THE PUBLIC AND SOCIAL SECURITY….A couple of notes from today’s Washington Post poll about Social Security. From a purely practical perspective, it looks like the following anti-privatization arguments are the ones most likely to resonate with the public:
Cost. Among people who currently support private accounts, over half change their mind when told the plan will cost $700 billion over the next decade. This is by far the most effective argument among privatization supporters.
(Conversely, people who oppose privatization are pretty solid. There don’t appear to be any arguments that have a significant effect on their opposition.)
Bush’s proposed benefit cuts. The most effective wording is “cutting guaranteed benefits for future retirees,” not “slowing the growth of benefits.” But regardless of wording, this is the change to Social Security most strongly opposed by the public.
Increasing the cap. A surprising 81% of respondents believed that income above the current cap of $90,000 should be taxed. Since this would fix the system completely with no benefit cuts, it could be a very strong public position for Democrats to take if it’s presented correctly.
(However, some caution may be called for. The wording of the question is technically accurate, but it seems possible to me that some people might have mistakenly believed that people who make over $90,000 don’t pay any Social Security taxes at all. Some more refined polling might be called for here.)
So: George Bush’s plan costs too much, it cuts guaranteed benefits, and the system can be fixed simply by taxing income over $90,000. Short and sweet.
UPDATE: On the other hand, here’s an example of a bad argument, courtesy of Senate Democrats:
According to the Congressional Budget Office, the privatized accounts are, in fact, expected to produce a risk-adjusted rate of return of 3% above the inflation rate. Therefore, the automatic reduction of Social Security benefits would equal the entire value of the privatized accounts. In effect, the automatic benefit reduction would constitute a 100 percent tax on the retirement savings in those accounts.
Trying to argue that private accounts won’t have better returns than treasury bonds is dumb. It’s not only wrong, it’s also not credible. The stock market isn’t likely to have the 7% returns that enthusiasts say it will, but it is likely to have risk-adjusted returns higher than 3%.
I know, I know, it’s just the “Question of the Day,” not the core of the Democratic message. But it’s still a wonky argument that’s unlikely to work. Best to stick with more potent arguments like the ones above.