Saturday, March 28, 1998

How can we have a Social Security debate without facts?

By BERNARD STARR / For Scripps Howard News Service

The clock is ticking. That's what President Clinton said when he launched the " great debate" on Social Security reform.

Speaking on Feb. 9 to a group of "twenty something" Georgetown University students -- the generation that will be most impacted by Social Security reform or the lack of it, -- the president warned that the present system will run out of funds in 2029, if not sooner.

The president assumed in his talk that the students were tuned in: "Every one of you knows that the Social Security System is not sound (for the future)."

But what do young people actually know? I posed 12 basic questions about Social Security (8 fill ins, 2 true-false, and 2 multiple choice) to 346 students at an Ivy League college, a city university, a private university and a large state university.

The findings beg the question: Do we dare invite into a debate so vital to the future of America a public that that may be totally unprepared?

Don't have a clue

"I don't have a clue" wrote one student at the Ivy League school when asked some very basic straight-forward questions about Social Security. She was not alone in her knowledge dearth. Most of the 346 students were equally clueless.

And these students were the most likely to be informed: bright undergraduates -- 145 were business students, some were in a graduate course in medical sociology, another graduate group was in a public policy course.

There was some general knowledge that Social Security was for old people, and that individuals paid for it, but there were big gaps. Most didn't know that employers as well as workers pay for Social Security. Some confused Social Security with welfare, veterans benefits and other programs.

"What does the government do with surplus Social Security funds?" Most simply said they don't know (58 percent) although they were encouraged to guess on this anonymous questionnaire. Some must have thought it was a trick question on an exam and responded with, "there are no surplus Social Security funds," or, "what funds?" (11 percent).

Only a single student of the 346 got it right -- that the Social Security funds are invested solely in U.S Treasuries. Seven others (2 percent) said the money is invested but couldn't specify in what.

Trust fund crucial

Yet the existence and fate of the $655 billion Social Security Trust fund ($87 billion was added last year and a comparable amount is expected this year) is crucial to the debate between privatization and the current defined benefit system, as well as other proposals for reform that would invest the Social Security Trust funds in securities and other financial instruments.

It is also essential to know about the nature of the various investments -- their advantages, liabilities and limitations -- to be a meaningful participant in a debate about how to use Social Security taxes.

It is highly unlikely that most young people have that knowledge. But older respondents did not seem to do much better. In a separate survey, 38 mostly boomer (and a few older) teamsters at a union meeting were equally clueless about surplus Social Security funds.

The significance of Social Security for financial security in old age is directly related to how much it pays recipients.

Social Security, as Clinton pointed out, is responsible for significantly reducing poverty in old age, which was Franklin Roosevelt's intent when he signed The Social Security Act into law in 1935. As recently as 1959 the poverty level of seniors was 35 percent, and in 1998 it is down to 10.8 percent -- the lowest of any group.

Significant underestimates

But ask "20 something" students, "what do you think is the average monthly Social Security benefit check?" and you get significant underestimates.

Currently, the average Social Security retirement benefit is $765 -- the maximum is $1,342. Yet most of the students (61 percent) estimated under $700 -- another 26 percent said "I don't know" and couldn't even venture a guess. The most common amount estimated was $200-$300 a month. Quite a few thought it was $100 or less per month.

Since administering the questionnaire I have informally asked others about Social Security reform -- friends, relatives, colleagues, other students -- almost anyone I run into. Few, other than those working in the financial industry do better than the students about the fate of the surplus -- most are surprised that there is a surplus and in disbelief at its size.

Plenty of opinions

But almost all had opinions -- "leave it alone, they want to steal the money, the government should pay more, put it in a 401K," etc.

Why should we expect young people be informed abut Social Security when they are so far from retirement? Because, we're inviting them to participate in a debate about reform and they're not prepared.

And they may be shocked when they're called on to bear the crushing burden of supporting the retiring army of boomers and boomlets.

It may be tempting to use these findings for hand wringing and finger pointing -- our schools have failed, parents have failed, the media has failed.

But the clock is ticking and its time to educate the public so that we can begin a meaningful debate on Social Security reform, an issue so vital to the financial security of America in this age of longevity.

Clinton might best serve the national forum as teacher rather than politician by taking on the task of instructing young people, and the public in general, on the economic facts, principles and issues surrounding the Social Security crisis.

Mr. President: The chalk is in your hand.

Bernard Starr, Ph.D., is a professor emeritus at the City University of New York and currently teaches psychology at Marymount Manhattan College.