Burnt Orange Report

Heber Taylor on the Galveston Plan

By Jim Dallas

Heber Taylor, Galveston County Daily News managing editor and voice of sweet reasonableness, wrote on Sunday:

As the hometown newspaper, we're sometimes asked what we think of this plan. We're open to changes in Social Security but don't think the Galveston Plan is the best model for change. The plan has two problems.

The first is that it benefits workers at the top of the pay scale more than it benefits those at the bottom. We'll admit that's a hotly contested conclusion. We've followed the debate. We've studied the arguments on both sides.

The conclusions that make the most sense are those drawn from a study conducted by the Government Accounting Office in 1999. In general, the study found that the alternate plan benefited higher-paid employees. The study found that low-income workers would fare better under Social Security.

Obviously, that's a problem that any attempt at reform should avoid.

The peple who most need an adequate guaranteed income are those at the bottom of the pay scale. Any effort to reform Social Security must take that truth as a starting point.

The second problem with the Galveston Plan is that a worker can opt out of the deal. Some county workers have done so. Over the years, we've talked to some who cashed in their chips, bought a new car and started looking for work elsewhere.

What do they have to show for their time with the county? Nothing. No Galveston Plan. No Social Security.

What happens when those workers retire? The burden of caring for them probably will fall back on the public. That burden is one of the things Social Security was designed to alleviate.

If you think about the analogy between Bush's proposal to reform Social Security and the Galveston Plan you'll come to one conclusion. The analogy is awfully superficial.

Bush wants to let workers invest some fraction of their contributions in the stock market. The county's alternate pln invests all of an employee's withholdings and county's contributions into conservative investments such as insurance annuities.

People who are looking at the Galveston Plan in hopes that it will shed light the President's proposal should look elsewhere for illumination.

Nonetheless, if President Bush wants to claim his plan is "like" the Galveston Plan, then I'm more than willing to make him "own it."

P.S. Incidentally, there seems to be a bit of cognitive dissonance about the Galveston Plan. Initially put forward of as proof that a privatized system could work, subsequent criticism has resulted in other privatizers backing off the claim and, indeed, blaming the "liberal media" for even suggesting the analogy. Did Dubya get the memo? Apparently not. He's not getting many of the memos these days.

(Also, George, we're putting the coversheets on all TPS reports. Did you get the memo about this? If you could just go ahead and make sure you do that from now on, that would be great. Uh, I'll go ahead and make sure you get another copy of that memo, ok?)