Recently, the Collegian chapter of CFACT at the University of Minnesota and the College Republicans co-hosted former Senator Rod Grams.
Sen. Grams discussed the current state of entitlement spending, particularly social security, and the impact reforming, or worse, not reforming social security would have on younger generations.
Senator Grams pointed to sustained pension reforms in other nations such as Chile. Such reforms have helped those economies avoid the ticking time bomb of tax obligations by converting to a defined contribution structure versus the current defined benefit structure.
Sen. Grams’ plan to privatize the U.S. Social Security system is based on Chile’s in many respects. The Senator noted that Chile’s success proves “this isn’t just pie in the sky.”
Grams’ plan would give workers the option of diverting 9 percent of the current 12.4 percent of wages that currently go into the publicly administered guaranteed-benefit Social Security system into personal retirement accounts similar to Chileans’. Grams would guarantee benefits for those at or near retirement. He estimates that it will cost $13.5 trillion to finance the transition to a privatized system,
which he said would be complete by 2050.
Grams noted that under the current system, “the government tells you how much you have to put into Social Security, how to invest it, and when you can retire. Under my plan, all those decisions will be up to you.”