AARP EXPOSE

It iis high time someone told the truth about AARP: "The Emperor has no clothes." On Social Security they are completely wrong in their attacks against letting workers own their own accounts. AARP and other critics of President Bush's Social Security plan for Personal Retirement Accounts argue that individually owned Social Security accounts cannot provide improved retirement benefits and will destroy what they claim is the "safety net." But a retirement program in Texas shows how to improve upon Social Security with Personal Retirement Accounts, and accomplish this while controlling financial risks.

A bit of history: Until the 1983 Social Security "reform," (which raised taxes and cut benefits), local governments could opt out of the Social Security system if they provided an alternative retirement plan. In 1981, three Texas counties-Galveston, Brazoria and Matagorda-launched a retirement program that offers a much better deal than Social Security, without introducing any significant financial risks to employees.

The Texas model is a resounding success. Retired Galveston County Judge Ray Holbrook, as his county's chief elected officer, oversaw the "Personal Retirement Plan" from its inception until his 1995 retirement. The plan had three principles: (1) benefits had to be better than or the same as Social Security; (2) no tax increases; and (3) no risk to workers.

Here's how this Personal Retirement Plan works: workers' payroll taxes are deposited in personal retirement accounts that are then used to purchase commercial banking and life insurance products already available in the marketplace, such as certificates of deposit and annuities, as well as conservative government and commercial bonds. "It was this approach that sold my colleagues, and me," Holbrook said, "because it essentially eliminated risk from the program."

"Our plan provides better retirement, survivorship and disability benefits than Social Security," said Holbrook, a National Grbuttroots Leader for USA Next. "Our plan provides a better rate of return-between 7% and 8% per year-compared to less than 2% under the current Social Security system. And our plan uses no risky investments, only commercial banking products, annuities and bonds that provide guaranteed fixed interest rates and no risk." This destroys AARP's claims.

Because Personal Retirement Accounts are individually owned, accumulated savings can be pbutted on to heirs. In this way, a worker can provide a tangible financial legacy for the family. AARP's bitter, determined resistance to helping families prosper financially is mystifying. The only logical explanation is they are completely dedicated to continued dependence on the government.

The contrast of the Texas Model with Social Security is not "theory." When one county commissioner died, the commissioner's widow received a $255 rest benefit from Social Security. That's all. The Alternate Plan, however, paid her a lump-sump survivorship benefit of $150,000, plus she is enbreastled to a reserve account of $125,000, available to her at any time. Her benefits are more than 1000 times better than what Social Security paid after a lifetime of working.

The existing Social Security system provides paltry returns on contributions. For millions it will be zero or less. The Personal Account provides a rate of return on retirement account contributions four to five times better than those offered by Social Security, without significant added risk.

The Social Security system cannot be left "as is." It requires enormous tax increases, significant cuts in benefits or both. That's a formula for intergenerational political conflict. Younger people will resent huge new taxes and retirees will blame younger workers' resistance to taxes for any benefit cuts. The Personal Retirement Plan in Texas proves AARP is dead wrong again and that they threaten Americans' finances.

Go to www.usanext.org and click on "Don't Mess with Texas" to see how you can beat AARP.