Harry Reid's 'Roulette'

George Will takes on the dem hysteria over the Social Security plan that will allow workers to invest a small percent of their SS contributions into private accounts. As the President pointed out in his SOTU speech, federal employess already have a similar plan. - Sailor


Harry Reid's 'Roulette'

Members of Congress are doing very well indeed under a plan comparable to the one President Bush would allow all Americans to participate in.

By George F. Will
Newsweek


Feb. 14 issue - A century ago, American progressives said they aspired to use Hamiltonian means to achieve Jeffersonian ends. They meant they would wield a strong federal government to promote equality. One of George W. Bush's aims with Social Security reform, as with the rest of his "ownership society" agenda, is to use Hamiltonian means for Hamiltonian ends.

Bush wants to use bold federal measures such as voluntary personal retirement accounts, funded by 4 percentage points of Social Security taxes, to encourage citizens to be self-reliant, farsighted, thrifty, industrious and entrepreneurial. The Democratic Party, which traces its pedigree—although little of its current thinking—to Jefferson, likes Bush's idea as little as Jefferson liked Hamilton. What the Democrats currently lack, however, is a leader with even 4 percent of Jefferson's stature.

Last week Howard Dean, almost certainly the next Democratic Party chairman, said: "I hate Republicans and everything they stand for." Either Dean means what he says, in which case he is as unhinged as the rest of the party's Michael Moore caucus, or he does not, in which case he is a blowhard like, well, Moore. Yet for several weeks Dean has been one of the four most conspicuous Democrats on the national stage.

Two of the others have been Ted Kennedy, the shrill essence of East Coast liberalism, and California Sen. Barbara Boxer, who comes from Marin County, a habitat for West Coast liberals who find the city across the Golden Gate Bridge too tepidly "progressive." The fourth, and most important, is Senate Minority Leader Harry Reid, who seems determined to earn the description Teddy Roosevelt applied to President John Tyler—"a politician of monumental littleness."

In December, Reid, speaking about President Bush's proposal for Social Security reform—a proposal Bush had not yet announced—said: "[Republicans] are trying to destroy Social Security by giving this money to the fat cats on Wall Street." Good grief. "Destroy"? The "fat cats" will not get fatter from the estimated 0.3 percent cost of handling the funds.

Reid's hyperbole suggests that Deanspeak is contagious. In Reid's televised "response" to the president's State of the Union address—written before the address—he disparaged the idea of voluntary personal retirement accounts funded by portions of individuals' Social Security taxes as "Social Security roulette." This is the crux of the Democrats' argument against Bush's plan: Equities markets are terribly risky—indeed, are as irrational and risky as roulette. Think about that.


Roulette is a game without any element of skill. By comparing the investment of some Social Security funds in stocks and bonds to gambling on roulette, Reid is saying that the risks and rewards of America's capital markets, which are the foundation of the nation's economic rationality and prosperity, are as random as the caroms of the ball in a roulette wheel. This, from a national leader, is amazing.

It is especially so for a reason Bush delivered with a rhetorical rapier thrust in his State of the Union address. After saying that the 4 percentage points of Social Security taxes could be invested only in a few broadly diversified stock and bond funds, Bush pointedly said to the assembled representatives and senators: "Personal retirement accounts should be familiar to federal employees, because you already have something similar, called the Thrift Savings Plan, which lets workers deposit a portion of their paychecks into any of five different broadly based investment funds." Touché.

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.

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.