Remember when Bush was talking Private Option to Social Security?
Here's what the media didn't tell you: the Galveston Plan:
Back in 1980 the employees of Galveston County voted to opt out of Social Security for a private plan. Two other counties joined in just before Congress closed that gap.
Here's a report on how this is turning out down in Texas;
The current debate over Social Security reform is reminiscent of the discussions that occurred in Galveston County, Texas, in 1980, when county workers were offered a retirement alternative to Social Security: At the time they reacted with keen interest and some knee-jerk fear of the unknown. But after 24 years, folks here can say unequivocally that when Galveston County pulled out of the Social Security system in 1981, we were on the road to providing our workers with a better deal than Franklin Roosevelt's New Deal.
The Problem with Social Security. Social Security is a pay-as-you-go system under which taxes collected from today's workers are used to pay today's retirees. That was sustainable in the past; for example, in 1950 there were 16 workers providing benefits for each retiree. However, today the ratio has dropped to 3 workers for each retiree, and by the year 2030 the ratio will be 2 to 1.
America's demographic changes and the program's expansion have driven the initial Social Security tax rate from 2 percent (1 percent each from employer and employee) to 12.4 percent today, and threaten to drive it even higher. This unsustainable trend is why policy makers are looking for ways to reform the system.
And how do the payouts compare between the galveston Plan vs soical Security?
Galveston vs. Social Security. Upon retirement after 30 years, and assuming a 5 percent rate of return - more conservative than Galveston workers have earned - all workers would do better for the same contribution as Social Security:
- Workers making $17,000 a year are expected to receive about 50 percent more per month on our alternative plan than on Social Security - $1,036 instead of $683. [See the Figure.]
- Workers making $26,000 a year will make almost double Social Security's return - $1,500 instead of $853.
- Workers making $51,000 a year will get $3,103 instead of $1,368.
- Workers making $75,000 or more will nearly triple Social Security - $4,540 instead of $1,645.
- Galveston County's survivorship benefits pay four times a worker's annual salary - a minimum of $75,000 to a maximum $215,000 - versus Social Security, which forces widows to wait until age 60 to qualify for benefits, or provides 75 percent of a worker's salary for school-age children.
In Galveston, if the worker dies before retirement, the survivors receive not only the full survivorship but get generous accidental death benefits, too. Galveston County's disability benefit also pays more: 60 percent of an individual's salary, better than Social Security's.
Two government studies of the Galveston Plan - by the Government Accountability Office and the Social Security Administration - claim that low-wage workers do better under Social Security. However, these studies assumed a low 4 percent return, which is the minimum rate of return on annuities guaranteed by the insurance companies. The actual returns have been substantially higher.
Why is this the first time we hear about this plan? Who broke it? Can't you guess?
Why has Social Security turned into a Ponzi scheme? Did our Government rob the funds that were supposed to be invested? rob or, more gently: borrow and not return.
What the bloody h*ll was the media doing and WTF are they doing now?
I do not think they were looking out for John Q Public, nor playing the role of the Fourth Estate. not for a very long time.
Hat Tip to Logistic Monster.
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Redwater, Alberta, Canada