Republican presidential candidate Fred Thompson yesterday proposed slowing the growth of Social Security benefits and creating voluntary, government-matched savings accounts, becoming the first candidate of either party to offer a detailed proposal to fix the nation's retirement system.I've always wondered why if I was working I'd have taxes taken out of my check towards social security. What if I don't want to pay into that system? Shouldn't I be allowed to use my earned wages/salary as I see fit?
Thompson's plan draws on ideas favored by conservatives: a reduction in benefits, rather than an increase in payroll taxes; and a shift toward private accounts, rather than government-provided payments. As a result, the proposal drew immediate criticism from liberals, who said it would severely reduce Social Security benefits, especially for low-income older Americans who rely most heavily upon them once they reach retirement.
Under Thompson's plan, Americans would be offered the option of contributing an extra 2 percent of their salaries to a retirement savings account. As with many corporate 401(k) plans, the government would contribute $2.50 for every dollar that an individual saved, up to a maximum of $12,000 per year.
To pay for the savings accounts and to help keep Social Security solvent, Thompson would change the way benefits are calculated. Over the next 50 years, benefits would grow much more slowly under Thompson's proposal than in the current system.
Those who are now nearing retirement would be exempted from Thompson's formula. But Thompson argued yesterday that even by requiring an increase in the retirement age to receive full benefits, people will be better off with the combination of reduced Social Security payments and money from their savings accounts.
"There's an awful lot of people out there who depend on Social Security for all or part of their income," Thompson told reporters. "It is unsustainable as presently constituted, and everybody knows it."
Economists have said that without changes, the Social Security system will no longer have enough money to pay benefits to all retirees starting in 2041. The problem has gotten worse as the baby boomers have begun to retire and draw their checks this year.
But with less than two months before the 2008 voting begins, candidates have generally been reluctant to confront the Social Security issue. Sen. Hillary Rodham Clinton (D-N.Y.) has said economic growth will deal with the projected shortfalls in the system. Her chief Democratic rivals have said that wealthy people should pay Social Security taxes on the money they make above the current cap of $97,500 each year. But neither has offered a specific plan.
Among Republicans, former New York mayor Rudolph W. Giuliani, Arizona Sen. John McCain and former Massachusetts governor Mitt Romney have talked in general terms about private savings accounts, but none has offered a specific plan. All the major GOP candidates have explicitly rejected increasing Social Security taxes as a solution.
Thompson's aides said they hope their candidate will get credit for tackling a difficult issue directly, without fear of the criticism he is likely to get. In 2005, President Bush pushed for private savings accounts but abandoned the idea in the face of withering opposition.
I'm all for allowing for a more voluntary system that encourages savings. Me personally I'm not sure I'd be for a "voluntary, government-matched savings account" but it's a start in the right direction. As a worker, I should be allowed to keep more of the money I have earned and then put that towards the future.