Poll after poll shows that Americans are more politically polarized than in any time in recent history, but not when it comes to Social Security. Even among those who identify themselves as “consistently conservative,” 59% now oppose any benefit cuts, and as many (12%) favor increasing benefits as phasing it out as a government program, the Pew Research Center reported recently. It’s hard to believe that just a decade ago, a newly reelected President George W. Bush declared he intended to spend some of his “political capital” by pushing for the partial privatization of Social Security.
Just as remarkable, support for Social Security spans not only across the political spectrum, but the generations. While half of younger folks say they believe they’ll never get any Social Security benefits, 61% of Millennials and 67% of GenXers oppose any cuts.
The depth of the current support for Social Security is illustrated by three recent developments. First, after the Social Security Administration announced this week that recipients would be getting a 1.7% cost of living raise for 2015, the chatter on Fox (and elsewhere) was about how the COLA understates the true price increases faced by the elderly, particularly at the grocery store.
Second, Republicans groups have been running ads attacking embattled Red-state Democrats for not being sufficiently supportive of Social Security. As the Washington Post reports, Crossroads GPS, the nonprofit group founded by none other than Bush political guru Karl Rove, has shelled out for ads against North Carolina Sen. Kay Hagan (D) and Arkansas Sen. Mark Pryor (D) that accuse them of supporting plans to raise the retirement age for receiving benefits.
Finally, the National Academy of Social Insurance yesterday released results of a study that asked respondents to make trade-offs to fix Social Security’s financing---by 2033, the Social Security “trust fund” will have been exhausted and there will only be enough tax revenue coming in to pay three fourths of promised benefits. The most popular package wouldn’t cut benefits, even for the well off, but would gradually eliminate the current $117,000 cap (it's rising to $118,500 in 2015) on the amount of wages subject to tax; slowly raise the Social Security paid by both employers and workers from 6.2% to 7.2%; increase COLA adjustments; and raise the minimum benefit so that any worker who paid into the system for 30 years could retire at 62 with benefits that put him over the poverty line.
That package, the study found, would be supported by 71% of respondents, including 68% of Republicans and 65% of those earning $100,000 plus, who would pay the biggest tax increases. Overall, 77% said they wouldn’t mind a tax increase for everyone if it was necessary to preserve Social Security for future generations and 83% were ready to raise the tax on top earners to preserve the program.
The survey’s 2,000 respondents also strongly opposed making various fixes that have been suggested by deficit reduction commissions, such as shaving COLAs (this would be accomplished by a shift to what’s known as the chained-CPI) or gradually raising the age for full retirement benefits to 70. (As part of a 1983 Social Security fix, the full age has already risen from 65 to 66 and will begin rising again for those born in 1955 or later by two months a year, hitting 67 for everyone born in 1960 or later. ) As for means-testing the program, 64% of Republicans and 60% of Democrats oppose it.
In fact, when it comes to Social Security, the real divide is between regular folks (who oppose benefit cuts and seem ready to pay more taxes to secure the retirement program’s future) and the Washington policy wonks, who favor using a mix of tax hikes, an increased retirement age, lower COLAs and cuts to benefits for the well off to put the program on sound actuarial footing.
Why is this so? I emailed that question to Joseph Thondike, my favorite tax historian (okay, the only one I know), who is a Forbes contributor and the author of Their Fair Share: Taxing The Rich In The Age Of FDR. He answered:
"Historically, I think current trends underscore Franklin Roosevelt’s political brilliance. He managed to create a program that came with its own political defenses. By insisting that Social Security be funded with a regressive but near-universal payroll tax, he ensured that voters would develop a sense of ownership in the program. There’s a famous, second-hand quote from FDR that made the point nicely:
We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program
I think that pretty much captures it. In my view, the ownership stake is not real; Social Security is not an insurance program, and payroll taxes are not premiums. But as a matter of politics, the relationship is very real, indeed. Americans think their Social Security benefits have been bought and paid for. Which makes any proposal to scale back those benefits a very tough sell."
I should note---before the angry emails start flooding Joe's mailbox---that while he doesn’t consider the payroll tax to be the same as insurance premiums, he also wrote in his email: “Fixing it (Social Security) entirely from the revenue side isn't crazy. There’s a good case to be made — buttressed by inequality and wage stagnation trends — that we should be trying to build a bigger, more robust social safety net, not scaling back the one we have. Compared to most of our peer nations, we have undersized social programs, not outsize ones.”
As a reporter, I have a shorter time horizon than Joe, so let me add my two cents here. The hardening of support for Social Security makes perfect sense within the context of what we’ve witnessed in the past decade: the decline of traditional pensions, the rise of 401(k)s and the stock market crash of 2008, which reminded Baby Boomers, Gen Xers and Millennials alike of the risk inherent in the 401(k) model. Who needs Social Security personal retirement accounts when we’ve already loaded with personal risk in the form of 401(k)s and IRAs?
According to the Census bureau, in 2013 just 9.5% of those 65 or older had income below the poverty line. Without their Social Security income, more than half the elderly would have fallen below that line. Sure, if they hadn’t known they could rely on Social Security, some of those folks would have saved more and some would still be toiling away, even if it meant working at Walmart. But living on Social Security income alone is hardly a picnic and the “moral hazard” created by the Social Security safety net may just be, like taxes, a price we must pay for a civilized society.
