Source: http://www.ibdeditorials.com/IBDArticles.aspx?id=305852438594528
By INVESTOR'S BUSINESS DAILY | Posted Tuesday, September 09, 2008 4:20 PM PT
Election '08: The country could use an honest debate on Social Security, particularly in an election year. From comments made over the weekend, though, it's clear that Barack Obama is not the man to provide it.
Read More: Election 2008 | Budget & Tax Policy
Speaking Saturday via satellite to an AARP group, Obama, who might not always know what city he's in or how many states make up the union, but knew well to whom he was talking, warned that his opponent John McCain would "gamble" their retirements by privatizing Social Security.
As if teleprompted on cue, he said that McCain embraces "George Bush's failed privatization scheme."
And with those comments, honesty left the building.
Bush's Social Security privatization plan is not a failed policy. It cannot be "failed" because it has never been tried, with the exception of three Texas counties where private systems are flourishing.
The president once had Washington talking about a partially privatized system in which Americans would voluntarily place a part of their retirements into private accounts. But the plan never became law, thanks to congressmen from the party of Obama who were in lockstep opposition, and some squishy Republicans.
What we are left with is a Social Security system that in nine years will begin to pay out more in benefits than it takes in via the payroll tax. By 2041, the "trust fund" will be exhausted and the system broke — unless Congress follows a plan such as Obama's, in which case the majority of Americans will be broke because the tax hikes needed to fund benefits will wreck the economy.
But that's not the case in Chile, which reformed its public pension system in 1980. Legislation passed that year let workers opt out of the government-run system that is funded by a payroll tax and instead deposit a piece — at least 10% — of their earnings into a personal retirement account.
The average return has been about 10% a year and 95% of the Chilean workers opt for the private system. They are free to stay in the government scheme, but it's not unusual to hear them say they are happy with their private accounts. But then the 95% participation rate says as much. And it destroys, as well, the Democrat-media complex argument that the system's flaws are being exposed.
Great Britain, with a newer system, set up in 1986, has also had success with personal accounts, as has Australia, Sweden and numerous other nations.
Obama complained Monday the Republicans are "shameful" for the way they have characterized his effete approach to terrorism.
But what could be more shameful than forcing Americans to pay into a retirement system in which the return on investment is a mere 2%?
Even worse, we have to pay a larger ratio of our earnings — 12.4% when employers' "shares" are included — than the Chileans, whose return on investment is likely to be five times higher.
Obama, possibly the next U.S. president, has decided that Americans can't have the same freedom to choose as Chileans, Britons, Australians and others. Those who support the "progressive" candidate in this race need to know that less freedom is not progress.
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