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Rick Perry Outlines New Tax, Social Security Ideas

Friday, November 4th, 2011

Hoping to gain ground on his rivals Mitt Romney and Herman Cain who are currently ahead of him in the polls, Republican presidential hopeful Rick Perry laid out an economic plan that makes big changes to the tax code and Social Security. Perry said it was a “bold reform needed to jolt this economy out of its doldrums.”

On the tax front, Perry proposed an “either-or” system. You could either opt to pay your income taxes as they currently are or you can pay a 20 percent flat tax. The reaction to his tax suggestion was less than warm. Economists predict it would reduce federal revenue, essentially acting as a big tax cut for the wealthiest taxpayers.

On the Social Security front, Perry proposes a mix of changes that we have seen before. There would be no taxes on Social Security benefits. For those currently receiving retirement benefits or about to receive them, benefits would not change, but younger workers would be able to invest their contributions in personal retirement accounts similar to IRAs. Perry would also raise the retirement age since, as he says, American workers are now living longer. Additionally, Perry would forbid the federal government from using Social Security trust fund money for other government programs (a sort of 0 percent IOU that we discussed in a recent post that makes it hard for the trust fund to earn a return and grow).

Which parts of Perry’s proposals do you support and which do you oppose?  What do you think the ramifications might be of his proposals?

Troutman & Troutman, P.C. – Tulsa Social Security disability lawyers

Cain’s Alternative to Social Security – Look to Chile

Friday, October 28th, 2011

Having shot into the spotlight after winning the Florida Republican primary, Herman Cain is now on center stage with Mitt Romney as the frontrunners to be the 2012 Republican presidential candidate. His thoughts on Social Security are taking shape, and Cain is holding up Chile as the model for an alternative to our system here in the United States.

One problem, though, is that many Chileans don’t like their system. Chile switched from a system like ours 30 years ago to one where workers have to contribute 10 percent of their paychecks to private pension plans. They have five investment funds to pick from when investing their money, with the options ranging from safe bonds to risky stocks. The investment accounts belong to each person, so it passes to his or her heirs upon death.

Chileans complain about the fees that they have to pay – as high as 15 percent of the money that they pay into the system goes towards investment fund commissions and transactional fees. Additionally, Chileans still retire in not-so-good shape. The average retirement payout is 36 percent of the average working wage. Here in America, that figure is 28 percent. Chileans also have to deal with the fluctuations of the stock market. Their retirement account plan began in 1981. The 2008 economic recession wiped out 60 percent of the gains since the plan’s inception. 2009 recouped much of those gains, but that is little solace for Chileans who retired in 2008. Depending on the state of the stock market, Chileans have to time their retirement well lest they risk retirement with little to no income.

Today, Chile’s Social Security alternative is looking more and more like Social Security, as the Chilean government has made changes to lessen the plan’s volatility. In fact, two-thirds of Chileans receiving a pension get some form of support from the country’s federal government. What are your thoughts on the impact of switching Social Security over to a system like that in place in Chile?

Troutman & Troutman, P.C. – Tulsa Social Security disability attorneys

Romney, Perry Sparring Over Social Security Reform

Tuesday, October 18th, 2011

“I don’t think the major problem is that Social Security is a Ponzi scheme. I think the problem is keeping it from becoming a Perry scheme.” The battle over Social Security remains in the forefront between Republican presidential hopefuls. This quote comes from current frontrunner Mitt Romney who is taking aim at Texas Governor Rick Perry and Perry’s quip that Social Security is a Ponzi scheme.

Of course, Romney may have been playing to his crowd a little bit. Romney said this at a town hall meeting in Florida, where some four million retired Americans live.  Any criticisms of Social Security are not likely to be welcome in front of that sort of audience.

Romney has spoken strongly in favor of Social Security, but has not yet given many details about how he plans to improve the system’s financial status. “Social Security is not going to change for anyone in this room,” Romney told the Florida crowd. Romney’s suggestions for changing Social Security center on privatizing it, a common proposal from conservatives.

What do you think about the Social Security fight?

Troutman & Troutman, P.C. – Tulsa Social Security disability attorneys

Reforming Benefits an Important Issue for Republicans

Friday, September 23rd, 2011

Social Security reform is shaping up to be a key issue for the candidates hoping to secure the Republican presidential nomination for 2012. We posted last week about Texas Governor Rick Perry’s references to Social Security as a “Ponzi scheme” and a “monstrous lie.” Perry also took aim at Social Security in his book “Fed Up!” Now it seems that other Republican candidates have taken aim at Perry, criticizing him for his harsh words and prodding him for more details on his ideas for reforming the system.

Another frontrunner, former Massachusetts governor Mitt Romney, has other suggestions for reforming Social Security, including pushing back the retirement age and privatizing it. He has said that he would not be in favor of raising taxes to fix Social Security’s financial grounds. A Romney spokesperson said that Romney would like for the public to come to know Republicans as the party that saved and improved Social Security.

Perry appears to changing his strategy in response to reactions to his criticisms of Social Security. Last week, he wrote an article for the USA Today in which he said he would like to protect benefits for those currently in retirement, but he added that reforms would be necessary to keep Social Security viable down the line.

Politicians’ comments that we hear in the media about Social Security usually refer to the retirement benefits, which are a large portion of the benefits that the Social Security Administration (“SSA”) pays out. But, the SSA runs a number of programs – including benefits for disabled or deceased workers – that comprise a significant portion of the SSA’s payouts. We would be interested in hearing the candidates’ thoughts on reforms they would propose for the disability benefits process.

Troutman & Troutman, P.C. – Tulsa SSI attorneys