Market Drop Didn't Shake Confidence In Social Security Privatization
February 2, 2001
Some foes of President Bush's plan to let people invest part of their payroll taxes in the stock market counted on the recent fall in stocks to deal the plan a mortal blow. But Bush still counts it as one of his top five priorities and the public continues to like it, according to reports.
- Bush still contends that the rate of return in private markets "is significantly higher than that which is achieved off the Social Security trust."
- Even after the fall in the Nasdaq, 60 percent of Americans still favored the Bush plan, according to a CNN/USA Today/Gallup poll in early January -- in which Bush's plan came in second in public priority.
- Wharton School economist Jeremy Siegel has found that the average rate of return for stocks has never fallen below the inflation rate for any 20-year period since 1802 -- and has beaten average returns on bonds and Treasury bills in every 30-year period since 1871.
- Siegel found that the lowest inflation-adjusted rate of return the market yielded over 30 years was 2.6 percent.
By contrast, a couple in their 30s making $58,000 in combined income can expect a 1.2 percent rate of return from Social Security, according to Heritage Foundation statistics.
Source: John Berlau, "Plan to Privatize Social Security Still Popular Despite Market Drop," Investor's Business Daily, February 2, 2001.
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