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Social Security

On Eve of Clinton Visit to Kansas City, Doubts About Social Security

By Steven Pearlstein
Washington Post Staff Writer
Tuesday, April 7, 1998; Page A03

KANSAS CITY, Mo., April 6—It is the day before President Clinton is to visit Penn Valley Community College for a town meeting on Social Security. And as a dozen students in Randy Kidd's accounting class file in, they are being asked whether they think they will receive Social Security when it is their time to retire.

Not one expresses confidence that they will.

Many of them are a bit vague on how the program works, but their instructor understands it quite well – and given his position, he is just the sort of person Social Security's supporters hope to rely on to bring around those who think the program is hopelessly headed for bankruptcy.

But they'll have to look elsewhere. "To tell you the truth, I'd be willing to give back all the money I've already contributed if I could simply be allowed to save and invest my own Social Security contributions going forward," said Kidd, 42.

The unmistakable sentiment in favor of overhauling a program once considered the government's most admired is everywhere in this city of Hallmark sentimentality, hot barbecue and cool midwestern practicality. The government pension program has a problem, and most everyone here seems to know it.

Right now, more money flows into the Social Security trust fund than is paid out. But when baby boomers start retiring, that reserve will begin to disappear. To prepare for that day, President Clinton is kicking off a series of four town hall meetings starting with one here Tuesday, when reform proposals will be debated.

Among the options are cutting benefits, raising the age at which retirees become eligible, or redesigning the current system in favor of one in which workers would be required to contribute to personal security accounts that they or the government would manage.

It is the last option, or at least some version of it, that seems to be gaining popularity not just in Kansas City but around the country. As a result, the political burden seems to have shifted, from those who want radical change to those who would keep things as they are.

It's not so much that people are angry about contributing money every week to a system they believe they won't get to enjoy, or even that they're unwilling to subsidize the poor or the elderly as part of a national pension scheme.

It's just that, well, they're pretty sure they could do better by investing at least some of their Social Security money on their own. That sentiment appears to cut across both race and class for those who are a decade or more from retirement.

"I think it's probably a good thing that people become responsible for their own financial future," said Monique Gustafson, 27, as she sipped a cafe latte in the trendy Country Club Plaza shopping district last weekend, accompanied by her husband, an engineer, and an aging lapdog, Nikki.

"I guess when it comes down to it, I'd rather take the risks of the market than the risks of the government running the program into the ground," said Thomas Norman, 51, a farmer from Lynwood, Kan., during a break last weekend at a personal finance conference sponsored by the Kansas City Star.

That, of course, was the line being pushed at dozens of booths set up at the fair by financial services companies, which have a big interest in fueling the somewhat misleading impression that Social Security will go bankrupt in the next 35 years – the fund's trustees say that even if nothing is done, future retirees would still receive 75 percent of the current level of benefits, even after allowing for inflation.

"I don't think there will be any money left for me," said Barbara Hakkio, 47, an office manager for American Century Investments, which has its headquarters in Kansas City. "Those ahead of us will get it all."

Recent polls reflect not only the dramatic collapse of both the support and confidence in the Social Security system but also the determination by younger Americans in particular to begin taking responsibility for their own retirements.

An Associated Press poll last week found that 74 percent of Americans favored fundamental changes in the system over small fixes. And fully 80 percent supported the general idea of letting individuals shift some of their Social Security contributions to individual accounts that they could manage themselves – an idea long pushed by the conservatives but recently embraced by a special commission on Social Security, business groups, centrist Democrats and even New York's liberal Sen. Daniel Patrick Moynihan.

To some extent, the politics of Social Security is simply catching up with the reality of people's lives. A poll commissioned by Americans Discuss Social Security, a group formed to spark debate about the program, found that 62 percent of workers between the ages of 25 and 34 are already saving for retirement, with fewer than 10 percent expecting to depend on Social Security for their well-being.

"Look, Social Security is like a lot of things that worked well 50 years ago but have now pretty much run their course," said Kevin Fortin, 29, as he washed his car early Sunday morning at the Wonderful Waldo Car Wash on the south side of town. The office equipment salesman and his wife each contribute the maximum to their 401(k) plans and Individual Retirement Accounts, salting away 15 percent of their current income.

Their confidence, like that of many Americans, is no doubt boosted by the current reign of prosperity, in which unemployment is low, the economy is powering forward and the stock market continues to soar, closing yesterday above the 9000 mark for the first time.

And it's not just the young who are becoming convinced that they would be better off trying to take care of themselves. Window washer Horace Smith began investing heavily in mutual funds and IRAs 15 years ago so that when he begins collecting Social Security in July, it won't be the major source of income for him.

"I know a lot of people who, if it wasn't for Social Security, they wouldn't be able to make it – people my age, you know" said Smith, leaning on his squeegee. "But honestly, I don't think the young people will be able to count on it that way."

Still, Smith likes the idea that, if all goes badly for him or his children when they are too old to work, Social Security will be there, if necessary, to keep the wolf from the door. That, he said, was the purpose behind Social Security in the first place, and was still a goal worth preserving.

"I don't look on Social Security as a reliable pension program, certainly," said David Falke, who has been putting his spare cash back into the clock shop that his great-grandfather started back in 1905. "But on the other hand, if things don't go right with the business, I may need it, so I'd be upset if it weren't there for me."

Or as Rosalie Rastorfer, 58, a former schoolteacher, put it Sunday while doing her weekly food shopping at a suburban Hy-Vee, "It's all well and good to say you want to privatize Social Security, which I support, but at the same time do you really want your grandmother standing on the corner begging for food?"

The debate over Social Security is all about balancing the old desire to provide a safety net with the newer instincts toward risk-taking and personal responsibility.

Of course there are some, like Wilma Roberts, who don't see why you can't have both.

On Sunday, Roberts, 77, and her pal Madeline Wing, 82, both of Sweet Springs, Mo., were making the rounds of the local riverboat casinos in a white Cadillac sedan. Roberts is strictly a quarter slot machine player ("the nickels wear you out") and was up $700 by the time she pulled up to the Flamingo in the early evening. Roberts also knows she's been a winner from Social Security.

"I don't know what all the fuss is about; it's fine the way it is," she said, giving a dismissive wave of her hand to such ideas as privatization, higher taxes, reduced benefits or limiting benefits to elderly who are truly needy.

"Just tell them back in Washington that everyone should get it who put money in. I know millionaires who take it. Who's to say what's right for someone else?"

© Copyright 1998 The Washington Post Company

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