Enron. WorldCom. A tumbling stock market. It would be hard to think of a less hospitable environment for proposals to allow workers to privately invest a portion of their Social Security taxes through individual accounts. Democratic politicians certainly think so. Hardly a day goes by without a statement from Democratic leaders promising to make Social Security “privatization” a central issue in this Fall’s election. Republican politicians may think so too. They have been noticeably reluctant to engage Democrats on the issue. But both parties may be badly misjudging public opinion.
A new poll conducted by Zogby International, one of the nation’s leading polling firms, on behalf of the Cato Institute shows that more than two-thirds of likely voters continue to support private investment of Social Security taxes. This poll was all the more significant because it was conducted just two weeks after the WorldCom scandal broke and during a week that the stock market fell more than 700 points. Yet, despite this market turmoil, 68 percent of likely voters supported giving younger workers the option of investing a portion of their Social Security taxes.
Support for individual accounts was broad and deep, cutting across political and demographic lines. It could be expected that Republicans (82 percent) and conservatives (78 percent) would support private investment, but so does a majority of Democrats (54 percent) and self-described liberals (57 percent). Fifty-eight percent of African American voters supported individual accounts, as did 64 percent of union households. That must be a terrible disappointment to their leadership, which has campaigned vigorously against the idea. Of course, young people were the strongest supporters of individual accounts (a stunning 82 percent of those under age 30). But the idea was supported by Americans of every age. Even among those 65 and older, 54 percent support individual accounts.
These results are similar to other recent polls, including those by Gallup, the Washington Post, and National Public Radio. All show that support for individual accounts has not been shaken by recent events in the market. Voters appear to have reached a consensus in favor of individual accounts that is not affected by day-to-day events. It has become an ingrained part of their beliefs.
A reason can be found in the response voters gave when asked the most important reason for supporting individual accounts. It wasn’t higher benefits or returns from private investment. It wasn’t even the ability to leave their accounts to their heirs, although both are popular concepts. Most voters simply cited the right of workers to control their own retirement funds and to have choices about how their money is invested. Indeed, voters said that recent Wall Street scandals made them want more control over their retirement investments. While they applied that to corporate retirement funds, they also applied it to Social Security.
As John Zogby explains, “Sure, people are worried about the market. But there is a core value of controlling your own retirement that trumps market volatility.” In short, Americans believe in giving workers more choice and freedom because Americans believe in freedom. That is far more fundamental than temporary shifts in the stock market.
Given voter sentiment, the question remains what role Social Security will play in the fall elections. Roughly half of voters consider a candidate’s stance on Social Security reform to be a “very important” factor in determining who to vote for. And, 69 percent of voters agree that Social Security needs major reform.
One wonders therefore whether Republicans will wake up from their self-induced stupor and recognize a winning issue when they have one. Or will Democrats continue to beat a dead horse in hopes of mobilizing their core constituencies? And in the long run, the big question is whether partisan wrangling and gridlock will continue to block a reform that the American people are clearly demanding.