Event Recap: How the Public Views the Options to Reform Social Security
On September 15, the Committee for a Responsible Federal Budget hosted "How the Public Views the Options to Reform Social Security." The event featured remarks from Committee senior vice president and senior policy director Marc Goldwein and the director of the Program for Public Consultation at the University of Maryland's School of Public Policy, Steven Kull. Goldwein provided an overview of the state of the Social Security program and its trust funds and Kull outlined the results of his program's "Americans on Social Security" survey. Goldwein and Kull then answered audience questions and engaged in a discussion about Social Security reforms.
A video of the full event is available below.
Goldwein opened the event with an overview of Social Security's finances. The program faces demographic pressures, mostly due to the aging of the population. While the ratio of workers to beneficiaries was once substantial, today there is a small number of workers supporting an increasingly large number of retirees - the ratio was 16 to 1 in 1950, 3 to 1 in 2016, and is projected to fall to 2 to 1 by 2035.
These pressures have led to a growing disconnect between Social Security spending and revenue - since 2010, the program has run cash deficits. As a result, the Social Security Trustees estimate the theoretically combined Social Security trust funds will be insolvent by 2035, at which point all beneficiaries regardless of age, income, or need will face a 20 percent across-the-board benefit cut. For today's 25-year-olds, that's a $175,410 cut in lifetime benefits. (To see how old you will be when Social Security's funds run out, click here for our interactive tool.)
Goldwein closed by noting that there are many Social Security reform options. These include Social Security Subcommittee Chairman John Larson's (D-CT) Social Security 2100 Act, former House Ways and Means Committee Chairman Sam Johnson's (R-TX) Social Security Reform Act of 2016, and the Conrad-Lockhart plan. Two recent proposals, however, would actually worsen Social Security solvency. A proposal to repeal Social Security's Windfall Elimination Provision and Government Pension Offset would lead to large overpayments in Social Security benefits and would advance insolvency by one year, to 2034. Also, the latest version of Social Security 2100 - Social Security 2100: A Sacred Trust - would only close half of Social Security's solvency gap on paper and would actually worsen insolvency once gimmicks are removed. (To design your own solvency package, tour our Social Security Reformer interactive tool.)
Kull then discussed the origins and findings of the "Americans on Social Security" survey of 2,545 registered voters. This public consultation survey, or policymaking simulation, put respondents in the mindset of policymakers and tasked them with making choices about Social Security reforms after they were given a briefing on the issue and on potential policy solutions to address the program's shortfall. For each policy option, respondents evaluated pro and con arguments and made an initial assessment on how acceptable the option was on a 0-10 scale. After all options were individually presented, they were presented to respondents together in one large spreadsheet and respondents made their final recommendations with constant feedback on how their choices would affect Social Security's shortfall.
One option was to gradually lower benefits for people who had higher lifetime earnings for new retirees only. 81 percent of respondents chose to reduce monthly benefits for the top 20 percent of income earners. The results show this option has bipartisan support, with 78 percent of Republicans, 86 percent of Democrats, and 78 percent of Independents selecting it. Another option was to continue to raise the full retirement age (under current law, the full retirement age is set to gradually rise to 67 by 2027 and then stop). 75 percent of respondents chose to raise the full retirement age from 67 to 68 by 2033 and stop there. This option also has bipartisan support, with 75 percent of Republicans, 76 percent of Democrats, and 71 percent of Independents choosing it.
On the revenue side, one option was to subject wages over $400,000 to the Social Security payroll tax. 81 percent of respondents chose to subject all wages above $400,000 (except income from capital gains and dividends) to the payroll tax. 79 percent of Republicans, 88 percent of Democrats, and 74 percent of Independents chose this option, suggesting the option has bipartisan support. Another option was to gradually increase the 6.2 percent employee-side and employer-side payroll tax rate. 73 percent of respondents chose to raise the payroll tax rate from 6.2 percent to at least 6.5 percent over six years. 70 percent of Republicans, 78 percent of Democrats, and 70 percent of Independents selected this option.
Respondents also evaluated options to increase Social Security benefits. One was to raise the minimum benefit to $1,341 per month, adjusted for inflation but always equal to 125 percent of the Federal Poverty Line, with 64 percent of respondents selecting it. 59 percent of Republicans, 71 percent of Democrats, and 63 percent of Independents chose this option. Another option was to gradually increase benefits starting at age 81, so that by age 85 the increase is equivalent to an extra five percent (about $97 per month). 53 percent of respondents selected it, with 53 percent of Republicans, 56 percent of Democrats, and 43 percent of Independents choosing the option. On Social Security's annual cost-of-living adjustment (COLA), respondents evaluated an option to use a more accurate measure of inflation based on a set of the goods and services elderly people tend to buy. 55 percent of respondents chose this option, with 55 percent of Republicans, 59 percent of Democrats, and 48 percent of Independents selecting it.
Taken together, the options selected by the majority of respondents would cover 78 percent of Social Security's shortfall. You can go through the policy simulation yourself here.
Kull and Goldwein then fielded a series of audience questions and offered closing remarks. Kull noted that he was surprised by the sense of bipartisanship the survey yielded (there was bipartisan agreement on virtually every policy option presented to respondents), as well as the homogeneity in responses across categories, including age and income. He believes that bringing the public to the table and letting their opinions be heard is a necessary step in getting policymakers to take meaningful action to fix Social Security.
Goldwein noted that Social Security reform doesn't need to be bipartisan to work, but that bipartisanship is needed to get reforms enacted (for example, 60 votes are needed in the Senate to pass Social Security legislation). Past reforms to Social Security have been done both in a bipartisan manner and at times when one political party had a significant majority in Congress. He mentioned the TRUST Act, which would create bipartisan commissions to restore solvency to the Social Security, Medicare, and highway trust funds. Like Kull, Goldwein believes that getting the public involved is integral to fixing Social Security.
The Committee for a Responsible Federal Budget thanks all of those who participated in and attended the event.