Review & Outlook: PERRY, ROMNEY and Social Security – WSJ.com
Perry, Romney and Social Security
Neither candidate is helping the cause of reform.
Republicans have been more frustrated than usual with their Presidential candidates, and last Tuesday’s debate exchange on Social Security between Rick Perry and Mitt Romney shows why. One candidate seemed to taunt his critics by showing disdain for anyone who supports the entitlement for seniors, while the other candidate sounded like a Democrat defending it.
Mr. Perry was asked about a passage from his recent book in which he called Social Security a Ponzi scheme. The question was inevitable, yet the Texas Governor gave the impression he hadn’t given it more than a few moments of thought.
“Anybody that’s for the status quo with Social Security today,” he said, “is involved with a monstrous lie to our kids, and it’s not right.” Young people who “expect that program to be sound, and for them to receive benefits when they research retirement age” should be disabused of that notion, Mr. Perry added, repeating the “lie” bit as if he had little more to say.
Give Mr. Perry credit for addressing one of the third rails of American politics, but that doesn’t mean he has to invite electrocution. The problem with his hot rhetoric is that it can turn off many voters before they even get a chance to listen to his reform proposals, assuming he eventually offers some.
He’s even technically right that Social Security is a species of Ponzi scheme (if not a criminal enterprise) in the sense that young people today are putting more into the system than they can possibly get out in retirement.
Part of the problem is that current seniors get more than they put in thanks to the formula for increasing benefits over time. Eugene Steuerle and Stephanie Rennane of the Urban Institute estimate that a two-earner couple both earning an average wage who retire in 2010 will get $906,000 in benefits having paid $588,000 in payroll taxes. The same couple who retires in 2030 will get $1.23 million (in constant dollars) while having paid $796,000.