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September 17, 2005

Investing public money to fund retirement benefits

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Don Surber notes that at least some Democrats seem to believe in using investments in securities as way to fund pensions, even as national Democrats and the AARP trash Bush's proposal to allow Social Security funds to be so invested.

If George Dubya Bush wants to save Social Security, let him come to West Virginia and campaign for the Democratic governor's $5.5 billion pension bond.

The state plans to borrow money to invest in stocks and bonds. This is the only way to save the nation's most underfunded teachers retirement sytem in the nation. The West Virginia plan is only 19 percent funded.

The bond is predicated upon stocks and bonds appreciating by an average 7 1/2 percent per year for the next 30 years. That is a highly conservative number. Federal employees have enjoyed 12 percent annual returns over the past 17 years from their stock investments.

The liberal Charleston Gazette heartily endorsed the state's borrow—and—invest plan to save the teacher's pension plan. But the Gazette is hysterical in its opposition to anything Bush. It claims investing Social Security taxes in stocks and bonds to save Social Security is a risky scheme. But for state government? In an editorial on Wednesday, Cure: Bonds best solution, the Gazette said:


West Virginia taxpayers are coughing up $350 million a year to keep these pension plans afloat — and this obligation eventually will rise to $700 million a year under a 40—year correction agreement. But if the bond sale is approved June 25, excess proceeds from the bonds will be invested in stocks, generating enough new revenue to hold the yearly taxpayer tab at the current level. If the bond proposal is defeated, taxpayer cost will continue rising to $700 million.

Again, more Democratic Party fudge.