Josh Marshall has be…

Josh Marshall has been constantly ridiculing Bush’s Social Security reform ideas as unworkable and suggesting they’ll break the system. Well, how about we take a look at where it’s already being implemented and see how that’s going, eh?

Senate Minority Leader Harry Reid (D-Nev.) said on Wednesday that all 44 Senate Democrats were united against the president’s plan to reform Social Security. Without knowing any details, Reid told reporters, “President Bush should forget about privatizing Social Security,” adding, “It will not happen.”

But privatized Social Security has been a fact of life for municipal employees in Galveston County, Texas, for nearly a quarter century. Local government workers voted overwhelmingly in 1981 to opt-out of Social Security in favor of a locally controlled system that has since been widely described as a phenomenal success.

Under federal law at the time, municipal workers had the option of not participating in the Social Security program, replacing it with private retirement accounts. The private system is subject to regular payroll deductions and employer matches, essentially mirroring Social Security tax withholding and employer match provisions.

So how well is it doing?

While the employee-employer funding formulas are nearly identical under both Social Security and the Galveston Alternate Plan, the results are very different.

The U.S. Treasury Bonds purchased with money from the Social Security “trust fund” pay approximately two percent. But for the period from 1982 through 1997 the rate of return on funds invested in the Galveston plan has averaged 8.6 percent, a return more than 400 percent greater than Social Security.

Data from First Financial Benefits, which administers the Galveston Alternate Plan, shows that county workers earning slightly more than $17,000 a year can retire at age 65 with a monthly payment of $1,285 compared with $782 a month under Social Security.

Due to having more money withheld and the effects of compounding interest, higher income employees in Galveston see even larger benefits under the Alternate Plan. Workers earning $51,263 a year could retire at 65 with a monthly benefit of $3,846, while the same worker participating in Social Security would receive $1,540 each month.

And this sort of success is what Democrats are against? Kinda puts the lie to the label “progressive”.

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