Given the state of the financial markets, some people are revisiting the idea of personal accounts. For example, Jane Bryant Quinn of Newsweek writes: "A few years ago, the dream was to put [Social Security money] in stocks and let folks take their chance. For your sake–or your mom’s sake–aren’t you glad we didn’t?"
No, I'm not glad. For starters, let's forget the part about mothers. In an article that addressed head on the misinformation surrounding Social Security reform, Ruth Marcus noted in the Washington Post that "the private account plan suggested by President Bush and backed by McCain would not have applied to anyone born before 1950" and "would not have changed benefits by a single penny for current retirees." So let's leave our parents and grandparents out of this.
For the sake of our generation, should we take the current market conditions as a lesson about reforming the broken Social Security system? As it turns out, two young Newsweek staffers down the hall from Jane Bryant Quinn debated the effects of the current financial situation on our generation. And oddly enough they repeatedly mentioned the "definitely frightening" future of Social Security.
Yet in contrast to their concerns about "the lack of Social Security money" that the current system will provide, one of the debaters was optimistic about long-term investment, the same strategy that would guide personal accounts:
"[W]e're probably not the most knowledgeable financial advisers. But from what I've been hearing, I should just be playing the long-term game–not watching my 401(k) go up a little, and then down a little, but just keep contributing and not get too nervous. And since we're in our 20s, insurance company meltdowns like AIG's don't seem to have much of a bearing on our lives."
This is a refreshing view, and it reflects the truth of the matter: despite some volatility, the market performs well over the long run. No matter if you support or oppose personal accounts, it doesn't make any sense to look at what the market does on one day or in one year. The key is to think about what would happen over the course of the 40 or more years we would contribute to personal accounts. And if you're not sure whether the market goes up or down over the long run, you can click here to see a chart of the Dow Jones Industrial Average since 1970.
In today's New York Times, this ad appears on p. A14 and 15. As a signatory of an open letter to the Presidential candidates and
the American people, S4 co-founder Patrick Wetherille joins former
government officials and grassroots organizations in calling attention
to our country's growing fiscal crisis and its implications for future
generations.
Our Social Security system deserves a
straightforward debate and candid discussion among our elected leaders.
We need to change the way our country saves; transform the way
Americans view retirement; and provide the opportunity for all income
classes to accumulate wealth within the Social Security system. Through
the efforts of S4 and our partners, like the Peterson Foundation, we
are redefining the Social Security debate in this country in order to
include the voices of
those of us with the most at stake: America's younger workers and
future generations.
A few pictures from the RNC convention - above is a photo of Jo during Sarah Palin's speech and below is Evan with Cindy McCain. S4 went to both the DNC and the RNC to talk with young people about the importance of Social Security reform.
The Associated Press wrote last week about Senator Obama's Social Security reform plans, criticizing the candidate for "providing few details on basic questions." This criticism is well-deserved, though the AP could just as easily have written the same thing about Senator McCain. Thus far, both candidates have been frustratingly vague on the issue.
One reason to target Obama may be that he went out of his way to make Social Security reform an issue during the Democratic primaries. Back before the Iowa caucus, Obama was very clear that he -- in contrast to Senator Clinton -- had a specific plan to fix Social Security: eliminate the payroll tax cap for those making over $250,000 a year.
Once people began to crunch the numbers, though, it turned out that a payroll tax cap elimination was an expensive way to address a small portion of the problem. (In truth, the SSA had done the math long before Obama came out with "his" plan, which was the same one advocated by Senator Edwards.)
When word of this got out, Obama's policy folks changed some of the numbers to make the tax increase less burdensome. The result, of course, is that the current plan fixes even less of the problem than the original proposal.
Which leads to a question: If fixing Social Security for our generation is so important to Obama (as it was back in Iowa), then why does his current plan address less than a quarter of the shortfall?
As mentioned, Senator McCain should also offer more details. So far we know that he supports personal accounts as well as benefit cuts, but what exactly does that mean? Progressive indexing? Raising the retirement age?
Restoring long-term solvency to Social Security will necessitate leadership on several fronts, but it would be useful to voters if Obama and McCain were each to explain -- at least in the hypothetical -- which options he could support.
Students for Saving Social Security, the nation's largest youth organization dedicated to reforming Social Security, today reacted to the news that the Center for American Progress, Rock the Vote and other youth organizations are misrepresenting our generation's views on personal accounts.
For starters, a recent economic survey by the Center for American Progress found that 74 percent of young people support personal accounts, but the organization then buried this statistic near the end of its survey report.
Titled "The Progressive Generation: How Young Adults Think About the Economy," the May 2008 survey sought to portray young people as broadly supportive of initiatives backed by the organization. A glaring exception to this portrayal was our generation's support for personal accounts, a finding not mentioned in the survey summary.
Instead, the authors buried near the end of the report that "Social Security is perhaps the one issue where Millennials [sic] views are not so progressive." The authors then proceeded to discount Millennials' support of personal accounts based on our age. The Center for American Progress did not use age to discount any of its other survey results.
"There is a clear implication that we are too young to understand the issue," said Jo Jensen, the executive director of Students for Saving Social Security. "Why ask young people what we think if you don't want to hear our answers?”
The buried statistic was recently dug up by reform opponent Michael Connery, a youth activist who blogs at The Nation. Connery used the statistic to argue that "progressive" organizations such as Rock the Vote should avoid discussing Social Security until after the Presidential election.
Specifically, Connery warned Rock the Vote against “engaging conservatives on the issue,” which would suggest that Rock the Vote has taken a political stance that is something other than conservative. Though Rock the Vote pledges to "tell it like it is," the group reneged on its commitment to participate in a youth entitlement conference just three days after the Connery article.
"Is Rock the Vote now openly partisan?" Jensen asked. "If not, how can Rock the Vote oppose something that 74 percent of young people support?"
