South Carolina Senate Fact #11: PRAs Working in Other Countries

Inez Tenenbaum, candidate for South Carolina’s open U.S. Senate seat, is running a fear campaign against Jim DeMint’s plan to save Social Security with Personal Retirement Accounts (PRAs). The truth is that PRAs are not “dangerous” like Tenenbaum claims; in fact, a similar plan has existed in Chile for over 20 years and is a tremendous success.

Here at home, the real danger lies in doing nothing: Social Security will run into the red in just 14 years when benefits paid exceed contributions to the system. This will happen because the system is flawed at its core, based on a Ponzi scheme that will inevitably collapse. Plus, the existing Social Security “Trust Fund” is a government accounting fiction full of meaningless government IOUs—there are no real assets waiting for future retirees. PRAs will allow workers to save real assets and free them from the Ponzi scheme.

In 1981, a new program in Chile allowed workers there to begin to invest a ten percent payroll tax into a personal account that the worker owned and controlled. Now, the average Chilean woker has more savings than the average American worker, while earning only one-seventh as much. These accounts provide Chileans with returns that more than double those of the U.S. system— and without creating a massive unfunded liability. Seeing Chile’s success, the U.K., Australia, and many Eastern European nations have reformed their retirement programs to some degree along these lines.

Representative Jim DeMint signed the FreedomWorks Candidate Survey and committed to reforming Social Security through PRAs similar to the Chilean plan. Unfortunately, Inez Tenenbaum refuses to complete the Survey and will not provide her own solution.

Don’t believe empty rhetoric about Social Security reform— Personal Retirement Accounts are the best solution to the retirement security crisis.

For more information, please visit http://www.freedomworks.org/southcarolina/