"History is philosophy teaching by example." (Lord Bolingbroke)

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Friday, February 04, 2005

Democrats Do Not Want You to Know This About Social Security

Social Security Alternative Already Working in Texas -- 02/03/2005

We don't ordinarily get into these kinds of issues on Sixth Column, but lying Democrats and other liberals need binding, gagging, tarring, feathering, and ridden out of the country on rails about Social Security reform. Our fundamental position is and has been that social security is morally wrong, thus practically wrong. The full, proper reform is to make it entire voluntary, entirely private, and totally insulated from government intervention and theft.

Would that "work"? Well, the moral is always practical.
In 1981, municipal workers in Galveston, Texas, opted out of standard social security in favor of private retirement accounts. The whole process has been clearly documented in the article cited above and should be read for all details.

What happened?

While the employee-employer funding formulas are nearly identical under both Social Security and the Galveston Alternate Plan, the results are very different.

The U.S. Treasury Bonds purchased with money from the Social Security "trust fund" pay approximately two percent. But for the period from 1982 through 1997 the rate of return on funds invested in the Galveston plan has averaged 8.6 percent, a return more than 400 percent greater than Social Security.

Data from First Financial Benefits, which administers the Galveston Alternate Plan, shows that county workers earning slightly more than $17,000 a year can retire at age 65 with a monthly payment of $1,285 compared with $782 a month under Social Security.

Due to having more money withheld and the effects of compounding interest, higher income employees in Galveston see even larger benefits under the Alternate Plan. Workers earning $51,263 a year could retire at 65 with a monthly benefit of $3,846, while the same worker participating in Social Security would receive $1,540 each month.

Even the relatively low "guaranteed rate of return" in the Galveston plan roughly doubles the rate of return for Social Security. Funds already invested in annuities have a guaranteed yield of 3.75 percent, according to Bazaman. As for money being placed into private accounts today, Bazaman said the rate is slightly higher at 4.24 percent.

"They have never lost money. They have gone through double recessions in the 1980s, recessions in the 90s, and a tech boom and bust in the 1990s and into 2000," said Charles Jarvis, chairman and CEO of USA Next-United Seniors. "They've gone through another recession, an attack on this country and wars in Afghanistan and Iraq, yet they have steadily provided income for people."

The Galveston County, Texas Alternate Plan enacted in 1981 with the approval of 78 percent of local employees proved popular locally. By 1983, local government workers in three nearby municipalities -- Brazoria and Matagorda Counties, and Texas City -- also voted to quit Social Security in favor of private retirement plans.

Peru has a similar nation-wide program, one meeting with the same expected success.

Well, nothing upsets the Left more than individual freedom in any form. So, what happened when the success of the Galveston program became overwhelmingly obvious?

Amid growing enthusiasm for an alternative to Social Security, the Democrat-controlled Congress voted in 1983 to end the provisions giving municipal workers the option to leave the federal system.

What President Bush proposes is a paltry change. The really moral thing to do is to privatize social security totally. You have the practical results. Now just expand these results to all citizens. That's what any real "humanitarian" would do. What is motivating the Democrats?


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