- The Washington Times - Thursday, May 3, 2001

President Bushs plan to let workers deposit some of their payroll taxes in their personal investment accounts to create greater retirement wealth has the potential to dramatically change American politics, analysts said yesterday.
As the New Deal-era Social Security system, a product of the Great Depression, drifts closer toward bankruptcy, polls show younger Americans doubting that they will ever see any benefits when they retire.
Partial privatization has attracted stronger political support in recent years as workers across the income scale have become investors in the stock market directly or through their 401(k) and IRA retirement plans.
"It has the potential to create a new coalition among a broad-based investor class. It could dramatically change American politics," said independent pollster John Zogby.
The first manifestation of this sweeping political change came last year when Mr. Bushs Democratic opponent, Al Gore, attacked him relentlessly for a plan that he said was a "risky scheme" that would destroy Social Security.
But the attacks did not work as effectively as had similar tactics in the past. Election polls continued to show strong support for Mr. Bushs proposal to create private retirement plans outside of Social Security, even among heavily Democratic constituencies such as blacks, Hispanics and organized labor.
A poll conducted last year by Mr. Zogby for the Cato Institute showed that 69.3 percent of Hispanic voters said they would like to be allowed to "invest at least part of their money" in their own investment accounts.
Another poll conducted by the Joint Center for Political and Economic Studies showed that Mr. Bushs plan won a 45 percent plurality among black Americans. Notably, his plan was supported by 55 percent of all blacks under age 50.
Analysts said that not only were the demographics of a widening investor class working in Mr. Bushs favor but that he was making inroads even among seniors who want the retirement system strengthened but not through higher taxes on their children.
"With the recent drop in the stock market, people are more concerned about retirement than ever. This is not just about Social Security. This is all about retirement security," said Republican pollster Frank Luntz.
"Bush is on stronger ground when it is a debate about retirement security. What it does is it makes the traditional Democratic scare tactics less viable. I think their scare tactics are passe," Mr. Luntz said.
"Seniors want the issue addressed. They know what Social Security payroll taxes are doing to their children and grandchildren," he said.
A recent national poll for the United Seniors Association found that 82 percent of seniors 60 and older said that it was very important or important "that their children and grandchildren have private retirement accounts to get a better deal."
"What this shows is that the Democrats could be in deep political trouble on this issue and our polls suggest that," said Charles Jarvis, president of United Seniors.
Nevertheless, Democratic leaders yesterday pointed to the stock markets sharp drop earlier this year and attempted to raise fears about investing Social Security funds in the financial markets.
But even with the stock markets decline and volatility over the past year, after two decades of unprecedented growth, surveys continue to show strong support for the much higher long-term growth from the market than the meager 1 to 2 percent return offered by Social Security.
"My experience is that support for privatization continues even when the stock market dips," Mr. Zogby said. "Most investors are 401(k) holders and longtime pension holders and the advice they get is that over the long period the stock market is going to perform well."
Meanwhile, Mr. Zogby thinks Mr. Bushs plan has the potential to make political inroads deep into traditionally Democratic territory. "We know that labor union members with 401(k)s think differently and are inclined to be more Republican than labor union members without 401(k)s. They see the market increasing their wealth and as a potential friend."


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