Is There Really A Crisis?

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That Americans should feel so protective of Social Security reflects the central role it has come to play in their lives, their expectations and their peace of mind. When Franklin Delano Roosevelt signed it into law in August 1935, he didn't use the word crisis because he didn't have to: 20% of the country was out of work, and no one was poorer than the elderly. "We can never insure 100% of the population against 100% of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age," F.D.R. said. At the end of 2004, about 48 million Americans--not just retired workers but also the disabled and the spouses and children of deceased workers--drew $41.5 billion a month in benefits. Even with 401(k)s and pensions figured, nearly two-thirds of those who receive benefits count on it for more than half their income; a third rely on it for 90%.

All of which explains why rank-and-file Republicans on Capitol Hill--who haven't forgotten how they used to get clobbered for entertaining even modest Social Security changes--aren't exactly storming the microphones to pledge their unconditional support for anything that would change the basic outlines of this arrangement. Anxiety is especially high in the House, where all 435 lawmakers have to run for re-election next year. "I've told my staff we are going to keep all options open. I'm not saying yes or no at this point," says Republican Congressman Mike Castle of Delaware, who leads a group of Republican moderates known as the Main Street Partnership. "It's well and good to say the average gain [in an investment account] would be higher than if you left it in Social Security, but there's a definite certainty to Social Security. When you're in the market, you're subject to the whims of the market."

What's more, studies of how Americans invest their 401(k) accounts suggest that, given the chance to make choices, most can't even beat a basic index fund. People tend to chase last year's returns, sticking with stocks long after they have peaked, or invest too conservatively or fail to diversify. Still, there are reasons to think the public, particularly younger Americans, might be open to the idea of taking more control of their own retirement. As the New Deal generation dies off, it is being replaced by one far more skeptical about Social Security. In the TIME poll, a majority of the work force--53%--said they had little or no confidence that the current system would provide full benefits when they retired. Half of those from 18 to 34 said they supported the idea of diverting part of their Social Security taxes into individual accounts, compared with only 30% of those 55 and over. (That's one reason Bush rarely misses an opportunity to reassure older people that his plan would maintain their benefits.) But in all age groups, a large majority said they would reject the plan if it meant heavy government borrowing.