Thursday, December 27, 2012

Protecting Social Security & Medicare Is More Important Than Reducing Deficit

This rather interesting data is from a Pew Research Survey taken between November 28th and December 5th of this year.

The big argument is Congress right now is over which is more important -- reducing the deficit or protecting the elderly (and future retirees) from cuts in benefits to the so-called entitlements (Social Security and Medicare). The congressional Republicans believe reducing the deficit is the most important thing, and they are willing to cut benefits for Social Security and Medicare to accomplish that (even though Social Security has not contributed to the deficit at all, and Medicare only partially). On the other hand, the Democrats would protect Social Security and Medicare from benefit cuts, and attack the deficit with higher taxes on the rich and improving the economy through job creation.

I personally think the Democrats have the right view, but the real question is what do the citizens of this country think. Are they willing to accept benefit cuts to Social Security and Medicare to reduce the deficit, as the Republicans want? Or do they agree with the position staked out by the Democrats? According to the Pew survey, they think it is more important to protect the "entitlements" -- by a substantial margin.

A full 56% of the people believe it is more important to protect Social Security and Medicare, while only 32% say reducing the deficit is more important (a 24 point difference), and 8% say both are equally important. When the question is broken down by age group, the support for reducing the deficit grows as the age group gets younger, but even the youngest voters (those between 18 and 29) show 7% more support for protecting entitlements over reducing the deficit.

The only group that supports reducing deficits more than protecting entitlements are Republican voters, and even there the percentages are close -- with 45% wanting to reduce the deficit and 42% wanting to protect entitlements. Clearly, the congressional Republicans are out of touch with the general public -- and many in their own party.

But while the entitlements don't really add much to the deficit, and they are not going bankrupt (as Republicans would have you believe), there are some changes that need to be made to make sure both Social Security and Medicare remain fully funded and able to operate far into the future for the benefit of current and future retirees. What sort of changes would the public support?

The survey also tried to answer that question, and the results are in the chart below. The options that have been discussed the most are:
* raising payroll taxes for the rich
* lowering benefits for the rich
* raising the age of eligibility.

The support for raising the age for qualifying for benefits for entitlements is very low -- 38% for Social Security and 35% for Medicare. Obviously, the people don't want the qualifying ages raised. Support for the other actions does get majority support though. About 66% would support raising payroll taxes on the rich (which would be done by raising the cap on the income for which the payroll tax is applicable). In addition, 55% would support reducing Social Security benefits for high-income seniors, and 60% would be in favor of reducing Medicare benefits for high-income seniors. I'm not necessarily opposed to means testing for entitlements, but I do think the easier (and perhaps fairer) way is just to raise (or eliminate) the cap on income subject to the payroll tax.

Anyway, that's what the American people think. Let us hope Congress is listening.

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