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In his State of the Union rebuttal, Senate Democrat leader Harry Reid attacked President Bush’s call to allow younger workers to be allowed to voluntarily put a portion of their Social Security tax dollars into Personal Retirement Accounts. These accounts would be owned and controlled by workers, could be passed on to loved ones, and would most likely be invested in stocks and bonds.
Sen. Reid said investing in such a manner is “Social Security roulette.” If that is the case, Sen. Reid must think “roulette” is a great way to save for retirement, considering he himself is heavily invested in stocks and bonds. As a candidate for public office, Sen. Reid has to file a “Public Financial Disclosure Report” – and his is an 18 page list of so-called “roulette-like” invstements in stocks and bonds.
Of course, investing in stocks and bonds in not like roulette. Sen. Reid knows this and, as a wealthy man, has prudently invested in them. The senator’s investments are well diversified—municipal bonds, technology, retail, banking, oil, telecomunications, pharmaceutical, and blue chip stocks. Why would a man who derides such investments as “roulette” gamble his life savings?
Maybe the truth is he knows it is not gambling. Maybe what should be asked of Sen. Reid, rather, is why does he not want to allow the working people of America the voluntarily option of doing the same with their Social Security money?
The senator has the luxury of being a millionaire and has plenty of extra money to put into whatever wealth-creating vehicles he thinks are best. He has wisely chosen stocks and bonds. But many working Americans, after paying 12.4 percent of their income in Social Security taxes, feeding their families and paying their rent, do not have enough left over to invest as he has. Why won’t he support letting the poorer among us own the same wealth building assets as he owns? Surely it can not be because he really thinks it is rouelette.
Senator Harry Reid is not alone in his characterization of Personal Retiremetn Accounts as “risky.” AARP has launched a national campaign with TV ads saying “If we feel like gambling, we’ll play the slots”.” The AFL-CIO features member testimonies making similar statements. The American Federation of State, County and Municipal Employees (AFSCME) released a resolution saying, “AFSCME has long opposed diverting Social Security payroll contributions…to fund risky retirement investment accounts.”
But, again, this political posturing seems like a case of “do as I say, not as I do.” As the Tax Foundation reports in a new study, “On average, public employee pension funds have 60 percent of their assets invested in the stock market, including roughly 15 percent in foreign stock markets. Union pension funds have a slightly smaller share of their assets in the stock market, 57 percent.” They do so because that is where the best return is. As this table shows, the California Public Employees Retirement System, the largest pension fund in the nation, puts 61 percent of its assets in stocks, including 21 percent in foreign stocks.
Retirement security is too important an issue to allow politicians like Harry Reid get away with scare tactics like comparing wise investing with gambling. We deserve and honest debate—and reform that will allow Social Security to provide the best retirement possible.