How to Talk to a Conservative About Social Security (If You Must)

[Gimpy]

Why don't you tell the "whole story"??

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Poorest likely worse off after Texas town abstains from Social Security


February 18, 2005 8:55 AM EST
Chicago Tribune


GALVESTON, Texas - For all the uncertainty swirling around President Bush's proposal to offer private Social Security retirement accounts, there is a corner of the country where the idea has already been tried and tested for a generation.

Three Texas counties hugging the Gulf of Mexico voluntarily withdrew from the federal Social Security system in 1981, transferring the retirement taxes of county employees into private investment accounts.

That's the good news: As the nation prepares to debate a momentous potential change in the bedrock federal retirement plan, there are some real-world experiences in Texas available to be studied as test cases.

The bad news is that the verdict is decidedly inconclusive . No one here can agree whether county retirees are better off than they would have been had they stayed with the Social Security system - a dilemma that precisely mirrors the emerging complexities of the national Social Security debate.


"I didn't come out ahead," said Evelyn Robison, who was the Galveston District Court clerk for 13 years before her retirement in 2004. "My chief deputy did not come out ahead. My bookkeeper did not come out ahead. I personally don't know anyone who has retired who came out ahead."


For better or worse, what is being called the "Galveston plan" is already being scrutinized by both proponents and opponents of Social Security private accounts as they cast around for models to make their respective cases. In the last week, House Majority Leader Tom DeLay, R-Texas, paid a visit here to learn more about the plan, while Sen. Barbara Boxer, D-Calif., phoned Galveston officials for information.


What intrigues most callers is the claim made by boosters of the Galveston plan that retirees can earn benefits that are two to four times higher than those provided by the Social Security system, without higher costs or greater risks.


"I think what we have here is a model for the rest of the country," said Ray Holbrook, a retired Galveston County judge and one of the original proponents of the plan. "The philosophy behind it is that we're better off if we fund our own retirements."


The three Texas counties set up their alternate retirement plan at a time when local and state government entities were permitted to withdraw from Social Security. Few actually did, according to the Social Security Administration, and in 1983, Congress closed the window, leaving the Galveston plan as an unusual orphaned model.


Under the plan, which covers some 5,000 employees in the three Texas counties, workers contribute a mandatory 6.1 percent of their gross salaries to their private retirement accounts, while the counties employing them add another 7.8 percent, for a total of 13.9 percent. That compares to a combined 12.4 percent Social Security contribution, divided equally between employees and employers.


Most of the funds are then invested in a combination of bank securities, bonds and annuities, where Gornto says they are currently earning an average 6 percent return.


That's a decidely more conservative approach than what President Bush has proposed - allowing younger workers to divert up to 4 percent of their pay from Social Security into investments in the stock and bond markets - and Galveston officials say it was key to persuading county employees to quit the safety of Social Security for the private accounts.

"We probably never would have been successful if we'd said we were going to invest in the stock market ," said Holbrook. "We assured employees it would be in safe investments, bonds and annuities."


(In fact, Brazoria County began allowing its employees to invest their funds in stock market equities several years ago. Only about a quarter elected to do so, and most have lost money during the stock market's downturn since 2000, Gornto said, further souring local officials on the option. )


When workers here retire, they can elect to have their accounts paid out as a lump sum, a series of payments or a lifetime annuity. The plan also includes a substantial death benefit, ranging from $75,000 to $215,000 depending on a worker's salary, and benefits for surviving beneficiaries and dependents.


Gornto's figures show that workers across all income levels do better under the Galveston plan. For example, Gornto says that a low-income county worker retiring at age 65 would receive just $683 per month from Social Security but more than $1,000 per month from the Galveston plan. Employees earning higher incomes can do at least twice as well as under Social Security, according to Gornto's calculations.


But there is substantial debate about those numbers. Two separate studies of the Galveston plan conducted in 1999, by the Social Security Administration and the federal General Accounting Office, each concluded that many low- and medium-income workers actually fare worse under the Galveston plan than they would have under Social Security, while the highest-paid employees do better .


"Our simulations found that low wage earners retiring today generally would have qualified for higher retirement incomes had they been under Social Security," the GAO report stated. "Many median wage earners, while initially receiving higher benefits under the (Galveston plan), would have eventually received larger benefits under Social Security because Social Security's benefits are indexed for inflation."


The Social Security Administration study found that a low-income married worker who retires in 2045 would receive just $670 per month under the Galveston plan, as opposed to $1,139 under Social Security. The highest-paid single workers, however, would earn $1,515 per month more under the Galveston model than under Social Security, according to the Social Security Administration calculations.


The gulf between Gornto's numbers and those from the federal agencies results from different assumptions about rates of return, length of employee service and age of retirement - all of which can dramatically affect the size of the monthly check any individual retiree receives.

Moreover, annuity payments under the Galveston plan are fixed and are not indexed for inflation, as are Social Security benefits. Nor does the Galveston plan increase benefits for a deceased worker's family based on the number of children left behind, as does Social Security. These factors, too, affect the complex actuarial comparisons between the Galveston model and the Social Security system.


Critics maintain that instituting private accounts similar to Galveston's for all workers would cause harm for many.

"These plans won't work for most people and would destroy Social Security for the vast number of Americans who depend on it," said Eric Kingson, a professor of social work at Syracuse University who has studied the Galveston plan.


"What we can learn from the Galveston experience is who will win and who will lose if we move toward this privatization plan," Kingson added. "People who work long and hard at relatively low wages get a proportionately higher benefit from Social Security, and that's because its purpose is to provide a basic set of protections for all Americans ."


The bottom line for many Galveston County retirees is the size of their check every month. And some say they have been bitterly disappointed.


"I get around $460 per month now, but under Social Security, I would have gotten $1,000," said Joyce Longcoy, who retired in 1998 after 23 years working for Galveston County. "They are putting this up to be a model for the rest of the country. Some model."


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Nice try Super...............but it didn't work !

[SuperScout]

But isn't it amazing that there isn't a hue and cry to terminate this dreadful retirement/protection plan? In all the so-called quotes by participants, one would get the distinct impression that riots in the street, massive protests, and hangins in effigy were next on the parade schedule. Sorry, but your bias precedes your credibility.

[Gimpy]

so-called "bias" has nothing whatsoever to do with the TRUTH!

And, my credibility in comparison to this little attempt of yours to further the propaganda, misinformation and horsehockey being put out by you and those of your ilk speaks volumes about YOUR lack of reasonable and sufficient reliance on the truth and/or reality of the subject matter.

You don't have to convice me . Try and tell it to Evelyn Robison, her chief deputy, her bookkeeper, Joyce Longcoy and those that Mrs. Robison claims are "bitterly disappointed" and are included with the folks that she personally knows who has retired who failed to come out ahead down there in "Rio Linda land"!
.
Then try and "sell" your bullshit to other folks....................if you think you can!
:cd: :re:

[Keith_Hixson]

When Clinton was in office he and the democrats were predicting the fall of the Social Security System and using it as a scare tactic to raise taxes.

So it seems to me that when talking to both Democrats and Republicans that our Social Security System is in serious danger of collapsing.

As I understand it, the debate is how to rejuvinate the system.

Higher taxes or Less Spending.

Or a combination of both.

If the government hadn't started borrowing from the system. Social Security wouldn't have problems at all. And it was the Eisenhower administration that first borrowed from Social Security, and every administration since has borrowed heavily from the system. Lots of blame to throw around. As far as I am concerned both parties have blown it big time when it comes to the health of Social Security.

Keith

[SuperScout]

I hope you will go back and recheck your 'facts' that led you to write that it was during the Eisenhower administration that borrowing from the SS Trust Fund first occurred. Since this was one of the rare instances when surpluses were enjoyed, I wonder if borrowing really occurred. I will agree that any "borrowing" from the Trust fund should have been outlawed, irrespective of the party involved in the thievery.

But you are correct in reporting that the Democrats of the previous administration were involved in a party-wide hand-wringing session, humming "Oh Woe is Me," but then nothing happened. This complete absence of action doesn't mean that the problems were resolved, Presto! Whacko!, but simply passed along to another administration who now has the cajones to do something of a corrective nature.

And I dispute that the only two solutions are either raise taxes or lower benefits. That line of thinking is so 20th century, so Democrat party simple-minded pseudo-panacea. What I find completely void of sanity is the hysteria from the Democrats about allowing people to VOLUNTARILY participate in individual retirement accounts. No coercion as currently practiced, but a simple opportunity for anyone with an IQ slightly higher than garlic to enhance their ultimate retirement account enormously.

Oh, and Gimpy, if you can provide the telephone numbers of the alleged victims of the Galveston plan, I'll be happy to verify your allegations. Or refute them. And can you do this without the usual vulgarity? OK, OK, everybody knows you know how to type four-letter words, now grow up.

[Arrow]

Greenspan

[MORTARDUDE]

a lot of hot air over something that doesn't even exist....oh well.

Larry

[Gimpy]

My dear, dear SuperSwiftee.

"BULLSHIT ".............is an eight (8) letter word! :re: Not a four (4) letter word. :cd:

I'll do my best to refrain from using "vulgarity" when YOU stop your attempts to "paint" anyone that happens to think differently from your right-wing belief system as "commies"....."pinkos"...."socialists"......and all the other derogatory and condescending names you come up with.

BTW...............if you'd like the phone #'s and/ or addresses of those individuals mentioned in the previous post for "verification" of their charges, I suggest you contact the Chicago Tribune since it was THEY and not I that found those folks to begin with.

Do I have to do ALL your "research" for you???? :cd: :cd: :re:

[Arrow]

Larry,

I think anyone with half a brain understands there is no "trust fund" and Greenspan's reference to "pay as you go" is to that fact. There is no "trust fund" but there is a budgeted item called Social Security. I'll get my check tomorrow. Itwillcomedirectly out ofthe paychecks of my children, your children,ourfriends and the not so friendly younger workers thatsee it as money they earned but will never spend. I can't say that I blame them.

It's not hot air to say that there is a sea change in the ratio of worker to retiree and webetter address the problem.Greenspan did not recommend any one fix, although he favors private accounts,he bounced that ball back across the table to our payed congressional representatives. As per usual there was more heat than light generatedin that hearing but in my viewthe heatwas not coming from Greenspan's side of the conversation.

[reconeil]

Believe you're both sort-of wrong, since NO Private, Personal or Individual Trust Funds EVER HAVE "SURPLUSES",...whether due compounding, dividends accrued, excessive deposits or contributions. ANY such Funds merely increas in value for the owners of same,...IN THE REAL WORLD.

So then, President Johnson and Dem Cohorts TAKING The Social Security Trust Fund and lumping same in with America's Tax Revenues and/or operating capital called: "The General Fund", just as with any other Retirement Monies similarly connived with or mis-managed by ANY corporation in America,...WARRANTED MASS JAILINGS.

Then too, Jimmy Carter and Dem Cohorts decreeing that: F.I.C.A. "SURPLUSES" (Outrageous!!!) be given to foreigners NEVER HAVING PAID A DIME into F.I.C.A. (Outrageous!!! also) ALSO WARRANTED MASS JAILINGS,...just like any other American Corporate Thieves would normally be forced doing when ripping-off peoples' personal Retirement Funds for company use.

Hope I've helped clear things up a little?
Well, at least legally and/or not politically.

Neil