Social Security has long been, in former House Speaker Tip O’Neill’s words, the “third rail” of American politics — touch it and your political career dies. The underlying belief is that American voters will not tolerate any major change to the program.
However, according to a poll of 800 registered voters conducted by Public Opinion Strategies on behalf of the Cato Project on Social Security Privatization, the public understands Social Security’s problems and strongly supports efforts to privatize the system.
No one should doubt the continued popularity of Social Security. Our poll results clearly show that Social Security remains one of the most popular of all government programs — two-thirds of respondents hold a favorable view of the program. That popularity cuts across all age groups. Even among baby boomers and Generation X, groups that have expressed skepticism about the program’s future, Social Security is viewed as a program that has succeeded for 60 years in ensuring a dignified retirement for elderly Americans.
Beneath the surface, though, there is a growing awareness that Social Security faces significant problems and needs reform. Only 37 percent of Americans believe that the current Social Security system is fair. In addition, far more Americans describe the current system as risky than describe it as safe or secure. A majority of Americans, 56 percent, believes the system either is already in trouble or will be in trouble in the next five to 10 years.
That is why young people do not believe that Social Security will be there for them. Fully 60 percent of all individuals under the age of 65 express that belief, as do larger majorities of younger voters.
As a result, more than two-thirds of respondents believe that Social Security will require “major” or “radical” change within the next 20 years. Approximately half of younger voters believe that major or radical change is needed today. The support for change cuts across ideological and party lines.
Certainly there is a good reason for that belief. According to the latest report of the Social Security system’s Board of Trustees, Social Security will be insolvent by 2029, back from 2030 in last year’s report. This is the eighth time in the last 10 years that the insolvency date has been brought closer.
But that is not the full story of Social Security’s looming crisis. The important date is 2012. Beginning in that year Social Security will start to pay out more in benefits than it collects in revenues. To continue meeting its obligations, it will have to begin drawing on the surplus in the Social Security trust fund. But the trust fund is really little more than a polite fiction. For years the federal government has used the trust fund to disguise the actual size of the federal budget deficit, borrowing money from the trust fund to pay current operating expenses and replacing the money with government bonds — essentially IOUs.
How then to fix Social Security? Our poll shows that a majority of voters reject most traditional Social Security reforms such as raising the retirement age, raising payroll taxes, or reducing benefits. They correctly perceive that such tinkering with the system will simply make it a worse deal for young workers, who will have to pay higher taxes for fewer benefits.
However, one Social Security reform does have strong popular support among voters — privatization. Under privatization the current Social Security system would be reformed to allow people to take the money they now pay in Social Security taxes and invest it in their own personal retirement accounts much — like IRAs or 401(k)s. More than two-thirds of all voters, 69 percent, would support transforming the program into a privatized mandatory savings program. More than three-quarters of younger voters support privatization. This support, particularly among young voters, cuts across party and ideological lines.
Our poll shows that while Americans recognize that Social Security has done much to help current seniors retire with dignity, they understand that the system will not be sustainable in the future. They clearly understand that reform of the system will be necessary to ensure that today’s young workers will also be able to have a secure and dignified retirement.
As this public support emerges into the political arena, Social Security will no longer be the third rail of American politics. Indeed, if politicians refuse to deal with Social Security’s problems, they may soon face a new third rail in their search for support among younger voters.