Edward Konecnik, Contributor, The American Dossier
It is an incontrovertible truth that the Social Security system as established is unsustainable. Criticism and calls for reform of Social Security are dismissed as blasphemous and un-American. The mythology of Social Security, the holy grail of progressives, is defended and propagated with misinformation and deception with cult-like religious fervor. An example of government double-speak and dishonesty is its decision to rename Social Security payments a “Federal Benefits Payment”.
Obviously these verbal alternations are designed to confuse the public and in far too many cases it works. One might well ask how an insurance arrangement in which the recipient makes payments throughout his working existence is regarded as a “benefit.” Whatever happened to “earned income"?
One of the myths perpetuated is that only government can provide the "security" in Social Security. One of the reasons why the system is bankrupt Is Congress uses your money elsewhere, for everything from highways to helicopters. It is also true that many receiving this “benefit” never contributed a dime to Social Security. These are people on disability (SSI) or those suffering from drug dependency. Many do not live in the United States but still receive monthly payments.
Three neighboring Texas counties, which opted out of Social Security over 30 years ago by creating personal retirement accounts, have avoided a fiscal train wreck while providing retirees with even more retirement income. Since 1980, when more than 75 percent of municipal workers in Galveston, Texas, voted and were permitted to opt out of the system, workers who earned $26,000 at retirement get $1,826 under the Galveston Plan rather than $1007 a month under Social Security. Middle income workers making $51,000 at retirement get $3,846 per month rather than $1,540 a month under Social Security; workers who earned $75,000 get $4,540 per month in retirement. The Galveston plan is financially sound, fully funded in advance and invests in guaranteed investment contracts, avoiding risky assets.
More importantly, if a worker participating in Social Security dies before retirement, he loses his contribution. But a worker in the Galveston Plan owns his account, so the entire account belongs to the estate. There is also, among other benefits, a disability benefit that pays immediately upon injury, rather than waiting six months, plus other restrictions, as under Social Security. There is no specified "retirement age," participants own their investment, can designate beneficiaries, can pass it on to their heirs and have a choice of options for payment of benefits. Most importantly, politicians cannot raid the funds to pay other bills.
Some claim that this kind of investment and "privatization" is risky, ignoring the fact that most retirement portfolios, including police, firefighter, teacher and corporation pension funds, annuities, municipal entities, hospitals, foundations and 401(K)s are similarly invested. The government's Social Security program is a unique one of a kind distinctive enterprise. It is neither an investment nor a savings account, but a Ponzi scheme that has run out of other people's money.
What the Galveston model has demonstrated over 30 years is that personal retirement accounts work, with many retirees making more than twice what they would have made under Social Security. It could also serve as a model for reforming Social Security. Common sense dictates we explore alternatives and stop recycling failed economic policies. Doing the same thing repeatedly and expecting different results is, according to Albert Einstein, the definition of insanity.