Hello, Congress:
Americans want a strong Social Security system
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[July 01, 2014]
By Mark Miller
CHICAGO (Reuters) -
Political polarization is at a historic peak. Americans
are divided on gun control, abortion, healthcare and
privacy, according to a study released last month by the
Pew Research Center for the People & the Press
documenting our increasing ideological rigidity and
partisan antipathy (http://bit.ly/1v23UXF).
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Then there's Social Security. The public is worried deeply about the
finances of our bedrock retirement and disability program. Pew found
just 14 percent of Americans expect to receive their full benefits.
And an earlier Pew study found concern is much higher among young
people: Roughly half of Gen Xers and Millennials think Social
Security won't have enough money to pay any benefits at all when
they retire.
But two-thirds of Americans say Social Security should be kept as it
is - that is, don't cut benefits. Just a third said benefit cuts
should be considered in the future. There's even relative agreement
inside ideological camps: Two-thirds of liberals and 59 percent of
conservatives agreed benefits should be maintained at current
levels.
"There really wasn't much of a difference on the issue, as there is
on many others," said Jocelyn Kiley, associate director for research
at Pew.
The report is timely, because the most important annual report on
the financial health of Social Security likely will be released this
month. The Social Security trustees' report is expected to reiterate
last year's forecast, which shows that the program's trust fund will
be exhausted in 2034. Absent reforms before that time, Social
Security would be able to pay only about 75 percent of promised
benefits.
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And the program faces a more urgent deadline in 2016, when its
disability insurance reserves are forecast to run dry, forcing a 20
percent cut in benefits. Congress could avert that by authorizing a
small reallocation of payroll tax revenue from the retirement fund
to the disability fund, something it has voted to do six times in
the past.
But with Congress as deeply polarized as the public, can lawmakers
get their act together to reform the program anytime soon?
"The whole point of the trustee report is to serve as an early
warning system for policymakers and public that the system will be
out of balance, so they can consider their options," says Virginia
Reno, vice president for income security at the National Academy of
Social Insurance.
NASI released its own public opinion survey on Social Security in
2013. Like Pew, it found the public united strongly against cutting
benefits. But the NASI survey, which will be updated this fall,
probed further on preferred solutions. And it found a strong
majority supports paying higher taxes to restore long-term solvency.
The demographic and political diversity of people holding that view
was remarkable: 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 (born from the early 1980s to the early
2000s).
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The consensus view actually went further than just paying more to
restore the status quo on benefits. Presented with a menu of
options, the most popular (71 percent) included a mix of higher
taxes and expanded benefits. In this scenario, the cap on earnings
taxed for Social Security (currently $117,000) would be eliminated
over a 10-year period. Payroll tax rates on employers and workers
would be lifted gradually over 20 years, to 7.2 percent from 6.2
percent.
At the same time, a special minimum benefit aimed at keeping very
low-income workers out of poverty would be beefed up, and the
program's annual cost-of-living adjustment would be made using a
more generous formula reflecting inflation pressures facing seniors.
The Pew study found less support for expansion - 27 percent favored
"covering more people with more benefits." But even here, support
was nearly as high among liberals (31 percent) as among those with
"mixed ideological views" (29 percent).
Those findings don't surprise Reno. "Perhaps the agreement on Social
Security is so widespread because it resonates with our basic
values," she said. "We pay for it, it's equitable, everyone is in,
and benefits are somewhat related to what you pay in and get out."
For more from Mark Miller, see http://link.reuters.com/qyk97s
(Follow us @ReutersMoney or at http://www.reuters.com/finance/personal-finance.
Editing by Douglas Royalty)
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