Republican presidential contender Newt Gingrich on Monday proposed allowing younger workers still decades away from retirement to bypass Social Security and instead choose private investment accounts that would be subject to stock market gyrations.
The former House speaker, who has risen in the polls, would allow younger workers to take their share of the payroll tax that funds Social Security and put it in a private account.
Employers would still pay their share of the tax, which would be used to pay benefits for current retirees. But it would create a funding shortfall that Gingrich brushed off.
“That gap is more than covered by the savings” that would come from giving states control of 185 social welfare programs, Gingrich told reporters after a speech that laid out broad concepts but lacked key details.
Gingrich’s plan would cover the near-term deficits by giving to states responsibility for such programs as AmeriCorps volunteers, Section 8 public housing and Pell Grants for college students. He said states were better suited to administer those programs.
Gingrich said his retirement proposal, an idea floated by Republicans before him, would empower voters.
“Wouldn’t you rather control your account?” Gingrich asked an audience of students at St. Anselm College.
His advisers couldn’t say how much the plan would cost, when it would begin or who would be eligible. They did say, however, that current retirees would continue to receive benefits at promised levels.
Peter Ferrara, Gingrich’s senior economic policy adviser, said federal spending as a whole would be reduced by half within the next three decades.
“It’s a lot of reduction,” he said.