Thursday, August 13, 2009

New polling on Social Security reform

The National Academy of Social Insurance released a new poll on Social Security reform, conducted in conjunction with the Rockefeller Foundation. The main takeaway from the poll is that people place a lot of value on Social Security and they'd be willing to pay higher taxes in order to keep benefits flowing (although, as it turns out, they'd much rather have other people pay higher taxes.) While I have some criticisms, which I'll discuss below, overall this is well worth checking out.

I became involved with polling on Social Security while I was at the Cato Institute, as well as some focus group work since then, and came to the conclusion there are two general varieties: polls performed for public consumption, designed to shift public opinion through their reporting of, well, public opinion; and polls designed as tools for better understanding the strengths and weaknesses of your own positions. Cato conducted a number of polls that highlighted public support for personal accounts and these polls generated good press. As time went on, however, I became more interested in testing this position. So, for instance, we added questions asking people who did not support accounts why they felt as they did. I also found that a number of arguments that were attractive from a philosophical perspective – for instance, that personal accounts gave you personal ownership while the current system did not – weren't particularly effective with people who didn't already agree with us.*

In any case, I suspect that the NASI poll lies in the former rather than the latter category of polls. I don't find it hard to believe that many folks would rather pay higher taxes for Social Security than receive lower benefits, and I find it very easy to believe that they'd rather have other people pay higher taxes than receive lower benefits themselves. (For instance, even delayed payroll tax rate increases, which would affect everyone, are favored much less than current tax increases on high earners.) But I'm not sure that true public opinion is nearly as cut-and-dried as the NASI poll seems to show.

For instance, you might simply ask people, "Social Security faces a financial shortfall. To meet it, would you rather pay higher Social Security taxes or receive lower Social Security benefits." You could flesh that out, if desired, with pros and cons of each. While I can think of a number of reasons people might be willing to pay more – e.g., they don't trust financial markets, they expect to receive a good return on their current contributions – I can also think of reasons why ordinary people would prefer lower benefits coupled with increased personal saving: they want to build assets, they don't trust that higher taxes today would be saved to pay benefits tomorrow, or they simply don't want to depend on one source for most or all of their retirement income. I'm not sure that the NASI poll really gets at these kinds of choices – but these are the choices people will have to make as they consider Social Security reform.

A further thought: the NASI poll, and others I've seen, put a lot of emphasis on increasing tax revenues from high earners, such as through raising the payroll tax ceiling, imposing a surtax on high earners, or dedicating estate tax revenues to Social Security. This emphasis strikes me as slightly odd coming from NASI, given how alien it is to the ways in which social insurance has generally functioned here and abroad. The link between contributions and benefits was deliberate from the beginning of the program and has been portrayed as a source of Social Security's ongoing political support. While every program should be open to change, I wonder how well the longer-term effects of breaking the contribution-benefit link have been thought through by folks on the left. (I discussed some of these issues in this article.)


*The reason, for anyone interested, is that highlighting the lack of ownership rights under current law scared current beneficiaries, who became more concerned that their benefits might be cut under reform plans. The "ownership argument," which had a ton of appeal for philosophical libertarians, weakened support for accounts more for seniors than it strengthened support among younger individuals.


Bruce Webb said...

NASI was founded by Bob Ball and current leadership are still emotionally committed to Bob and so the Ball Plan which relies in part on a diversion of estate taxes to SS.

I was invited to join a mail list established by NASI insiders and you have to tread carefully around any criticism of Ball's approach.

I think the Ball Plan is misguided as it breaks the Social Insurance model but it is too soon after Ball's death to allow some of the NASI people to distance themselves. My take anyway.

BTW this mail list tracks Notes very closely. It may not show up in your traffic but people are reading your stuff by proxy via an RSS feed forwarded on e-mail to some pretty big names. (With me in the role of dust under the chariot wheels)

Andrew G. Biggs said...

Thanks, and glad to hear it's getting around. Any publicity is good publicity, I guess.

I think it's a danger to too closely follow any person's model (Republicans have the same problem with looking at everything through Reagan's lens). Ball's plan -- as written, not as generally described by Nancy Altman -- does keep the program solvent over the long-term, but includes things the left wouldn't like -- tax rate increases, CPI reductions, and potentially trust fund investment -- and things the right wouldn't like, such as using non-Social Security revenues. It's hard to criticize it too much, given that so few people have been willing to put any kind of plan on the table. While no one's going to swallow it whole, there may be chunks that could work in a compromise plan.