The Social Security Board of Trustees has reported for some years now that as the Baby Boom generation has been retiring, the cost of benefits have been superseding revenues, depleting the Social Security’s Trust Fund. This is known as the Social Security “shortfall”. The most recent report concluded that if no changes are made to Social Security revenues and/or benefits, by 2035 the Trust Fund will be fully depleted and current benefit levels will have to be reduced by 21%.
Nonetheless, there have been no reforms to Social Security since 1983. Social Security is often characterized as being a “third rail,” meaning that policymakers are afraid that any change to the Social Security system will elicit a severe public backlash.
In addition to the problem of the Social Security shortfall, there are also voices calling for an increase in the minimum Social Security benefits for workers who have worked for 30 years. The current minimum benefit level is below the poverty line.
- National Sample: 2,545 Registered Voters
- Margin of Error: +/- 1.9%
- Fielded: April 11 - May 15, 2022
- National Sample: 4,591 Registered Voters
- Margin of Error: +/- 1.4%
- Fielded: February 16 - March 24, 2016
There were also an oversample of 1,797 respondents from California, Florida, Maryland, New York, Ohio, Oklahoma, Texas and Virginia. This data can be found in the questionnaire.
In developing the survey, reform options were selected from a list put forward by the Social Security administration and were foreground in Congressional discussions of Social Security reform according to lead Congressional staffers. All of the options were scored by the SSA in terms of their impact on the shortfall.
Respondents first went through a briefing about how the Social Security program is structured. They were then told about the nature and extent of the Social Security shortfall, along with its multiple causes, and how, if no changes are made, there would ultimately be reductions in benefits.
Respondents were then presented a series of options for reforming Social Security, including ones that mitigated the shortfall, ones that increased benefits for certain populations, and options for recalculating the annual cost of living adjustment.
For each option they were given a brief explanation and what impact it would have on the Social Security shortfall. Each option was scored in terms of what percentage of the shortfall it would mitigate--at 100% there would be no need for any reduction in benefits.
After evaluating pro and con arguments they evaluated each option separately in terms of how tolerable it would be on a scale of 0 to 10, with 0 being completely unacceptable, 10 being completely acceptable and 5 being just tolerable.
Finally, respondents were presented all the reform options in a spreadsheet enabling respondents to make their own comprehensive and integrated set of recommendations. Each option, including tiered levels, was shown with their potential impact on the shortfall. As respondents made their selections an interactive feature gave them immediate and cumulative feedback on the impact of their choices on the shortfall.
Proposals with bipartisan support, discussed below, included:
- Reducing benefits for high income earners
- Raising the retirement age gradually
- Raising the Social Security payroll tax
- Applying the payroll tax to higher incomes
- Raising the minimum monthly benefit
- Changing the method for calculating the Cost of Living Adjustment (COLA) for Social Security benefits
- Increasing benefits for the very elderly, starting at age 81.
ADDRESSING THE SHORTFALL
Bipartisan majorities supported four options that would reduce the Social Security shortfall. Combined, including silver and gold levels of support, the proposed steps would eliminate 105% of the shortfall. Including only gold levels of support, the proposed steps would eliminate 66% of the shortfall. Majorities also increased the minimum benefit which increased the shortfall by 7%.
Respondents were told that one option under consideration for addressing the Social Security shortfall is to reduce the benefits that are presently scheduled for future retirees whose lifetime average earnings are above a certain level. It was presented as follows:
One option for reducing benefits is to reduce the amount of benefits that people with higher earnings will receive when they retire in the future.
Currently, the more people earned while working (up to $117,000), the more they receive in monthly benefits. One option—for new retirees only—is to gradually lower benefits for people who had higher earnings. Their benefits would still be higher than people who had lower earnings, but their benefits would be less than people in that income group are currently scheduled to receive.
Two pro and two con arguments were presented. While the pro arguments were found convincing by majorities from both parties, for Republicans these were bare majorities. Both con arguments were found convincing by large majorities from both parties.Respondents were asked to evaluate the acceptability of each tiered level of the proposal using a 0-10 scale, with 5 being “just tolerable”. Reducing benefits for the top 25% of earners (average lifetime earnings of $65,500 a year or more) was found at least tolerable (5-10) by 60%, including two thirds of Democrats and a bare majority of Republicans (52%).
Reducing benefits for the top 40% of earners was found at least tolerable by less than four in ten, including just 31% of Republicans and 44% of Democrats. Even smaller percentages found the proposal to reduce benefits for the top 50% of earners tolerable.
In making their final recommendations -- whether to reduce benefits for the top 25%, top 40% or top 50% of earners, or not reduce benefits for any of those groups -- three in four chose one of the options to reduce benefits. Three quarters (76%) chose an option of 25% or more, including 72% of Republicans and 81% of Democrats. Less than half (31%) chose the 40% level or higher (Republicans 28%, Democrats 35%).
Interestingly, when making their final recommendation a larger percentage of respondents recommended reducing benefits for at least the top 25% of earners, than found that proposal at least tolerable -- a 16 point difference. Response Without Undergoing Policymaking Simulation
When asked about reducing benefits for “wealthy” retirees as a way to decrease the budget deficit, support has been higher, but not always a majority:
Support increases to a substantial and bipartisan majority when reducing benefits for “wealthy” retirees is framed as a means to help fix Social Security:
Respondents were told that an option to reduce the Social Security shortfall is to reduce its costs by raising the full retirement age. This would reduce the total amount of benefits that a person receives over their lifetime. They were told this would not change the early retirement option, which would remain at age 62, with correspondingly lower benefits.
They were told that, according to current law, there are scheduled increases to the full retirement age as follows:
Currently, the full retirement age is 66 years. According to current law, it is scheduled to gradually rise until it reaches 67 by the year 2027 and then will stop rising. This has no effect on those already receiving Social Security. It does affect those born in 1960 or later.
Respondents were then presented two arguments for and two arguments against increasing the full retirement age. Substantial majorities found convincing both the arguments for and against. They were then asked to evaluate the acceptability of continuing the current process of gradually raising the retirement age until it reaches 68 (reduces shortfall 15%), 69 (21%), or 70 (29%), using a 0-10 scale, with 5 being “just tolerable.
Raising the age to 68 was found at least tolerable (5-10) by 62%, including 65% of Republicans and 61% of Democrats. For raising the age to 69, just under half (49%) found it at least tolerable, including 52% of Republicans, and a minority of Democrats 47%. For raising the age to 70, less than half (43%) found it at least tolerable ( Republicans 47%, Democrats 41%).
When making their final recommendation -- whether to raise the eligibility age to 68, 69 or 70, or not raise it at all -- an overwhelming majority of 79% recommended raising the full retirement age to 68 or higher, including 78% of Democrats as well as 81% of Republicans. On raising the age to 69, just 41% approved (Republicans 43%, Democrats 38%). Raising the age to 70 was recommended by 23% (Republicans 28%, Democrats 20%).
Response Without Undergoing Policymaking Simulation
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Respondents were told that an option for reducing the shortfall is to increase its revenues through higher payroll taxes. Respondents were first reminded that:
At present both workers and employers pay a tax of 6.2% on the amount of an employee’s salary and wages subject to the payroll tax. Self‐employed people pay both the employer and employee share.
They were then presented options for gradually increasing the tax rate .05% per year for both the employer and the employee, rising ultimately to 6.6%, 6.9% or 7.2%. They were told the impact of these increases on the monthly payroll taxes of an individual with an income of $39,000 would be $13, $22, and $32, respectively.
Large majorities nationally found convincing both the arguments for and against raising the payroll tax rate. Respondents were asked to assess the acceptability of raising the payroll tax rate to 6.6% over a period of 8 years (reducing the shortfall by 17%) on the 0-10 scale. Over two thirds (69%) found it at least tolerable (5-10), including 65% of Republicans and 75% of Democrats.
For raising the payroll tax to 6.9% (covers 33% of shortfall) 63% found it at least tolerable, including majorities form both parties (Republicans 59%, Democrats 70%).
Raising the payroll tax to 7.2% (covers 49% of shortfall) was found at least tolerable by a modest majority (55%), including 62% of Democrats and 49% of Republicans.
When asked for their final recommendation -- whether to raise the payroll tax to 6.6%, 6.9% or 7.2%, or not raise it at all -- three quarters nationally (76%) recommended raising the payroll tax rate to 6.6% or higher, including majorities of Republicans and Democrats (72% and 80%, respectively). Less than half (42%) recommended increasing the payroll tax to 6.9%, including 39% of Republicans and 46% of Democrats. Just 19% increased it to 7.2% (Republicans 17%, Democrats 22%).
Response Without Undergoing Policymaking Simulation
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Posed as a choice between raising taxes and cutting benefits, a very slight majority goes for raising taxes, but many do not provide an answer.
Status of Legislation
Respondents were introduced to two proposals put forward by the Social Security administration to ensure Social Security’s solvency by increasing its revenues through either raising or eliminating the cap on income subject to the payroll tax.
In making their final recommendations, respondents could raise the cap to $215,000, eliminate the cap, or do neither.
An overwhelming 88% either raised the cap to $215,000 or eliminated it entirely. This included 84% of Republicans as well as 92% of Democrats.
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When framed as a means to reduce the federal deficit, a bipartisan majority has favored eliminating the cap:
When framed as a means to prevent spending cuts driven by sequestration legislation, majorities have favored increasing the payroll tax of high earners.
Status of Legislation
A similar proposal is in the Social Security Expansion Act by Rep. Peter DeFazio (D) (H.R. 1170) and Sen. Bernie Sanders (I) (S. 478) in the 116th Congress, which would subject income above $250,000 to the payroll tax, and as the “donut hole” closes, eventually all income would be subject to the payroll tax. These bills have not made it out of committee.
There has been concern that the inflation-adjusted value of Social Security’s minimum benefit has been declining, and that it is inadequate for many beneficiaries. Respondents were introduced to an option: