Clinton and Gingrich privatize Social Security

Supposedly, before the Monica Lewinsky Scandal, Clinton and Gingrich were moving towards the privatization of Social Security.

What if they'd privatized Social Security in 1998 or 1999? Let's assume they go with the Chilean model.
 
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Supposedly, before the Monica Lewinsky Scandal, Clinton and Gingrich were moving towards the privatization of Social Security.

What if they'd privatized Social Security in 1998 or 1999? Let's assume they go with the Chilean model.

First off, I doubt that their attempt to privatize Social Security would succeed. Look what happened when George W. Bush tried to do that with a Republican Congress. Secondly, if they do try and fail then the backlash against Clinton could see Bush win both the electoral and popular votes in 2000.
 
Supposedly, before the Monica Lewinsky Scandal, Clinton and Gingrich were moving towards the privatization of Social Security.

What if they'd privatized Social Security in 1998 or 1999? Let's assume they go with the Chilean model.

What is the chilean model? Do you have links to sources explaining in detail? Please and Thank you
 
This article has a decent summary of the policy that was under discussion:

The federal government would fund these accounts with annual contributions equal to 2 percent of the wage base used to compute old-age and survivors' benefits under Social Security. Workers’ payroll tax contributions would continue to go into Social Security as before; there would be no “carve-outs” to fund the private accounts. When the worker was ready to retire, the Social Security Administration would calculate a monthly stream of payments based on the balance in her account. If the amount was less than her expected benefit under traditional Social Security, the program would make up the difference. If the amount exceeded her entitlement, she could keep the extra for herself.​

It looks like the key difference between this and Bush' 2006 proposal was that the Clinton/Gingrich plan was for an "add on" private account, keeping existing payroll taxes and benefits fully intact as a backstop for those who invested their private account unwisely or unluckily, while Bush's was for a "carve out" account that would redirect some money from the payroll tax system into the accounts and would reduce the benefits formula for those who opted in to the accounts.

If I'm reading it right, the Clinton/Gingrich proposal would also not have increased total payments to retirees unless the returns on their 2% private accounts exceeded their total benefits under the existing system funded by the 12.4% payroll tax (6.2% tax paid by the employee, plus another 6.2% payed by the employer). Otherwise, their benefits would be "topped up" to exactly what they would have gotten without the private account. Which makes the proposal sound less like privatization and more like a way to dress up a two percentage point increase in the payroll tax to make it more politically palatable.
 
Been nice if the 401k, program had been loosened up a bit. Also nicer would have been a bit less deregulation of the investment industry. A fair bit of folks private retirement funds vaporized since 1986 & more so since 2000. Of course investor stupidity cant be legislated away, but reducing the opportunities to dash off a cliff helps some.
 

Marc

Donor
Been nice if the 401k, program had been loosened up a bit. Also nicer would have been a bit less deregulation of the investment industry. A fair bit of folks private retirement funds vaporized since 1986 & more so since 2000. Of course investor stupidity cant be legislated away, but reducing the opportunities to dash off a cliff helps some.

After the crash of 2000, and the Great Recession, I sincerely doubt that deregulating the investment industry would have been considered wise outside of the libertarian fringe in American politics.
 
After the crash of 2000, and the Great Recession, I sincerely doubt that deregulating the investment industry would have been considered wise outside of the libertarian fringe in American politics.

Yet they still keep on deregulating it, even IOTL.
 

kernals12

Banned
This seems very out of character for Bill Clinton. It amounts to tearing apart the cornerstone of America's welfare state. There would not be any support in congress for this. I do know that Bill Clinton was in favor of investing the social security trust fund into the stock market, which would've been a necessity if, as was projected at the time, the government was going to pay off all its debt.
 
After the crash of 2000, and the Great Recession, I sincerely doubt that deregulating the investment industry would have been considered wise outside of the libertarian fringe in American politics.

Why? Under the proposal, the retirees would lose nothing as the government would have topped it off. The government just puts the money back into US treasuries and EVERYTHING returns more than that. In the short run the retirees would have lost nothing and in the long run would have made more money.

I would have done the same as their proposal but have the cost paid back by reducing SS payments $1 for each $2 they make over what they would normally have got. For example, if they were to make $500 a month in SS payments and the money they received would be $550 when including their investments they would get $525 as the government would cut their SS check $25. The government would pay $25 less and the recipient would make $25 more than they would otherwise which means both would be ahead.
 
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This seems very out of character for Bill Clinton. It amounts to tearing apart the cornerstone of America's welfare state. There would not be any support in congress for this. I do know that Bill Clinton was in favor of investing the social security trust fund into the stock market, which would've been a necessity if, as was projected at the time, the government was going to pay off all its debt.
Clinton literally did that.
 
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