A majority of the American public supports preserving, and even enhancing, existing Social Security benefits, even if it means raising payroll taxes on working-age Americans.
A new survey, released Thursday by the nonpartisan National Academy of Social Insurance, shows a sharp contrast between what average Americans want to see done to stabilize the popular retirement program and the program changes being discussed in Washington, such a raising the retirement age or revamping the formula used to determine annual cost of living adjustments.
The online survey of 2,000 Americans 21 and older was conducted in September 2012. Large majorities of the respondents, both Republicans and Democrats, agree on ways to strengthen Social Security — without cutting benefits. Nearly three-quarters of Republicans and 88% of Democrats who participated in the innovative survey agree on the statement: “It is critical to preserve Social Security even if it means increasing Social Security taxes paid by working Americans.”
Workers and employers each pay taxes on up to $113,700 of earnings in 2013. About 5% of workers earn more than the cap.
The NASI survey used a new approach to measuring public opinion about Social Security. In addition to asking participants whether they would favor a particular change, they were asked to choose a preferred package of changes, much as lawmakers might do.
Participants considered various combinations of 12 possible changes, including raising taxes, lowering benefits by raising the full retirement age, changing cost-of-living adjustment formulas, means-testing benefits and increasing benefits.
The most favored package of changes would gradually eliminate the cap on earnings taxed for Social Security over 10 years and would slowly raise the Social Security tax that workers and employers pay from 6.2% of earnings to 7.2% over the next 20 years.
The proposal, which won the support of more than 70% of the respondents, also would increase the COLA to reflect the fact that seniors typically pay more for medical care than younger Americans.
The results of the NASI survey are in direct contrast to recommendations released by the Business Roundtable earlier this month that would gradually raise the retirement age for Social Security benefits from 67 to 70 and set the eligibility age for Medicare benefits at 70, instead of 65. The proposal would exempt anyone 55 or older from the recommended changes.
The Business Roundtable, an association of chief executive of leading U.S. companies, also suggested that the method for calculating COLAs should be updated to use the chained consumer price index approach, which proponents say is a more accurate reflection of inflation. Opponents counter that the Chained CPI method would effectively cut benefits.
The Business Roundtable proposal, which also called for including newly hired state and local workers in the Social Security system, is similar in many ways to the report issued by the National Commission on Fiscal Responsibility and Reform in December 2010. The commission, led by Alan Simpson, a former GOP senator from Wyoming, and Erskine Bowles, White House chief of staff for President Bill Clinton, issued a report that is considered by many in Washington as the starting point for eventual discussions on needed Social Security reform.
Long-term funding problems
Social Security currently faces a projected long-term funding shortfall, and if Congress fails to act, the program would be able to pay only about 75% of scheduled benefits after 2033. NASI said the publicly supported package of changes would result in a small surplus.
“This report deserves close attention from policymakers,” said James Roosevelt Jr., president and CEO of Tufts Health Plan and grandson of President Franklin D. Roosevelt, who created Social Security in 1935. “It drills deeper into public opinion than standard surveys and shows how Americans are willing to make hard choices and address challenges for the common good.”
The survey drew from a pool of 700,000 consumers who have volunteered to participate in surveys. Online interviews explored participants' knowledge and attitudes about Social Security and their preferences when choosing among many possible combinations of policy changes. Results were weighted to reflect the composition of the U.S. population in the 2010 census.