Democrats – Hillary, Bernie and the gang – are talking about
making Social Security more generous – while Republicans, if they talk
about the retirement program at all – say they want to cut benefits in
the future. Chris Christie wants to raise the retirement age and change
the indexing formula to reduce future benefits for those who paid in the
So Democrats are offering better Social Security, and Republicans
are offering a deal to make it worse. This is a total political loser
for the GOP. How many times do Republicans have to electrocute themselves
by endorsing smaller benefits? Some of the bean counters think this is
virtuous. But the economics is questionable here too.
Pro-growth Republicans should be talking about how to transition to
optional private IRA-type accounts for young workers. With a normal rate
of return those workers would retire with much, much higher benefits.
Peter Ferrara of the Heartland Institute has calculated that the monthly
benefit from a private account would be about double the benefit from
Social Security assuming promised benefits are paid.
Republican benefit cuts would make a bad deal for today’s young
people even worse. Moreover, the people who have paid in the most over
their working years, would get the biggest cut in benefits. How in the
world is that “fair” or fiscally responsible.
To win back millennial voters the GOP should offer the personal
account option. The plan should also guarantee young people a benefit
that is no lower than Social Security is promising, so it is a no-lose
proposition for today’s young workers.
Yes, George W. Bush tried this and it didn’t sell politically.
That’s why the guaranteed minimum benefit is crucial. What I can’t
understand is why Republicans say they can’t offer private accounts for
young workers, but they can offer young workers lower benefits in the
future. Every time since the Reagan years this has been tried, it has led
to big losses for Republicans.
The only candidates who have even hinted at private accounts are
senators Ted Cruz and Rand Paul. Where are the rest?
To learn more about Stephen Moore, visit SupplySideEconomist.com
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