In the name of deficit reduction, House Republicans are going back to the Social Security well, offering budget proposals similar to those President George W. Bush proposed after his 2004 re-election that would privatize Social Security accounts and reduce cost of living adjustments.
Rep. Jeb Hensarling (R-TX) appeared on Hardball tonight and advocated balancing the budget by privatizing Social Security and cutting benefits for those now under 55.
“You can get better health care and better retirement security if you go to a defined contribution plan. We had this debate in Social Security a few years ago,” Hensarling said:
A “defined contribution plan” means the amount contributed to the plan on the front end is fixed. Social Security and traditional pensions are “defined benefit plans,” where the amount paid out on the back-end is fixed according to a formula.
“Are those under 55 … gonna get the same deal as their parents? No, probably not,” he said.
Throughout the interview, the congressman said Social Security benefits should be kept the same for those already receiving them, or those over 55.
“You mean cut Social Security benefits as a way of balancing the budget,” Chris Matthews said.
Hensarling rejected Matthews’ wording, but continued to call for privatization and reduced benefits for those under 55.
At the same time, Rep. Paul Ryan (R-WI) has been getting a lot of attention (including shout-outs of a sort from OMB Director Peter Orszag) for his proposed budget plan. But Ryan’s plan too harkens back to earlier Bush proposals, with a call for private accounts:
As these personal accounts continue to accumulate wealth, they will eventually replace the funding that comes through the government’s pay-as-you-go system. This will reduce the demand on government spending, lead to a larger overall benefit for retired workers, and restore solvency to the Social Security Program.
Ryan’s plan also suggests reducing Social Security’s cost of living adjustments, which are currently based on wage growth, by linking them to the consumer price index instead. Ryan’s privatization plan would be phased in beginning with workers 55 and under.
ed. note: This post has been edited from the original.
