James Leroy Wilson's blog

Sunday, February 27, 2005

Robin Hood Republicans

I believe Social Security is unconstitutional, and believe that government-managed private accounts are just as bad. But to give equal time here is Bush supporter Rod D. Martin:

Taking advantage of a loophole in the Social Security Act, three Texas counties -- Galveston, Brazoria and Matagorda -- established private retirement systems in 1981. Horrified, Congressional Democrats closed the loophole two years later, preventing other counties from following suit; but every public employee in the three Texas counties, 5,000 in all, has been part of the private system ever since. The results are amazing.
The private system works like an annuity. Employees are taxed at the same rate as workers everywhere, but instead of sending the money to Washington, the counties ask large insurance companies to bid against each other for the right to manage their retirement funds for one year. Each insurance company offers the counties a guaranteed rate of return on their investments, and the highest bidder wins.

Employees are vested immediately. Since they own their account, they can take it with them if they switch jobs. They can increase their contribution to a maximum of 20 percent of their income, all tax-deferred, and take their choice of a lump-sum payment or monthly checks when they retire.

The results have exceeded all expectations. In some years, the guaranteed minimum annual return has been as high as 12 percent; it has averaged 6.5 percent since 1981. Under current projections, a 40-year-old middle manager will receive $5,474 a month upon retirement. Under Social Security, he would have received $1,042.

What about death and disability benefits? While Social Security pays an insulting one-time death benefit of $255 -- less than the cost of a pine box -- the private plan pays triple the worker's salary up to $150,000, with a guaranteed minimum of $50,000.

This saved Wendy Colehill's life. Her husband Bill, a sanitation worker in Galveston for 12 years, died in a car wreck, leaving behind Wendy and their three-year-old son. Under Social Security, she'd have been penniless and homeless, another victim of liberal "compassion." She cries as she tells of the $126,000 death benefit she received days after Bill's death, allowing her to keep their home, rear Bill Jr., and even go back to school to learn a trade.

Liberals decry personal accounts as “too risky,” and pretend (after thirty years of saying the opposite) there is no crisis. But the truth is, it’s crisis enough that so ridiculously few Americans have a deal this good. Democrats could have provided it long ago, for everyone. Instead, they robbed little old ladies’ piggy banks, and then scared them with tales of Republican “vultures.”

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