Monday, February 07, 2005

Private accounts for Congress – not for America

George Will has a must-read column in Newsweek titled “Harry Reid’s ‘Roulette’” and subtitled: “Members of Congress are doing very well indeed under a plan comparable to the one President Bush would allow all Americans to participate in”:

Begun in 1987, the Thrift Savings Plan, which as of December 2004 had assets of $152 billion, is a retirement-savings plan open to all civilian federal employees, including senators, and all members of the uniformed services.

They can invest as much as 14 percent of their salaries in one of five retirement funds. Consider the rate of return of C Fund, one of the five. It is a common-stock fund, so it should represent the risks that Reid thinks should terrify Americans:

In only four of 17 years has the rate of return been negative. But in 11 years the rate has been greater than 10 percent, in eight years it has been greater than 20 percent, in four years it has been greater than 30 percent. The compound annual rate of return for the last 10 years has been 12 percent, and the return over the 17 years has been 12.1 percent.

[Senate minority leader Harry] Reid participates in the plan, but opposes allowing all Americans the comparable opportunity that Bush is proposing. But if the numbers just cited are the result of roulette, the legislators should let the rest of us into the game in which they are prospering.
One of the governing tenets of 1994’s Contract with America was one stating that Congress must comply with rules imposed on the rest of America. If personal accounts are disallowed by Congress, then obviously Congress must divest itself from the Thrift Savings Plan.

17 comments:

Anonymous said...

That's a bad argument. For My sins, I was once in the civil service. Yes, you could contribute to the TSP, and yes, the first 4% was matched.

BUT, you also paid the full Social Security tax. Only those hired before January 1984 (I missed it by 6 months) are exempt from paying SS taxes.

I support the President's plan (if anything, it's too timid), but this argument is not valid.

Gene said...

I agree with the key point made Will and Viking; That the TSP has a much better investment record than Social Security and that is is NOT a risky game of Roulette. The same point applies to all the academic types who are able to acquire wealth anf retirement funds through TIAA-CREF, but seem to think that "other people" are not smart enough to do the same for themselves.

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