Two GOP veterans may have had the most impact, and the most success, in the debate at the Reagan Library Wednesday night. Neither was on the stage, but Karl Rove and Dick Cheney put the Social Security issue front and center. Earlier in the day, Rove said Texas Gov. Rick Perry’s language on Social Security is “toxic.” Meanwhile, Cheney disputed Perry’s claim that it is a “Ponzi scheme” and said we have to fix it and not dismantle it.
It certainly came up in the debate. Perry, remarkably, didn’t have a pithy answer and refused to disclaim the remarks in his controversial book. And he didn’t offer a tangible plan that would demonstrate his desire to repair and preserve Social Security.
Mitt Romney jumped all over the issue. His campaign sent out an e-mail titled, “Perry does not believe Social Security should exist.” Included were a list of Perry’s statements declaring Social Security a “failure” and suggesting that the federal government had overstepped its bounds by setting up a national retirement benefits system.
On Wednesday afternoon, I pressed Perry’s campaign for an explanation of his prior comments that we should allow states to run retirement benefits. The campaign sent over two items: a USA Today column and testimony presented to a presidential commission on Social Security, both by Galveston County Judge Ray Holbrook. A Perry spokesman chose to highlight this portion of Holbrook’s testimony on Texas counties that opted out of Social Security:
An election was called for all county employees for the fall of 1980. Newly and completely sold on the Alternate Plan, my colleagues and I campaigned for its passage. It passed by a 3 to 1 margin. The Galveston Commissioners Court then voted 4 to 1 to implement the Plan on January 1, 1981. Brazoria and Matagorda Counties joined us in 1982. Harris County and some 50 other counties were ready to join but were blocked from doing so by what Congress did in 1983 when they raised taxes, raised the retirement age and closed the door on local governments developing better deals of their own.
The alternate system in Texas, according to the testimony, worked like this:
The payroll taxes of workers were deposited in personal retirement accounts that then purchased commercial banking and life insurance products already available in the marketplace – like bank CDs (certificates of deposit) and annuities – as well as government and commercial bonds, all with fixed and guaranteed rates of interest. It was this approach that sold my colleagues, and me because it essentially eliminated risk from the program.
It’s not clear how rates of interest are “guaranteed.”
So understand that if you were in the minority in the employee elections and wanted to keep your Social Security benefits, you could have been outvoted by your peers. The idea raises numerous concerns. Among them: How does it work when you transfer to a job with standard Social Security? If your plan goes bust, are you out of luck?
What is surprising is how ill-thought-out this appears to be. Perry has used incendiary rhetoric about a critical topic, doesn’t have a clear response in the debate and elsewhere offers a highly questionable state plan as an example of what he’d prefer. It is not reassuring to voters who may want reform but don’t want entitlement programs dismantled willy nilly.
Perhaps this is the result of insufficient prep time or overwhelmed homestate staffers. But Perry can’t afford to offer half-baked ideas and allow his past, troublesome statements to float around. He’d be wise to promptly disclaim his comments as intending merely to start a debate and then roll out a smart, forwarding-looking reform plan that will preserve Social Security. If he doesn’t, he places his nomination at risk.