The Firestorm Over Private Accounts
By Charles Cole (03/22/05)
My recent AmericanDaily.com article about members of Congress having a private account component in their retirement system while opposing one for taxpayers generated a maelstrom of criticism and accusatory name calling from folks adamantly opposed to the President’s efforts at including personal ownership accounts in his Social Security reform effort.
The main thrust of most of the arguments was that I was wrong to suggest that the federal government retirement system’s private account component (the Thrift Savings Plan, or TSP) was any different from a private sector 401(k) account. Aside from the blatantly obvious difference, i.e. that all the money which goes into federal employees’ TSP accounts is provided by the taxpayer, I suspect there is a deeper reason for their anger on this issue.
Admittedly, these folks raised one valid criticism of my article, i.e. that the actual dollar amounts I used to portray the size of possible annual TSP contributions which a member of Congress could contribute were higher than the currently allowable “cap”. I chose to use the maximum amount for two basic reasons: (1) based on prior practices, I believe this cap will be increased after the current regulation expires since this has been the case as the TSP has evolved over time; and (2) in the past, Congress has not hesitated to change rules at the drop of a hat, especially in areas from which they themselves might benefit. They did so back in the early 1980s by mandating federal employee payroll deductions as contributions to the Medicare fund, proving yet again that they rarely, if ever, hesitate to flex their muscles in support of a “cause” in which they believe.
The hubbub generated by my recent article caused me to wonder as to just what aspect of private accounts was so heinous as to cause such vitriolic reaction to this concept on the part of the Democrats in Congress and their minions throughout society. I decided to do some additional research on the matter and found a recent editorial in the Wall Street Journal by pollster John Zogby. Hardly a stooge for the Republican Party, Zogby’s poll turned up a heretofore understudied variable was he found to be, in his words, “a far greater determinant” of people’s vote in the 2004 election than most of the traditional voter classifications.
The variable? Being a member of what Zogby terms “the investor class”. In 2004, people who reported being a member of this class, regardless of the size of their portfolio, voted for Mr. Bush by a 61-39 percent margin. The newly defined “investor class” was at play across many of the traditional Democrat voter groups, including: union members, women, 18-29 year old voters, Hispanics, and voters in the $50,000-$75,000 income range. Non-investors in all these classes voted for Mr. Kerry by between 10 and 37 percentage points.
Moreover, Mr. Zogby noted that “self-identified investors comprised 46% of the total vote in 2004” which was much higher than had previously been thought. All this led him to posit that if the Democrat Party ignores Mr. Bush’s proposed “ownership society”, they may find themselves in the minority for a long time to come.
This, of course, explains both the recalcitrance of the Democrat Congressional leadership on this issue and the venom directed at supporters of personal Social Security accounts on the part of those who continually lambaste anyone who dares to support such “risky schemes”. Democrat politicians can be counted on to support any effort at maintaining the cycle of dependency on government programs and to oppose any attempt to break this cycle by giving individuals a greater say in their own future and thus freeing them from the arbitrary fiats of an oversized and arrogant central government.
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