Obama Says Private Accounts Would Endanger U.S. Social Security

President Barack Obama said Republican proposals to have people invest Social Security benefits in private accounts would increase the U.S. budget deficit and put retirement money at risk to “the whims of Wall Street traders.”

In his weekly address on the radio and Internet, Obama marked the 75th anniversary of President Franklin Roosevelt’s signing of the Social Security Act, and said he would fight if Republicans try to convert the entitlement program to private investment accounts.

“I’d have thought, after being reminded how quickly the stock market can tumble, after seeing the wealth people worked a lifetime to earn wiped out in a matter of days, that no one would want to place bets with Social Security on Wall Street -- that everyone would understand why we need to be prudent about investing the retirement money of tens of millions of Americans,” he said.

The president said Republican lawmakers want to make Social Security “a key part of their legislative agenda” if they gain a majority in Congress after November’s elections.

“I’ll fight with everything I’ve got to stop those who would gamble your Social Security on Wall Street,” Obama said. “Because you shouldn’t be worried that a sudden downturn in the stock market will put all you’ve worked so hard for -- all you’ve earned -- at risk.”

Social Security Politics

Democrats have seized on Social Security’s anniversary to criticize Republican candidates calling for changes to the system. The Democratic Senatorial Campaign Committee said 13 Republican Senate candidates have supported some kind of plan to put Social Security benefits in retirement accounts, including Sharron Angle, of Nevada, and Marco Rubio, of Florida.

House Republican Leader John Boehner said yesterday that Obama and House Speaker Nancy Pelosi “refuse to even acknowledge the challenges” Social Security faces.

“It’s time to have an adult discussion about the future of this crucial program,” Boehner said in a statement.

Americans who are at least 62 years old are eligible to receive Social Security retirement benefits. According to Bloomberg data published Aug. 10, Social Security paid $57.2 billion in retirement, survivors’ and disability benefits last month, providing an average payment of $1,071 to 53.4 million beneficiaries.

Republican Address

In the Republican address, Pennsylvania Senate candidate Pat Toomey, a former U.S. representative, said an “extreme ideologically driven agenda is preventing the strong economic recovery and job creation that we should be having.”

He cited measures to bail out Fannie Mae and Freddie Mac, to overhaul the health-care system, to prop up the U.S. auto industry, along with the “so-called stimulus bill,” as examples of reckless spending by Democrats.

“We were told that this monster spending bill would create jobs and keep unemployment below 8 percent,” Toomey said. “Well, since then we’ve lost nearly 3 million more jobs and the unemployment rate hit 10 percent, and in some states it’s still well above that.”

Toomey, a former president of the Club for Growth, an anti- tax group based in Washington, called for keeping “hundreds of billions of dollars” from stimulus programs that haven’t yet been spent.

Toomey said tax cuts scheduled to expire at the end of this year should be renewed and capital gains taxes should be reduced to encourage economic growth.

Obama has proposed extending tax-rate reductions enacted under President George W. Bush only for those who earn less than $200,000 per individual or $250,000 per couple.

To contact the reporter on this story: Kate Andersen Brower in Washington at Kandersen7@bloomberg.net.

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.