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The Inspiration Is Not the Solution

Monday, March 28, 2005; Page A16

A March 19 story reported on the success of the retirement plan established in 1981 for 2,000 employees of Galveston County, Tex., in lieu of Social Security ["In Texas, a Model for Bush Proposal," front page]. Whatever success the county had was due, however, in large part to its being a single-employer plan, much like the federal Thrift Savings Plan.

The article reported that then-Gov. George W. Bush was inspired by the Galveston County experience in formulating his proposal to establish individual investment accounts in the Social Security system.

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However, neither the Galveston plan -- nor the much larger Thrift Savings Plan -- could meet the demands of the Social Security system. Social Security encompasses 155 million participants and more than 6 million employers. About 85 percent of these employers are small businesses without pension plans, let alone the payroll and personnel resources necessary to administer a system of individual accounts.

Moreover, any federal agency charged with centrally administering individual accounts would be burdened with the same problems now faced by the Social Security Administration. For example, 25 percent of Social Security mailings are returned as undeliverable, funds sometimes are not attributed to individual taxpayers for up to 22 months because of delayed reporting and billions of dollars each year never are attributed to individual taxpayers because of reporting errors.

The costs of administering a system of private Social Security accounts involving 6 million employers, as distinguished from a one-employer system, would be so overwhelming as to swallow any investment return greater than that of the Social Security trust fund.

FRANCIS X. CAVANAUGH

Chevy Chase

The writer was the first executive director and chief executive of the Federal Retirement Thrift Investment Board, the agency that administers the Thrift Savings Plan for federal employees.

Galveston County employees were secure in the knowledge of Texas's pension plan when they made their decision to participate in what was essentially a 401(k) program. The safety net is and will be there for them. Reporter Michael A. Fletcher did a disservice to the public discourse by putting that fact deep in his story.

ETHEL HANSAN

McLean


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