Americans need Social Security more than ever, and they’re willing to pay for it. Rather than more cuts, we need higher benefits across the board.
This was the gist of my presentation at the National Academy of Social Insurance conference last month, whose theme was “Social Security and Medicare in a Time of Budget Austerity” (emphasis added). I wasn’t expecting it to go over very well.
Though my colleague Josh Bivens likes to point out that deficit reduction doesn’t necessarily imply spending cuts, and though Republicans don’t hesitate to call for tax cuts in the same context, there’s a general sense that expanding social insurance programs is out of the question and the best we can hope for is targeted measures to protect the most vulnerable.
Even many progressives have trimmed their sails. Though most reject the need for additional cuts, few call for fully reversing cuts enacted in 1983, notably the gradual increase in the retirement age that is still taking effect. Progressives have also been divided about raising the payroll tax rate, the only way to pay for significant benefit increases while preserving the program’s contributory structure. Though almost all agree we should “scrap the cap” on taxable earnings, this only gets you part of the way to closing the projected shortfall in the aftermath of the Great Recession.
This seems to be changing, if the mood at the NASI conference is any indication. Rather than being contrarian, my presentation was almost redundant. At the conference, NASI released the results of a poll showing strong support for Social Security by the American people, a consensus that benefits are inadequate, and a willingness to pay higher taxes to strengthen the program (I discussed these results in an earlier blog post). The poll made it harder to dismiss calls for expanding Social Security, though Wall Street Journal economics editor David Wessel tried. Among the other conference participants who made a strong case for expanding Social Security were blogger-economist Duncan Black (a.k.a. Atrios) and Wilhelmina Leigh, a participant in the 2011 Commission to Modernize Social Security, which led the way in calling for higher contributions and benefits across the board.
Admittedly, NASI poll respondents were lukewarm about specific across-the-board benefit increases, though they strongly supported packages that closed the shortfall and included these measures. People might be more supportive if such measures were presented as a way to reverse earlier cuts, since these cuts are news to many people.
What about concerns that the payroll tax is regressive and contractionary? The tax would be less regressive if we got rid of the cap on taxable earnings. And a gradual increase in the tax rate could be postponed in a weak economy. The version I proposed, which roughly offsets projected growth in life expectancy, calls for a more gradual increase than that proposed by the Commission to Modernize Social Security, which focused on people of color, and a similar initiative last year focusing on women, which was also the version included in the NASI poll. (Both initiatives called for a combination of across-the-board and targeted increases.)
At the Center for American Progress last week, Senator Tom Harkin renewed his push for expanding Social Security as part of a comprehensive reform of our retirement system, saying this would be his top priority before he retires in 2014. It looks like the movement to expand Social Security is picking up steam.
 Social Security has dedicated financing and is required by law to operate in long-term balance. But the program gets dragged into deficit discussions because changes will be required to eliminate a projected shortfall and there are competing priorities for any revenues that can be generated by raising taxes. However, Strengthen Social Security coalition co-chair Nancy Altman likes to remind us that the program’s popularity expands the political room for tax increases of any kind.
 High-income taxpayers would still have more unearned income, which makes payroll taxes regressive even if all earnings are taxed. However, the system as a whole is progressive when benefits are taken into account.