Mrs. Colehill Thanks God for Private Social Security

Opponents of plans to privatize the Social Security system often exploit the fear of the unknown. Testifying before the House Ways and Means Committee in October 1994, for instance, union official Gerald Shea criticized such privatization plans as too risky. Over and over again, the employee-benefits director for the AFL-CIO said there is no evidence that privatization is better, no evidence that workers will save up more money, no evidence that workers will be protected if they become disabled, and no evidence that they could carry their savings from job to job. Conjuring up images of senior citizens standing in line at soup kitchens, he said that passing privatization reform would eventually force a future Congress to reintroduce Social Security. No private insurance product, he said, can offer such protection. Three weeks before Shea's testimony, in an equally passionate speech over the grave of her husband, Wendy Colehill offered just such evidence. A sanitation worker in Galveston, Texas, for 12 years, Bill Colehill had died in a car accident while driving Wendy and their three-year-old son home from the beach. He was 38. am normally a quiet person, but not at that cemetery I couldn't be, Wendy says. did what Bill would have wanted me to do. I thanked God that some wise men privatized Social Security here. If it wasn't for them, if I had regular Social Security, I'd be broke when he died-eating cat food or something. Within days of Bill's death, Wendy Colehill had received a death-benefit check for $126,000. With that money, she paid both for her husband's funeral and, since she could not raise Bill Jr. on a cashier's wages from Burger King, for her tuition at paralegal school. If Wendy Colehill had instead been relying on Social Security benefits, she would have received a check for a mere $255. A Lucky Loophole When Social Security was established in 1935, a loophole allowed states and municipalities to exempt their public employees from the federal retirement program. In a handful of states, governors and unions set up smaller versions of Social Security for teachers. They were virtually identical to the federal program. But in 1981, three counties in eastern Texas quietly withdrew from the Social Security system and set up their own privatized retirement program. Fearing a severe drop in Social Security tax revenues if others followed, Congress closed the loophole two years later. But the Texas experiment shows that Americans have nothing to fear from privatization. The Texas program makes more money. It offers greater benefits to the disabled. It follows the worker from job to job. upon the death of the beneficiary, it functions as a generous life-insurance policy, paying the survivors a minimum of $50,000. For years, critics have been able to argue with computer projections and models against privatization, but this is real life, explains Merrill Matthews Jr., an analyst at the National Center for Policy Analysis, in Dallas. And real life shows us it works even better than anyone expected. In 1979, Bill Decker was serving an uneventful term as Galveston's county attorney. As the county official responsible for personnel administration, however, he started to become concerned about all the newspaper reports of Social Security's looming insolvency. So he asked a financial analyst to design a program that would protect the county's workers. Don Kebodeaux, the president of Houston's First Financial Capital Corp., proposed privatization. Under Kebodeaux's plan, the 5,000 public employees of Galveston, Brazoria, and Matagorda counties are still taxed 6.13 percent of their pay, just like employees everywhere, and the county kicks in an equal amount. But the money doesn't go to Washington. Instead the fund works like a private annuity. Every year, the counties ask large insurance companies to bid against each other for the right to manage their retirement funds for one year. …