Three Texas Counties Opted Out of Social Security

Democracy and Power 106:  A politician receives no financial gain for good policy or punishment for bad policy.

It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong. – Thomas Sowell

Three Texas Counties Opted Out of Social Security

Merrill Mathews of the Wall Street Journal showcases three counties in Texas that opted-out of Social Security by creating personal retirement accounts for county employees.  After 30 years, the county workers in these three counties:

”…retire with more money and have better death and disability supplemental benefits.”

Unlike the federal Social Security system, which has gigantic unfunded liabilities, the three counties are solvent.

“And those three counties—unlike almost all others in the United States—face no long-term unfunded pension liabilities.”

With essentially the same contributions, the county workers’ will receive roughly twice the retirement income as compared to those in the federal system. 

 Why?

In these three counties, the money is saved and invested.  Conversely, in America’s federal system, the Social Security taxes are transferred immediately to current retirees, and when there were surpluses, politicians use the money for other government functions.   Thus, America’s federal system has no money saved and because of fewer workers supporting retirees, America has enormous unfunded liabilities.  The difference is saving and investment growth versus the federal government’s taxing, transferring and spending. 

The Texas counties that chose private accounts used professional money managers competing for the opportunity to invest their money.  As a result, the employees are guaranteed a minimum rate of return.  Unfortunately, American workers have no choice to invest a portion of his or her Social Security tax.  Just the opposite.  Government imposes taxes and federal politicians determine how and when the benefits, if any, will be distributed.  Worse, the government implies there will be benefits at retirement.  However, future politicians will determine which Americans receive benefits and the age of eligibility

A saving and investing system has enormous benefits to all Americans.  Obviously, twice the amount of money for retirement is good.  Equally important are saving and investing, which helps propel commerce and industry.  A nation of savers is more dependable and solvent than a tax, raid, and distribute system, which has proven to create enormous unfunded pension funds.

Unfortunately, seniors and people nearing retirement fear any change to the present system.  Deplorably, politicians pander to seniors and excoriate any mention of a save and invest program.  Thus, in a time of great need to increase saving and investing, the vast majority of America’s politicians are intentionally contriving against the necessary change.  Most politicians are silently saying, “I want to be elected and in power.  Good policy and expanding economic prosperity be damned.”

Personal accounts for retirement and medical needs are absolutely essential for personal freedom and a vibrant society.  America’s critical task is how to exit the corrupt political system and create personal accounts.