2012 GOP presidential hopeful Newt Gingrich today released his latest big idea: a return to Bush-style Social Security privatization. Gingrich has been quite vocal in his support for privatized Social Security accounts, but today marked the first time that he laid out specifics as to how he would gut one of the most successful programs in American history.

First, Gingrich explains that he would let workers opt into private accounts, just like Bush’s suggested system. Gingrich points to two models that inspired him to suggest this approach: privatized retirement accounts in both Chile and Galveston, Texas. He added the caveat that, should private accounts fail to deliver the same return as minimum Social Security benefits, the government would step in and make investors whole again:

The government guarantees that all workers with personal accounts will receive at least as much in retirement as they would under the current Social Security system. If someone with a personal account retires with benefits lower than those offered by the current system, the Treasury will send them a check to make up the difference. Thus, there is a legal government obligation that in a worst case scenario a retiree will be able to enjoy benefits at least as good as they would under th e traditional Social Security system.

Watch him explain the idea at a campaign event today:

As we pointed out when Sen. Rob Portman (R-OH) suggested a similar idea, promising to make investors whole again sets up a huge moral hazard problem. If investors know full well that the government is going to provide them with a minimum benefit, no matter what they do, then the incentive is to make risky investments and hope for a big payoff. After all, why not take the risk if the government has guaranteed that you can’t lose money? Investors have every incentive to bet big in the hopes of a large payout, because if they go bust, the government will bail them out.

Add to this the fact that the privatized systems in Chile and Galveston aren’t as wonderful as Gingrich makes out. In fact, while they work quite well for the wealthy, middle- and lower-income participants wind up worse off. Regarding the Galveston system, Eric Kingson, a professor of social work at Syracuse University, explained that “for most people, it’s somewhere between ‘very bad’ and ‘not very good.’ ” Chile’s system, meanwhile, has “left millions without savings for their retirement.” According to estimates by Chile’s undersecretary for pensions, “in 2007, only 60 percent of Chilean workers had some kind of pension coverage, down from 86 percent in the 1970s.”

Gingrich’s plan would also cause the deficit to explode, as money meant for Social Security would have to be diverted into the creation and administration of private accounts. Social Security kept 14 million seniors out of poverty last year, but Gingrich would enact a scheme to privatize the system, while hoisting the costs of failure onto the federal government.

Across the country, groups pushing for living wage legislation are finding powerful allies in religious leaders and faith groups that are flocking to join the fight. Case in point, a rally in New York City urging the City Council to raise wages at city-subsidized projects got a big boost today from the support of the Roman Catholic Archdiocese of New York:

Msgr. Kevin Sullivan, executive director of Catholic Charities, is scheduled to speak at a rally on Monday organized by a coalition of religious, labor and community leaders to urge the passage of the bill, originally introduced last year by two City Council members from the Bronx.[...]

[H]e added that the rally on Monday, at Riverside Church, would provide an appropriate setting for the archdiocese to address economic hardship and unemployment, matters of utmost concern to the church.[...]

“We’re going to speak about how this economic crisis continues to hurt everybody in society, particularly the poor,” the monsignor said. “We need to make sure there are decent jobs with decent wages.”

The City Council will hold a hearing tomorrow on the bill, which would would mandate a wage of $10 per hour with benefits, or $11.50 without benefits, for employees of projects that receive at least $1 million in government subsidies. Small businesses and manufacturers are exempt, but the bill has still faced strong opposition from business leaders and Mayor Michael Bloomberg.

Archbishop Timothy Dolan of the New York archdiocese has recently been pushing the church to focus more on the economic hardship millions are facing and the importance of living wages. He wrote in a letter to all bishops in the U.S. that “the best way out of poverty is to work at a living wage.” According to a 2009 report, more than one million workers in low-wage industries in Chicago, Los Angeles and New York City lose more than $56.4 million each week as a result of employment and labor law violations.

The Florida Independent reports that faith groups are planning a series of actions to protest wage theft. This week also marks the first anniversary of the Day Against Wage Theft in Miami-Dade County. Florida Republicans are pushing a bill that would bar municipalities from “adopting or maintaining” local ordinances like Miami-Dade’s that crack down on wage theft.