Public Opinion and Private Accounts
Cato Executive Summary
Social Security has long been America’s most popular government program. Yet it is a program badly in need of reform. In recent years, reformers have proposed allowing younger workers to take all or part of their Social Security taxes out of the Social Security system and invest them privately in individual accounts similar to IRAs or 401(k) plans. While those proposals have been politically contentious, the American public appears to be well ahead of its elected representatives in accepting both the need for reform and the advantages of individual accounts.
A careful examination of public opinion polling on this issue shows that a substantial majority of the American public supports proposals that would allow them to invest a portion of their Social Security taxes through individual accounts. That support has been consistent over time and is seen in a broad range of public opinion surveys. The handful of public opinion surveys showing less support for individual accounts are based largely on biased questions.
Support for individual accounts is based on Americans should have control over their own money and retirement—rather than higher rates-of-return or higher benefits. As a result, support for individual accounts is less subject to erosion through outside events, such as fluctua-tions in the stock market.
There is no correlation between support for individual accounts and stock market performance. The growing support for individual accounts in the late 1990s was not a result of the bull market. Recent declines in stock prices have not significantly diminished support for individual accounts.
Public confidence in the current Social Security system has been steadily declining, in part, perhaps, because as increasingly prosperous Americans have access to alternative investment vehicles, they are able to make informed comparisons with Social Security.
In the 2002 elections, pro-reform candidates were victorious in every campaign in which Social Security was a major issue. An examination of public opinion shows that the American people support Social Security reform, including individual accounts.
