Wednesday, May 18, 2005

Avoiding the Social Security debate - THE MILWAUKEE JOURNAL SENTINEL

Reforms may affect young workers most, but are they listening?
By GREG J. BOROWSKI
gborowski@journalsentinel.com
Posted: May 18, 2005

When the president - any president - talks about reforming Social Security, the ones who pay the most attention are those closest to retirement, or already there.

President Bush addresses a gathering of the National Association of Realtors last week, pitching his plan for Social Security.
Milwaukee Schedule
President Bush will deliver remarks and conduct a conversation on the future of social security Thursday morning before 400-500 invited guests in Milwaukee.


But as President Bush arrives in Milwaukee today to push his new reform plan, the ones with among the most at stake - younger workers - may be the ones paying the least attention of all.

To some, the issue is as remote as retirement, 30 or 40 years away. To others, the problems facing the system - chiefly the impending wave of baby boomer retirees - are so great, they defy hope of a solution.

Still others, in the wake of a bitterly contested election, simply don't trust Bush, believe the problem is overstated or are conditioned to be skeptical of any proposed cure-all fix for a system they don't believe will survive for them.

There is Stacy Conroy, a 33-year old Milwaukee resident, who is hopeful the system will be around for her 2-year-old son, but is leery of Bush's efforts to fix the system and acknowledges, "I have kind of a feeling it is going to go down anyway."

And there is Ivan Gamboa, a 26-year-old West Allis resident, who is interested in Bush's plan to allow some money to be invested in private accounts, but right now is putting any savings toward a house, thinking "that's the safest investment right now."

In general, there is skepticism, said Wendy Scattergood, an assistant professor of political science at St. Norbert College in De Pere.

"I don't think they believe anybody who says, 'It will be there for you,' " she said. "They just don't buy it."

In a recent statewide poll the college conducted with Wisconsin Public Radio, only 28% of the adults who responded said they approve of Bush's handling of the issue, while 63% disapproved and 9% were not sure.

However, the results differed when respondents were asked - without a reference to Bush - about allowing younger workers to invest a portion of their Social Security taxes in private accounts, a central piece of Bush's plan.

In that question, 52% favored the idea and 42% opposed it, with others unsure or not responding.

That sort of split is among the many challenges faced by Bush as he leads off his second term with what may go down as his biggest domestic policy fight.

Bush also faces fire from Democrats and other groups, who quickly organized protest events this week leading up to his Milwaukee visit. Even some Republicans in Congress have been slow to embrace Bush's plan, perhaps unsure it is what they will end up voting on.

Bush will talk about Social Security this morning at the Milwaukee Art Museum, his latest stop in a nationwide barnstorming tour to focus attention on the issue.

He was invited by the Metropolitan Milwaukee Association of Commerce, which emphasized its connection with the Young Professionals of Milwaukee group when it made the pitch for a presidential visit.

If today's visit follows the form of earlier stops, Bush's pitch will include the stark numbers: In three years, the first of the baby boomers will reach retirement age. In 12 years, by 2017, the system will be paying out more than it takes in, if nothing is changed.

By 2040, there will be two active workers paying into the system to support each recipient, down from today's 3-to-1 ratio, and much lower than the 16-to-1 ratio that existed in 1950.

Although many details still must be spelled out, Bush's plan would not make any changes for those already receiving Social Security, or who were born before 1950 - those now about 55.

It would use something known as "progressive indexing," which would let lower-income workers see larger increases in benefits than others.

Younger workers would be allowed to invest a portion of their Social Security taxes in what Bush describes as "a conservative mix of bonds and stocks." The idea is that this would mean larger benefits for everyone in the future, without a deep cut in benefits or a tax increase, which he has ruled out.

Bush argues that the system must be fixed now, and that for every year nothing is done it adds $600 billion to the cost of fixing it.

Democrats, though, have criticized the plan, labeling it a "privatization" of Social Security that would shift money to Wall Street brokers even while cuts are made in benefits.

Democratic Gov. Jim Doyle said the plan amounts to "borrowing trillions of dollars and wagering the future of Social Security on the stock market."

Talking Wednesday to about two dozen people at the Washington Park Senior Center, most of whom would not be affected by the proposed changes, Doyle said Bush has not established that a major overhaul is even needed.

"We're not in any crisis mode, despite the president's effort to build it up," said Doyle.

Bush's plan has led to dueling sets of numbers. In a recent speech in Washington, Bush cited a 26-year-old who earned $33,000 last year. That person, he said, would get $21,700 a year in today's dollars when she retires, or $3,800 more than the same person today.

Plug the same numbers into a Democratic calculator - labeled "Social Insecurity" - and it says the benefit would be $2,800 less than received today.

The future of Bush's plan may hinge in part on support from the younger workers.

They will be paying into the Social Security system as it takes in their boomer parents, and they would have the most time to benefit from any change allowing private investment accounts.

The St. Norbert/Wisconsin Public Radio poll, conducted between April 25 and May 4, found a similar split in this group.

Among younger respondents, the appeal of private accounts was strongest - 78% favorability for those age 18 to 24, with the numbers dropping by group to a low of 27% for those 65 and up.

The 18- to 24-year-olds gave Bush his best overall approval rating - 66%. But only 39% in that group approved of his handling of Social Security. Indeed, in each age group, Bush's approval for handling Social Security was far lower than his overall rating.

The poll, which questioned 400 state adults, had a margin of error of plus or minus 5 percentage points.

A challenge for Bush will be connecting with younger workers, who also tend to be less politically engaged than others.

"Just getting their attention will be difficult," said Scattergood of St. Norbert. "Even if you have their attention, trying to convince them that Social Security will be something other than a tax on them to pay for other people to retire will be very, very difficult."

Conroy is among those skeptical of the future of Social Security - and Bush's intentions as he moves to reform it.

"Overall, I pretty much stopped listening to anything the president has to say," said Conroy.

She and others question who will benefit most from putting some Social Security money into investments - and what will happen to those whose investment strategies do not pan out.

In many ways, the "personal savings account" concept is a natural fit for younger workers. They would have the most time to benefit from any growth in the investments.

And they have grown up in an age of IRAs and 401(k)s, not the straightforward pension-when-you-retire concept of their parents.

"From what I've heard, it's safe investments that have done well over the long term," said Gamboa, who works in marketing for a local law firm. "It's not anything risky that's getting invested."

Gamboa, who voted for Bush, said the issue is a big one for the growing Hispanic population, on average younger than many other groups. Yet, he said, there is little discussion about it among those his age.

"I think it's more of a political issue right now, and you don't talk politics too much with your friends," he said. "It's not something where you sit down and debate the pros and cons of Social Security."

Gamboa likes the idea of investing some money in a personal account, noting that the work-world is different today than when his father was able to work for decades at one place.

Others worry that some will make poor investment choices and are in need of the old-fashioned Social Security safety.

"President Bush's plan wrongly assumes everyone is a sophisticated investor," said Erik Guenther, 28, an attorney who lives in Madison.

He believes Bush's proposal doesn't address the real problem - funding. Guenther believes cuts need to be made elsewhere in the federal budget, or taxes increased, something Bush has ruled out.

Like many his age, though, he is not especially confident the system will be around when he reaches retirement age.

"I've paid into it and I hope it will be there," he said. "But I'm not counting on it."

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