President Bush in Galveston County today, where workers voted to privatize their retirement accounts in 1981:
Just – let me just give you a sense for the difference between what a worker gets here in Galveston and then a worker would get out of Social Security. If you get a 3.75 percent return, like they guarantee here in Galveston, on your money, and you’re a person working 37 years, making about $25,000 a year, you’d receive $1,250 a month from the alternate plan now available for workers here – as opposed to $669 from Social Security. Think about that. That’s a difference between a better rate of return on your money over a 37-year period.
In fact, the Social Security Administration did an analysis of the Galveston plan in 1999. The report showed well-paid workers with no kids did slightly better in the short run under the plan. As for everyone else:
Social Security tends to offer higher initial benefits than the Galveston Plan to workers with lower earnings and/or families with dependents who qualify for Social Security benefits. Although many of Galveston’s initial benefits are higher than Social Security’s, they are not indexed to inflation and lose value relative to Social Security’s over time.
The same year, the Government Accountability Office compared the two plans, coming to a similar conclusion:
In general, low-wage workers and, to a lesser extent, median-wage workers would fare better under Social Security. High-wage earners can generally expect to do better under the Alternate Plans, although if spousal benefits are included, even the high-wage workers could eventually receive higher benefits from Social Security.
Hmmmm, makes you wonder which report President Bush was quoting.