A recent story published by The Motley Fool dug-up some interesting quotes on Social Security from President Donald Trump’s White House Chief Economic Advisor Larry Kudlow, a former CNBC commentator. These quotes indicate that Kudlow is not too worried about Social Security reserves being exhausted by 2034 as long as 3 percent economic growth exists, but they also indicate, at least at some point in time, Kudlow favored at least partial privatization of Social Security.
Kudlow, who has only been on the job a little more than four months, replaced former Goldman Sachs executive Gary Cohn who previously was Trump’s top economic advisor for 16 months.
Kudlow on Social Security
The Motley Fool published the following quotes from Kudlow that were discovered in a January 2007 interview with National Review.
“As far as Social Security is concerned, a set of optimistic (yet eminently reasonable and realistic) economic assumptions exist which lead to no bankruptcy and no trust fund exhaustion. This scenario — one rarely discussed by most — includes slightly less than 3 percent real economic growth, and 2 percent productivity per year. Over the next seventy-five years, this solid growth forecast keeps Social Security funds alive and well.”
This quote seems to indicate that Kudlow is not as concerned about Social Security’s future as everyone else and does not believe Social Security will not be able to meet 100 percent of obligation in 2034 as long as 3 percent economic growth is achieved.
Kudlow on Privatization
“The real problem with Social Security is not bankruptcy. It’s the dreadful investment return (barely 1 percent) that future retirees have to look forward to. If Americans had the chance to purchase S&P 500 SPDR contracts, and were able to hold them for fifty years, they would receive a real return of at least 7 percent compounded annually based on the history of the stock market. That’s a lot of Benjamins. Heck, even if workers were given a lousy bank deposit option, federally insured by Uncle Sam, they could still count on squeezing out at least 3 percent compound returns.”
Because Kudlow believes, at least as he said back in 2007, that Social Security’s investment returns were too low, at least partial privatization should be considered. Other Republicans have offered the idea of Social Security privatization before, but it has not been a popular idea with the American people. Trump’s own stance on Social Security, at least publicly, is different from Kudlow’s ideas. During the campaign for President, Trump was somewhat vague on his ideas about Social Security, but did say that he would not touch Social Security and leave it as is, but did not say much about the future of Social Security. The only reach quote The Motley Fool came up with about Trump addressing Social Security was an article in The Washington Times in March 2013.
“As Republicans, if you think you are going to change very substantially for the worse Medicare, Medicaid and Social Security in any substantial way, and at the same time you think you are going to win elections, it just really is not going to happen … What we have to do and the way solve our problems is to build a great economy.”
Although Trump and Kudlow seem to disagree on the privatization part, it does seem they agree that growing the economy is the best way to solve Social Security’s issues.
