Pelosi blasts Republican plan to privatize Social Security

At an event celebrating the 75th anniversary of the Social Security Act, Speaker Nancy Pelosi (D-Calif.) blasted Republicans for trying to privatize the fund, saying the change would have resulted in the trust fund incurring a massive loss because of the recent downturn in the stock market.  

“Just five years ago, President Bush and his Republican allies pushed a risky plan to privatize and cut Social Security,” she said. “If they had succeeded, seniors would have lost trillions more in the financial crisis. At the time, Democrats and the American people said ‘no.’ And no one lost a penny in Social Security, even as America’s households lost more than $17 trillion in wealth.”

Under Bush, congressional Republicans sought to allow individuals to invest a percentage of their social security benefits in investment instruments. They claimed the rate of return for these vehicles would be greater than keeping benefits in the trust fund. They also said that the benefits would be transferable, meaning the funds could be transferred to other family members. 

Republicans never got enough momentum behind their initiative to pass it out of Congress. 

A similar proposal has been advanced by Rep. Paul Ryan (R-Wis.), ranking member of the House Budget Committee. It allows workers to invest their Social Security benefits in personal saving accounts, which would provide a higher yield than the trust fund but also contain greater risk.

“This year, Republicans are charting a course right back to the failed ideas of the past,” Pelosi said. “Again, Democrats and the American people are saying ‘no.’ We are not going back to the exact same agenda of the Bush years.”

Rep. Earl Pomeroy (D-N.D.), who chairs the Ways and Means Subcommittee on Social Security, plans to host a hearing on Ryan’s proposal in the fall. The focus of the hearing will likely focus on the solvency of the trust fund and how Ryan’s plan could affect it.