Americans are willing to pay more for Social Security
CHICAGO (Reuters) - Suppose a pollster asks you this question about Social Security reform:
"Social Security will only be able to pay 75 percent of benefits after 2033 if Congress fails to act. That can be fixed by cutting benefits or by increasing taxes. Which do you favor?"
If you are a member of Washington's political class or a corporate chieftain, you probably favor the benefit cuts. People are living longer, you might reason, so we should raise Social Security's retirement age, reduce inflation increases or cut benefits for the wealthy through means testing.
But the public has a very different answer, according to a survey released on Thursday.
The survey finds a strong majority of us favor paying higher taxes to restore Social Security's long-term solvency.
We do not want benefits cut. If anything, we would like to see them strengthened. That's the view across all lines of political party, income level and age, according to the survey of a representative sample of more than 2,000 Americans.
The survey was commissioned by the National Academy of Social Insurance, a respected nonpartisan group whose members include researchers and policy experts from across the political spectrum. Its stated mission is to increase public understanding of social insurance programs like Social Security.
While this is not the first survey to show public opposition to cutting Social Security benefits, the NASI poll went further by asking people whether they are ready to pay more for the program.
"For so long, the conventional wisdom has been that we can't pay for the government we want," says Virginia Reno, vice president for income security policy at NASI. "We can keep running deficits forever, but we can't tax ourselves for any reason, no matter what.
"This survey shows that there's no discontinuity between what people want and what they are willing to pay for."
The poll arrives during the quiet after the storm of the fiscal cliff and before the next round of turbulence over the federal budget and debt ceiling.
Most Washington pundits and the business community take it as a given that Social Security benefit cuts should be thrown into the pot of a big fiscal deal. Earlier this month, for example, the Business Roundtable proposed raising the retirement age to 70 and adopting a "chained" consumer price index that would reduce annual inflation adjustments to benefits.
While President Obama vowed to protect Social Security in his inaugural address this month, he signaled his willingness to adopt the chained CPI during the fiscal cliff fight.
WHAT THE PUBLIC WANTS
The NASI survey presented a menu of options. Here is the package of reforms supported by 71 percent of survey respondents:
- Gradually eliminate the cap on earnings that are taxed for Social Security over a 10-year period. That change would affect the 5 percent of all workers who earn more than this year's cap ($113,700).
- Gradually raise the payroll tax rate on both employers and workers over a 20-year period to 7.2 percent from 6.2 percent.
- Bolster a special minimum benefit intended to keep very low-income workers above the federally defined poverty line.
- Set Social Security's annual inflation increase, using a measure of consumer prices that accurately reflects the higher prices older people pay for healthcare - effectively, the opposite of a chained CPI.
- Keep Social Security's full retirement age at 67 (already the age for beneficiaries born in 1960 or later), and do not means test the program.
Very large majorities across every age group, political affiliation and income group said they would be willing to pay more to maintain current benefits: 74 percent of Republicans, 88 percent of Democrats, 82 percent of families with income over $100,000, 84 percent of baby boomers, 80 percent of Gen X (born in the 1960s to the early 1980s) and 77 percent of Gen Y Americans (born from the early 1980s to the early 2000s).
That is a striking finding, but it should not be surprising, considering the challenging retirement prospects confronting so many Americans.
Just 14 percent of households report they expect to have enough money to live comfortably in retirement, according to the Employee Benefit Research Institute. Barely two-fifths of private-sector workers ages 25 to 64 have a retirement plan of any sort with their job, Boston College's Center for Retirement Research reported recently.
Even among the affluent, 66 percent of women and 54 percent of men say they worry that they will not have sufficient assets to last through their lifetimes, according to the Merrill Lynch Affluent Insights Survey.
"Americans are well aware of how much they already are paying for Social Security," Reno says. "They see it on their W-2 statements.
"But they don't mind paying for it, because they see its value, for themselves and for broader society."
(The writer is a Reuters columnist. The opinions expressed are his own. For more from Mark Miller, see link.reuters.com/qyk97s)
(Follow us @ReutersMoney or here. Editing by Linda Stern, Heather Struck and Lisa Von Ahn)
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