Poll says majority wants Soc. Sec. reform

By LISA TROSHINSKY, for United Press International

WASHINGTON, July 26 (UPI) -- The majority of likely voters favor the option of putting part of their Social Security funds in safe personal retirement accounts, despite the recent stock market turmoil and corporate scandals, according to a new poll conducted by a Washington think tank.

More than two-thirds of voters indicated support for "giving younger workers (under the age of 55) the choice to invest a portion of their Social Security taxes through individual accounts similar to IRAs or 401(K) plans," said the poll, conducted by the libertarian Cato Institute and polling firm Zogby International. In other words, the majority of respondents favored private investments that are not as risky as individual stock market accounts.


Forty-five percent of likely voters favor some sort of reform to the Social Security system, and one in four people polled said a complete overhaul of Social Security is necessary, said John Zogby, who conducted the poll for the Cato Institute.


Given the strong support for reform, Republicans are making a big mistake by not campaigning on the issue of Social Security -- traditionally a Democratic issue -- in the upcoming congressional elections, Zogby said last week at a Cato news conference.

"Republicans should wake up and realize they have a winner," he said.

The 10-question survey of 1,109 likely voters was conducted between July 8 and July 12 -- two weeks after the WorldCom accounting scandal broke and during the week when the Dow Jones Industrial Average tumbled 694.97 points, said Cato representatives.

The support for Social Security reform cuts across all demographic and ideological lines, including political parties, age groups and race, they said. The group least in favor of privatization is the 65 and older group, but even 54.5 percent of this group favored safe investment reform, compared to 82.8 percent support shown by the 18-to-29-year-old group.

Current retirees who are receiving benefits create the biggest challenge for passage of Social Security reform, Zogby said.

Strong support for reform during a market downtown "is something that goes beyond policy; it's a value, a belief in the right to choose and control their own destiny," Zogby said. "There is a fundamental belief in controlling your own retirement that trumps any volatility.


"The fact that 51 percent of voters said they are less likely to invest in the stock market, but two out of three want the opportunity to invest, is not inconsistent," he said. "They are saying they are not trusting big business and not trusting their brokers."

Another factor, he said, is distrust of the current Social Security system, which is predicted to enter debt in 2017 -- when the baby boomers are collecting benefits.

"People want some sort of change; they are worried about the current Social Security system. The problem is in the details," Zogby said.

David John, a research fellow at the conservative Heritage Foundation, said a recent Wall Street Journal/NBC poll that found 65 percent of the public losing faith in the stock market and only 48 percent or fewer in favor of Social Security taxes being invested in personal stocks and bonds, is not inconsistent with the Cato-Zogby poll.

"The Cato poll is almost exclusively about Social Security; the WSJ poll is also about what people think of the stock market, which changed the focus of the poll," John said. "The key is what alternative they have. People have a great concern about the ability to win or lose money, but on the other hand, people don't have faith in Social Security either. For years they've been told there won't be enough benefits to pay younger workers, who are aware that Social Security is not a guaranteed, risk-free program. They are measuring that against the risk of personal retirement accounts, which don't require investing in the stock market."


Those who say that investing 25 percent to 30 percent of Social Security taxes in personal accounts will take away money from current retirees are only putting off the inevitable problem of Social Security debt, John said.

"The current, pay-as-you-go Social Security system doesn't have a way to save and invest money. By 2017, the system will be five to six trillion dollars in debt, which the Clinton administration said only can be repaid by borrowing money, raising taxes, cutting Social Security benefits, or cutting other spending --all hard choices. The only way to get around that is to create some form of personal retirement account," he said.

"It's true that money going into that account will not pay current benefits to our parents, but filling that gap will have to be done by the hard choices mentioned above. It will just happen sooner," John said. "If we do nothing and wait, the amount of the debt will be $25 trillion between 2017 and 2077. By 2041, Social Security will only pay 75 percent of the benefits that it does today. If we put money in personal accounts, the debt will be $7 trillion."

Former Democratic presidential candidate Al Gore won senior votes in the 2000 presidential election campaign by saying that Social Security would lose $3 trillion over the next 20 years if only 2 percent of income, or one-sixth of current Social Security taxes, was invested. George W. Bush lost that argument because he didn't come back with a solution, Zogby said.


William Gale, senior fellow and deputy director of economic studies at the Brookings Institution, said he is "skeptical of the Cato-Zogby poll," and he is "surprised to see liberals and union members in favor of privatization." He also agrees that Social Security will be in debt with or without reform.

"There's an unfunded liability in Social Security that wouldn't go away through private accounts," Gale said. "You eventually have to cut benefits or raise taxes, even if the market does well. You'd also have to change the Social Security formula, which hasn't been addressed. Under a reformed system, total benefits would equal personal accounts plus current Social Security benefits. So if the market did well, you would have to cut scheduled benefits in order to give people the same amount of money."

Christian Weller, an economist at the liberal Economic Policy Institute said the Cato-Zogby poll is flawed because it leaves out important questions.

"Serious studies on this issue show that support for Social Security reform would dwindle from 68 percent to 25 to 30 percent if you asked people if they would support privatization if it meant a reduction in benefits or an increase in taxes," Weller said. "The Cato poll also doesn't ask people if they understand the complex issue of Social Security."


Eugene Steuerle, senior fellow at the progressive Urban Institute, falls in the middle.

"It's not unreasonable for people to want individual assets and want Social Security benefits; the trick is how to get the right balance," he said. "Most Social Security reform proposals confine the would-be investments to index-type funds. These accounts could work if you make them safe enough."

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