounts can contribute less and get a better rate of return on that money. His plan would have each person contribute the standard 6.2% payroll tax to their private accounts. He proposes that once the country is transitioned to a private account system, a substitute for social security survivor's insurance and social security disability insurance could be substituted with a 2.3% tax on the employer side. He then states that a 2.9% payroll tax could be used for old age medical insurance to eventually replace Medicare. He cites the final payroll rate of 11.4% for an equivalent private account social security system and medicare system as compared to the current 15.3% rate.

 

Real Change

In 2007, Congressman Gingrich wrote a book entitled Real Change. In that book, he discusses the option of going to a social security system which incorporates a partial private account system.

 

Fox News Sunday

In May of 2010, Congressman Gingrich appeared on Fox News Sunday and spoke about the need to migrate the social security system to one based on personal contributions.

 

Greta Appearance

In August of 2010, Congressman Gingrich appeared on the Greta van Susteran Show and spoke about immigration and social security. He stated that he would support a system that allowed people to pay fewer taxes later in life in exchange for not taking social security.

 

TEA Party Debate

In September of 2011, Congressman Gingrich appeared in the TEA Party debate in Tamp Bay, Florida. He stated that politicians should not have the right to threaten seniors with taking away their retirement. He stated that there would be no change in social security benefits for those already in the system, and that young people should be able to opt out of the system.

 

CNN National Security Debate

On November 22, 2011 Congressman Gingrich participated in the national security debate on CNN. When asked about long term deficit spending and entitlement reform, Speaker Gingirich outlined his plan for social security. 

 

Michigan Economic Debate

In November of 2011, Congressman Gingrich participated in the Michigan economic debate. He discussed his views on social security.

 

Unleashing Growth and Innovation to Leave Behind the Welfare State

On November 21, 2011 Speaker Gingrich released his plan for social security, welfare reform, and health care. He called this plan the "Unleashing Growth and Innovation to Leave Behind the Welfare State" plan. The portion of that plan that deals with social security is shown below.

 

 

Sponsored and Cosponsored Legislation

This representative has not been identified as sponsoring or cosponsoring significant legislation related to this title.

References

[1] Website: Fox News Article: Transcript: Newt Gingrich on 'FNS' Author: NA Accessed on: 05/19/2011

[2] Website: Think Progress Article: Gingrich Endorses Social Security Privatization Part of Ryan’s Roadmap rn Author: George Zornick Accessed on: 05/19/2011

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