If the reactions of FedSmith.com readers are any indication, President Bush has his work cut out for him in gaining widespread support for his proposed Social Security overhaul, which would allow citizens to invest a portion of their withholding taxes into private accounts.
While readers generally supported the idea of using the current Thrift Savings Plan as a model for how the investment portion of Social Security would work, it wasn’t the level of support that would be necessary to move the initiative forward.
The President will get his opportunity to win over the nation with the proposal during his state of the union address tonight, in which a large portion of his speech is expected to be devoted to outlining his ideas for reforming Social Security.
At the federal level, a survey of FedSmith.com readers revealed that there was support for reforming Social Security. Furthermore, there was acknowledgement that the TSP is an excellent program for any reform to be modeled after. But exactly how the reform should work seems to be an area of disagreement among federal employees.
When asked whether they believe that the current Social Security system is facing financial problems that need to be resolved, 72% acknowledged that there was, while 20% said no, leaving 8% unsure.
Here is where things get sticky. When asked if changes are made to Social Security whether they agree with the option of allowing some payroll taxes to go into private accounts, 47% said they did. 46% said they did not. 7% said they were unsure – meaning 53% of feds taking the survey are unsure or don’t think some payroll taxes should go into private accounts. This is probably not the kind of endorsement the administration is seeking.
But there is hope. When asked whether using the Thrift Savings Plan as a model for private Social Security accounts was a good idea, 54% said yes and only 33% said no. 13% said they were unsure.
Perhaps most revealing, survey takers were asked whether they would like the option of investing in private Social Security Accounts. 48% said yes, 45% said no and 7% said they were unsure.
The responses of readers illustrated some of the misconceptions about the proposed Social Security overhaul, something that has to be clearly defined and explained before the nation’s citizens give the idea the support necessary.
A federal employee in Atlanta said she was worried that she may lose her account altogether under the new plan.
“I feel I have been paying in SS for over 40 years and I feel that I should be able to receive some of the funds I have contributed. I know that social security was never to be touched for anything other, but it seems that our government officials keep tapping the pot. This needs to stop and it needs to continue as Roosevelt meant it to be.”
One VA worker in Oregon said the current program wasn’t in as bad of shape as the administration would have you believe.
“Financial problems with Social Security are not as dire as professed by the Bush administration. Nevertheless, some problems do exist and they should be addressed in a manner that does not impose major structural changes or require additional deficit spending.”
A benefit authorizer from a New York office of the Social Security Administration said one thing that the proposed reformation doesn’t take into account in comparisons with the TSP is the fact that the government matches a certain percentage of investments for enrollees – something that the SSA worker said could be disastrous if the entire private sector was thrown into the program.
Another SSA manager in Birmingham, AL said the administration was missing the point.
“First I do not think privatization will help Social Security in the long run. Not enough people will opt to participate. Social Security was set up for the wage-earners and their dependents. It has become an entitlement, almost a welfare program and does not even resemble what was originally established by congress. The indexing provision was a mistake that need to be corrected – this is what the administration should be selling.”
An attorney with the Navy in Washington said the TSP was too risky. “Private accounts place greater value on one’s investment luck and know-how and make retirement earnings depend on those factors rather than being based on your work history which seems fairer and more the American way! Leave it alone.”
There was some support for the overhaul as well. A manager with DFAS in Virginia said that the TSP was a great model and should be used as an addition to Social Security and not as a replacement.
An engineering technician from China Lake also vouched for the change.
“The TSP is a great system. It is not ‘privitization’ as the Democrats would have the populace believe. Let the younger folks have the opportunity to build up a retirement nest egg.”
Another fed endorsed the change as long as Congress couldn’t touch the funds.
“As long as ‘uncle’ cannot touch it and use the monies as congresses ‘piggy bank’ (i.e. general revenue fund) it may work.
An auditor with the DCAA said the Social Security returns of the past generation are very low.
“The 2% Social Security returns over your lifetime of working is indefensible. It’s time for big brother to cut the apron strings and let us be responsible for our and our families’ futures.”
An Army engineer wondered what all the fuss was about in the first place.
“If I understand this correctly, no one is proposing dumping all of everyone’s Social Security into a risky stock fund. What’s the problem with allowing people to actually earn more Social Security? Over just about similar length of period, any fund in the TSP has provided far greater returns for people than Social Security has. Those that worry about some of their Social Security funds being put into high-risk areas (such as the Government’s C, S or I funds) could put their money into the more conservative areas (such as the F and G funds). Even these funds produce far greater returns than the current Social Security system.”