What’s Happening with Seniors Benefits

by Art Kelly

CNBC's "Your Money, Your Vote: The Republican Presidential Debate," held at Oakland University in Rochester, Michigan, a northern suburb of Detroit, included a discussion of Social Security by Newt Gingrich, Mitt Romney, Michele Bachmann, and Rick Perry.

Gingrich mentioned the Galveston Plan, pioneered by former County Judge Ray Holbrook, an alternative to Social Security for county employees, which was explained in a previous issue of this newsletter.

The former Speaker of the House also criticized the "unified budget" in which Social Security payroll taxes are considered to be income of the federal government that can be spent for any purpose.

Previous issues of this newsletter have reported on this raid of the Social Security Trust Fund.

Romney agreed with President Obama's proposal to extend the cut in these payroll taxes, thereby depriving Social Security of money that is needed to pay benefits.

This current cut in payroll taxes has not stimulated the economy to any measurable extent.

When the moderator asked if any of the candidates opposed the extension of the payroll tax cut, several of the candidates raised their hands.  The debate moderator recognized Bachmann, who said she opposed the payroll tax cut when it was initially passed and opposes its extension because it would "blow a hole" in the Social Security Trust Fund.

The missing money for the Trust Fund is made up by transferring funds from the Treasury, thereby greatly increasing the already enormous federal deficit.

Perry, the governor of Texas, did not mention the Galveston plan by name, but may have had that in mind when he alluded to "a blended type of a program."

Here's a transcript from CNBC of the Social Security portions of the debate:

NEWT GINGRICH: You deal with Social Security as a free-standing issue. And the fact is, if you allow younger Americans to have the choice to go to a Galveston or Chilean-style personal Social Security savings account, the long-term effect on Social Security is scored by the Social Security actuary as absolutely stabilizing the system and taking care of it.

The key is there is $2.4 trillion in Social Security, which should be off budget, and no president of the United States should ever again say because of some political fight in Washington, I may not be able to send you your check. That money is sitting there. That money is available. And the country ought to pay the debt it owes the people who put the money in there.
 
JOHN HARWOOD, CNBC: Governor Romney, if I could follow up, Speaker Gingrich just said he is not prepared to raise taxes on the American people in the middle of a slow economy like this. That's what would happen if the payroll tax cut is not extended.

Do you agree with him, and would you also support, when it comes down to it, an extension of the payroll tax cut?

MITT ROMNEY: I don't want to raise taxes on people in the middle of a recession. Of course not.

HARWOOD: So you're for it?

ROMNEY: And that's one of the reasons why we fought so hard to make sure the Bush tax cuts weren't taken away by President Obama.  But, look, this issue of deficits and spending is not about just dollars and cents. It's a moral issue. It's a moral imperative.

We can't continue to pass on massive debts to the next generation. We can't continue to put at risk the greatest nation in the history of the Earth because of the profligate spending that's going on in Washington, D.C.

HARWOOD: But to clarify, you agree with President Obama the payroll tax cut should be expanded?

ROMNEY: I want to keep our taxes down. I don't want to raise any taxes anywhere. Let me tell you, I'm not looking to raise taxes. What I'm looking to do is to cut spending. And that's why this last week I put out a plan that dramatically cuts spending in Washington, that gets us to a 20 percent cap, and makes sure that we have a balanced budget thereafter. And how do I do it? I have three major steps.

Number one, cut programs. Get rid of programs we don't have to have like Obamacare. Take a lot of programs that we have at the state level, number two -- excuse me, at the federal level -- and send them back to the states where they can be better run with less fraud and abuse.

And number three, finally, bring some productivity and management expertise to the federal government. I would cut the workforce by 10 percent and -- I want to say one more, and that is this -- I want to make sure we link the compensation of our federal bureaucrats to that which exists in the private sector. People who are public servants shouldn't get more money than the taxpayers that they're serving.

HARWOOD: Does any candidate on this stage disagree? Does any candidate disagree and oppose an extension of the payroll tax cut?

MICHELE BACHMANN: Say that again.

HARWOOD: Does any candidate disagree with the Speaker and Governor Romney and oppose the extension of the payroll tax cut?

BACHMANN: Yes.

HARWOOD: You oppose it?

BACHMANN: I do. I opposed it when it was first proposed, because I knew that it would blow a hole of $111 billion in the Social Security trust fund.

President Obama clearly did this for political reasons. That's why he did it. And so I had made that warning then, because we actually have already run Social Security in the red. We aren't just about to, we already have, six years ahead of time.

Now, consider the context. We have baby boomers in their peak earning years. This is when money should be flooding into the Social Security trust fund. Instead, we're already in the red.

When we talked this evening about how much trouble we are in with spending, we are in a tremendous amount of trouble with spending. Just consider we pay a lot of taxes in this country, $2.2 trillion is what we send into Washington. The problem is, we spent at the government level $3.7 trillion. Your started out tonight talking --
 
HARWOOD: Out of time, Congresswoman. 

MARIA BARTIROMO, CNBC: Governor Perry, name the top programs that you would cut in terms of long-term deficit reduction. Include Medicare, Medicaid, Social Security, and defense spending in the order you see fit.

RICK PERRY: Well, every one of those -- and by the way, that was the Department of Energy I was reaching for a while ago.  So here what's we have to look at as Americans. And it's the entitlement programs that are eating up this huge amount of money that's out there.

And it's also the spending, Congressman Paul. And when you look at Medicaid, Medicare, Social Security, and those unfunded liabilities, I think are over $115 trillion just in those three programs. Those are the places where you go where you have to make the really hard decisions in this country.

BARTIROMO: So what is your order? And you didn't mention defense spending.

PERRY: Well, obviously, Social Security is one of those where we either can go to a blended type of a program where we blend price and wages, and come up with a program, and can save billions of dollars there. But the people who are on Social Security, they need to understand something today. It's going to be there for them.

Those that are working their way towards Social Security, we've made a pledge to them. Those individuals are going to have those dollars there for them.

But the young people out there, who is going to stand up for the young people in this country, those that are at the workforce today, and stand up and say, we are going to transform this program so it's going to be there for you? I will do that. I will stand up for the young people in this country and put a program into place that will be there for them.

The current What's Happening with Conservatives and the Tea Party newsletter reports on other aspects of this GOP presidential debate.

Previous issues of both newsletters