Who To Trust On Social Security?
February 8, 1999
When Social Security was founded during the Great Depression, people who felt they had been betrayed by Wall Street put their faith and confidence in the federal government. Today, however, baby-boomers nearing retirement regard Wall Street as their financial savior, while reserving their scorn for the federal government's shaky promises.
- Public opinion polls reveal that many of the 76.5 million Americans born between 1946 and 1964 are decidedly skeptical of President Clinton's proposal to have the federal government invest hundreds of billions of dollars in the stock market.
- It's not that they distrust the stock market's ability to yield greater returns than the low-interest bonds in the Social Security trust fund -- rather, they distrust the government's ability to invest the money prudently and without political influence.
- Investment of Social Security taxes in government bonds has yielded a paltry 2 percent to 2.5 percent annual rate of return since the taxes were first collected in 1937.
- An array of recent polls show that Americans steadfastly oppose propping up Social Security by increasing taxes, reducing payments or raising the retirement age.
And the polls show only modest support for measures that would burden upper-income Americans -- such as raising the amount of earnings that are subject to payroll taxes or reducing benefits for those with high retirement incomes.
Source: Kevin Sack, "Faith Shifts Over Secure Retirement Funds," New York Times, February 7, 1999.
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