by Rod D. Martin
February 21, 2005
It has long been said that Robin Hood, that populist bandit of legend, “stole from the rich to give to the poor.” More than a few liberals have invoked his heroism as a justification for the “progressive” income tax and every manner of government compulsion.
But in many, if not most, versions of the legend, “the rich” aren’t the target at all.
Just pop some popcorn and put on Kevin Costner’s Robin Hood – Prince of Thieves (recently released in a vastly improved DVD special edition). Costner’s bandit doesn’t waste much time on those who’ve earned their living, however generous it might be. On the contrary: his Robin Hood goes straight at the heart of darkness, the oppressor of rich and poor alike, the ultimate thief who with the full force of law robs everyone, allegedly for their own good. He is the Sheriff of Nottingham, a stand-in for his kind throughout the centuries: the state.
And in this year’s version, he’s played by Harry Reid.
Despite Reid’s pathetic denials, Social Security is in crisis, and the crisis is government-made. A Ponzi scheme from the start, Social Security takes in your retirement savings by force – between 12 and 15% of your total income! – and pretends to hold it in trust. But the only thing you can trust is that your money is getting spent, in part on current retirees, in part on crucifixes dipped in urine or whatever crazy program happens along. Even were Social Security capable of surviving – it’s not – younger workers are guaranteed a negative rate of return: they’re actually losing money.
Fortunately, outside the Beltway, others have not been so blind. We can learn from their example.
Taking advantage of a loophole in the Social Security Act, three Texas counties — Galveston, Brazoria and Matagorda — established private retirement systems in 1981. Horrified, Congressional Democrats closed the loophole two years later, preventing other counties from following suit; but every public employee in the three Texas counties, 5,000 in all, has been part of the private system ever since. The results are amazing.
The private system works like an annuity. Employees are taxed at the same rate as workers everywhere, but instead of sending the money to Washington, the counties ask large insurance companies to bid against each other for the right to manage their retirement funds for one year. Each insurance company offers the counties a guaranteed rate of return on their investments, and the highest bidder wins.
Employees are vested immediately. Since they own their account, they can take it with them if they switch jobs. They can increase their contribution to a maximum of 20 percent of their income, all tax-deferred, and take their choice of a lump-sum payment or monthly checks when they retire.
The results have exceeded all expectations. In some years, the guaranteed minimum annual return has been as high as 12 percent; it has averaged 6.5 percent since 1981. Under current projections, a 40-year-old middle manager will receive $5,474 a month upon retirement. Under Social Security, he would have received $1,042.
What about death and disability benefits? While Social Security pays an insulting one-time death benefit of $255 — less than the cost of a pine box — the private plan pays triple the worker’s salary up to $150,000, with a guaranteed minimum of $50,000.
This saved Wendy Colehill’s life. Her husband Bill, a sanitation worker in Galveston for 12 years, died in a car wreck, leaving behind Wendy and their three-year-old son. Under Social Security, she’d have been penniless and homeless, another victim of liberal “compassion.” She cries as she tells of the $126,000 death benefit she received days after Bill’s death, allowing her to keep their home, rear Bill Jr., and even go back to school to learn a trade.
Liberals decry personal accounts as “too risky,” and pretend (after thirty years of saying the opposite) there is no crisis. But the truth is, it’s crisis enough that so ridiculously few Americans have a deal this good. Democrats could have provided it long ago, for everyone. Instead, they robbed little old ladies’ piggy banks, and then scared them with tales of Republican “vultures.”
There’s no question who the vultures were (and are) today. It’s time to give Americans their money back, to create real lock-boxes beyond government’s control. Were Harry Reid and Nancy Pelosi private-sector pension managers, their management of Social Security would have landed them in prison long ago. As with Nottingham’s Sheriff, we have too long trusted the criminals to guard our lives.
America needs a Robin Hood. IRAs, 401(k)s and these three courageous Texas counties have shown us the way. It is thus all the more appropriate that the Texan George Bush should lead the charge.