Privatizing Social Security savings accounts for recipients would disproportionately impact people of color and low-income earners, according to former Vice President and potential 2024 presidential candidate Mike Pence.
Mike Pence Tells Fox News To Privatized Social Security
Mike Pence is one of those who are advocating for privatization Social Security during the debate over Social Security is to either privatize the program or at least reform it in a way that it acts more like an investment plan. Pence suggested that Social Security a social insurance program that supplies disability and retirement benefits regardless of payment levels should be privatized and replaced with a system in which individuals can have their own funds that are tied to investments in the stock market and personal contribution levels. At the National Association of Wholesaler-Distributors summit earlier this year, during a speech Pence suggested giving younger Americans “the ability to take a portion of their Social Security withholdings and placing that into a private savings account.” Pence shared a similar sentiment in a recent Fox News interview.
Social Security has become a political lightning rod during the current debt-ceiling negotiations because the program’s Old Age and Survivors Insurance Trust Fund is expected to run out of money by the middle of the next decade. While most Democrats oppose efforts to privatize or otherwise change the basic structure of Social Security, some Republicans advocate reforms that would prop up the program while also giving future Social Security beneficiaries more control over their retirement funds.
Such a change could be devastating for people with low incomes, who are often incapable to contribute to retirement funds. Recent factors like the pandemic, inflation, market pressures, and high gas prices which have made it more difficult for most Americans to save for retirement have hit people with low incomes even harder.
Replacing Social Security With Private System
The research found that replacing Social Security with a private system would also have a disproportionate impact on people of color. Moreover, An analysis by the Center on Budget and Policy Priorities, which looked at privatization efforts in 2006, noted that any evolution to a private system would inevitably demand benefit cuts, which would disproportionately impact Black income earners’ retirements.
Pence suggests letting employees invest in companies by providing them an individual retirement account at birth similar to a 401(k), but with more protections. The account could be financed through a “small seed investment” from the government. Recent wage taxes would then fund the accounts to ensure that everyone is saving for retirement.
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