Black groups hesitant about Bush proposal
By Jill Lawrence, USA TODAY
LARGO, Md. A mostly black audience burst into applause here last month when Ken Mehlman, in his first appearance as Republican Party chairman, said "every single American will be able to save and build and own and pass along an asset to their children" under President Bush's proposal to make private investment accounts part of Social Security.
But at a mall in nearby Hyattsville, more than a dozen interviews with blacks yielded only one person who said he might like to try Bush's idea. The rest wondered why Bush wants to inject risk into a program they think works well.
"People would be taking chances with their money," said Rebecca McGraw, 60, a part-time sales assistant from Mount Rainier. "Why mess with something that's already perfect the way it is?"
As the GOP launches a four-year drive to build on gains last year among black voters, the administration is betting private accounts will hold special appeal to them. The reasons include two unfortunate facts of life: black people on average earn less than white people, and they die younger.
Bush is among many conservatives, ranging from the libertarian Cato Institute to Maryland's African-American lieutenant governor, white and black, who argue that Social Security is therefore unfair to blacks and they could do better with private accounts. Low-income earners could reap the rewards of the market, conservatives say. And people who died early would have a nest egg for their families.
Opponents of Bush's plan, including the NAACP and the Congressional Black Caucus, counter that blacks do well under the program. Blacks on average make less money than whites. People with low incomes get back a higher percentage of their wages than those at the high end. Survivor benefits ensure that widows and minor children have income after the premature death of a worker or retiree.
There's no argument about the central role Social Security plays in the black community. It's the only source of income for four in 10 black retirees, twice as many as whites, and it's viewed broadly as a lifeline. To draw more black support, Bush will have to overcome widespread unease about trading the certainty of the current system for the potential risks and rewards of private accounts.
So far, key black groups are rejecting the administration's case. "We're not opposed to private accounts," says Hilary Shelton, director of the NAACP's Washington office. "We just don't see private accounts as a replacement for the Social Security net."
The Joint Center for Political and Economic Studies, a think tank on issues affecting blacks, is sounding cautions. Four in five African-Americans would oppose private accounts if they would "weaken the current system or result in reduced benefits," the group's president, Togo West, says on its Web site, referring to a poll it did with AARP, which is fighting Bush's plan. The center is sponsoring a forum today to explore "concerns within the black community" about proposed changes.
Challenges facing Bush
Bush would let younger workers invest up to 4% of their first $90,000 of income in tightly controlled private accounts. In exchange, they would agree to a lower guaranteed benefit on retirement. Phasing in the accounts could cost up to $2 trillion.
Independent polling in the black community is sparse but suggests the size of Bush's challenge. In January, the non-partisan Pew Research Center asked 163 blacks whether it was more important to keep Social Security as a guaranteed monthly benefit based on earnings, or let younger workers decide how to invest some of their money in the stock market. Respondents chose the guaranteed benefit, 78%-17%.
Another hurdle for Bush is black opposition to his presidency. His share of the black vote rose from 2000 to 2004, but only from 8% to 11%. "There's a significant degree of mistrust of the people who are pushing this," says David Bositis, a senior fellow at the Joint Center.
Bill Beach, director of the Center for Data Analysis at the conservative Heritage Foundation, says Bush could expand black support for his plan by building in financial safeguards and local involvement. Heritage, he says, is "arguing very strongly that these personal retirement accounts be mutual funds administered by the federal government or a certified third party, an AME (African Methodist Episcopal) church or some local organization that you trust."
John Bryant, founder and CEO of Operation Hope, a financial literacy organization based in Los Angeles, visited the White House this year with other black leaders. He offered several steps he said could increase black support for the accounts: keep a guaranteed benefit, finance private accounts by raising the amount of income subject to the payroll tax (from $90,000 to $150,000), make private accounts mandatory so poor people will participate, and couple the accounts with a "massive" drive to improve financial literacy.
The private accounts program "doesn't look like it's designed for the average person in black America," Bryant said. People need to hear, "Here's how it applies to you."
Bush has decried the stereotype that "only a certain group of people at a certain income can manage an account." He also has said, "African-American males die sooner than other males do, which means the system is inherently unfair to a certain group of people. And that needs to be fixed."
Blacks do live shorter lives than whites, so on average they receive monthly benefits for less time, if at all. But they receive a greater share of other benefits. For instance, 22% of children getting survivor benefits are black, though black children make up 15% of the U.S. population.
And for blacks at the lower end of the income scale, Social Security replaces a higher percentage of their earnings. A person who earned $20,695 in 2003 and retired at 65 in 2004 would receive annual benefits of $13,331, according to the Social Security Administration. A 65-year-old who made $87,000 would receive $21,905.
Eugene Steuerle, a Social Security analyst with the Urban Institute, says his studies show a wash: The higher income replacement rate for low-wage workers and the money blacks lose by dying relatively young "roughly offset each other."
Nest egg or gamble?
Prince George's County, a suburb of Washington, is 63% black and has the highest median income for black households of any county over 100,000. Maryland Lt. Gov. Michael Steele said the county's newly affluent residents are becoming interested in issues that "transcend what we traditionally associate with African-Americans," such as affirmative action. One of them is Social Security.
Heads nodded in Mehlman's audience of 200 as he called private accounts "the key to the American dream" for low-income workers: "If you can't save money, if you can't build wealth, if you're living paycheck to paycheck, for the first time ever, you're going to have a nest egg."
But Mehlman seemed to realize he was preaching to a small number of converted. He repeatedly urged them to talk to friends and relatives about Social Security and GOP approaches to other issues.
Rep. Albert Wynn, D-Md., who represents a ring of majority-black communities in Prince George's County, says feedback to his office is running 3-1 against Bush's plan.
If Republicans are truly concerned about blacks' short lives, he said, they ought to improve their access to health care. "They have not," he said. "Any suggestion that they are concerned about the welfare of the African-American community is just totally false. And black people know it."
In Hyattsville, many people said they would not gamble their money on Bush's plan. Some said they know Social Security needs changes to stay solvent, but Bush is on the wrong track.
"There's other ways to fix the Social Security program," said Robert Richardson, 53, a disabled veteran from Hyattsville. "The market can change too much. What if there's a crash? We don't know what's going to happen 50 years from now."
Cynthia Kirk, 42, a freelance writer from Silver Spring, called Bush's plan "another way for Republicans to take responsibility away from the government and make it easier on business." She said the borrowing needed to set it up "sounds crazy" and most young people would not know how to make good decisions. "The stock market to me is complicated. A lot of older people don't even understand about investing," Kirk said.
Alfred Watson, 31, a New York-based sales representative for ADT alarm systems, hadn't heard much about Bush's plan. But he is typical of younger workers, who are relatively receptive to change.
"I'd probably do it," he said.
