Brownback Unveils Social Security Reform Plan
No tax increases, no decrease in benefit; choice for current worker between current system and personal savings accounts
ALEXANDRIA, Va—U.S. Senator Sam Brownback, Republican candidate for President, unveiled his comprehensive Social Security reform plan at the Club for Growth Winter Conference in Palm Beach, Florida on Friday, March 30.
In remarks to the Club for Growth, Brownback ruled out a tax increase or benefits cuts as a “solution” to the impending Social Security crisis. Instead, Brownback offered a marked-based approach to save Social Security and grow the American economy.
“With an aging workforce and an unsustainable social security system, we face an unprecedented challenge,” Brownback stated. “By staying the present course, Social Security as we know it will not survive. Should we prevail by structuring a lasting solution, the rewards will be as unprecedented as the challenge itself.”
Brownback laid out three fundamental principles of reform:
1. Americans should be able to retire with financial security and dignity.
2. Younger workers should be able to own and keep more of the money they earn.
3. Any reform should benefit and not burden the economy.
Brownback continued, “Underlying these principles is my belief each American worker should have a choice in how he or she provides for retirement, and the freedom to make that choice. No one would be required to leave Social Security, but everyone would be allowed to. Their new option would be a market-based alternative.”
The market-based alternative is a saving and investing structure. It replaces taxes with the accumulation of wealth as the source of benefits. This structure should:
1. Create individual accounts with assets owned by the account holder;
2. Provide the opportunity for workers of all incomes to invest in capital markets;
3. Ensure inexperienced investors will not suffer poor returns relative to other investors;
4. Provide investment choice;
5. Offer a solution for workers who make no investment choice;
The plan would create three investment levels. Under the plan, workers’ savings are deducted from payroll and invested in a collective money market fund. The units are then invested in one of three balanced funds. Each fund would be highly diversified, investing across multiple asset classes, but with different allocations. Individuals who do not or choose not to make a selection would have their assets invested in a default option.
“The benefits of reforming Social Security from a tax-based to a market-based system are significant and numerous,” Brownback said. “Unlike Social Security benefits, the accumulated assets are one’s personal property, which is not the case today. Also, everyone is allowed to bequeath assets above a certain level to any individual or organization they wish.”
Brownback added, “Real Social Security reform will save our children and their children from a crushing burden of debt. The alternative to this transformation is not merely more of the same, but the possible hemorrhaging of the present system as it implodes under the weight of a shrinking tax base proportionate to longer-lived, more active American retirees.”
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