Saturday, November 1, 2008

A private take on Social Security: From Former State Legislator Al Schumann in the Pipestone Star

To the editor:

Our Democrat friends all over the nation are running against privatizing the Social Security system.In Minnesota the state employees, as well as the teachers retirement, have always been privatized. Their retirement board is made up of elected members of the employees and the governor and state treasurer, which invests the money in various stocks and bonds in the open market.

Back in the 1960s when I was in the Legislature we made a slight change. P.E.R.A. and T.R.A. did not include death and survivor benefits, and Social Security did. We changed the law so that 50 percent of the payments went into Social Security, 50 percent went into the privatized accounts. Oh, did we run into opposition from the state and teacher’s union. They much preferred their privatized retirement system because of the excellent returns on their investments.

I get the regular reports from the board and they have been getting up to 10-12 percent annually. They wouldn’t change for the Social Security’s two percent return at any price. Under the “rule of 72” it would take 36 years to double your money at two percent, while at 12 percent it will double in six years. If $10,000 is invested, at two percent, it will be worth $20,000, with compounded interest, in 36 years. If $10,000 is invested, at 12 percent, it will be worth $640,000, with compounded interest, in 36 years. Can you blame them for not wanting to change?

There have been numerous bipartisan boards looking at the problems we are going to have in Social Security. The last one included our former Democratic congressman Tim Penney and former U.S. Sen. Daniel Moynihan, D-New York. One recommendation was that we consider privatization. Remember you only lose money on stocks when you sell low. The boards invest roughly the same amount every month and they can buy more stock when the price is low. The stock will always come up in time.

Brian Davis is right to support partial privatizing for Social Security. Our younger citizens won’t have much when they retire under the present program. Being against this may be a popular gimmick for an election, but please tell us Mr. Walz, what are you proposing to do about the Social Security system? And, contrary to what you have been saying on TV ads, it will not take any money away from the present recipients.

Al Schumann