Public Statement of The Honorable Ray Holbrook

President's Commission to Strengthen Social Security

September 6, 2001

I am Ray Holbrook from Santa Fe, Texas, a retired County Judge in Galveston County for 28 years.

I am honored to have this opportunity to testify before the President's Commission to Strengthen Social Security. I am here in my own capacity and as a Grassroots Leader for the United Seniors Association, the national association with 550,000 citizen activist members dedicated to Uniting The Generations and expanding Retirement and Investment Freedom, Health Freedom, and Economic and Tax Freedom.

For the past ten years the United Seniors Association has vigorously warned citizens and politicians alike that the social Security Trust Fund was at risk due to both demographic and political pressures, and needed to be protected and strengthened immediately. Today, United Seniors Association is an active member of the Alliance for Worker Retirement Safety, the preeminent national alliance dedicated to expanding wealth for all Americans, with special concern for minorities, women, and those at lower income levels who suffer most under our present system.

As a retired judge, I know how important the personal testimony of an eyewitness can be. I am not a theorist. I am an eyewitness and a practitioner.

I know personal retirement accounts can work. Because I have one.

I know a commission can design a Better Deal. Because I was part of one.

I know it's possible to build public support for bold reform. Because I did it.

I know it's possible to change the heart of a skeptic. Because I was one.

Twenty-one years ago, three Texas counties - initially Galveston, and then Brazoria, and Matagorda, plus two cities - developed an alternative to Social Security's retirement, disability, and survivorship programs. That was at a time when local government could opt out of Social Security, but that is not he case since 1983. Despite initial fear and anxiety, the details were exactingly explained and strenuously debated in public. County workers approved the plan by a 3 to 1 margin and the results since inception have been extraordinary.

Our plan provides better retirement, survivorship, and disability benefits than Social Security. 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 is a "banking model." It uses no stock market investments, only commercial banking products, annuities, and bonds that provide guaranteed fixed interest rates and no risk. Most importantly, minorities, women, lower income workers, and those dying prior to reaching retirement age have clear economic advantages under the Plan, compared to Social Security.

We've done very, very well, without taking such risks. Over the course of the past 20 years, we have averaged between 7% and 8 % per year on our personal retirement accounts. That's between two and five times better than what our workers would have received had we stayed din Social Security, and all the money has been safe and secure.

Our disability insurance pays 60% of a worker's salary, up to $5,000 a month. And our life insurance program, which replaced the survivorship part of Social Security, pays three times a worker's annual salary at least $50,000 a year or a total of up to $150,000. These are significantly better benefits than Social Security.

Financially, workers have had the peace of mind that their money was truly safe, that we were getting guaranteed fixed interest rates that they could "take to the bank," rather than have to live with great anxiety that certain stocks or market sectors would go up an ddown like a roller coaster.

Politically, that made our reforms much, much easier to sell to a curious but skeptical work force in our Texas Counties.

These successes matter to real people. One county commissioner in Galveston County passed away not long ago. His widow was quite young, about 40. From Social Security, she received a lump sum survivorship benefit of $255. Not per month. Not per year. That was it -- $255.

What did she receive from our Alternate Plan? She received a lump some survivorship benefit of $150,000. Plus, she is entitled to a reserve account of $125,000, available at any time she wants to draw it down. From our plan she received more than a quarter million dollars, or over a thousand times that received from Social Security.

That's why though I respect the New Deal upon which Social Security was based, I ask the President and the Commission to look seriously and carefully at our approach, because it is truly a Better Deal for workers and their families.

Finally, let me emphasize that our workers have true financial security for themselves and their families; wealth building, personal accounts that are their own property; and the opportunity to escape from poverty, especially for women and minorities. This is not a theory. We have a real model - an American Model - a Texas Model - that the President and the Congress could readily adapt for use on the national stage.

I urge you to come down to Galveston. See for yourself. We'd be glad to have you. We'd be glad to answer your questions, calm your fears.

It is my fondest hope that we have created a model the rest of the country can benefit from as well.

Thank you very much for the opportunity to testify before this esteemed Commission.