June 16, 2012
That arguably should have been the headline of a Post segment discussing the release of new polling data from the Pew Research Center, which Kohut heads. The Center’s poll asked people a series of questions about the budget, taxes, and various programs. Most people answered that they viewed the deficit as a major concern. They were also strongly supportive of all major areas of federal spending with the exception of the military. In the case of military spending, there were almost equal numbers of people favoring cuts as increases. In the case of Medicare and Social Security, those favoring increases outnumbered those supporting cuts by more than 3 to 1.
In the case of Social Security, an overwhelming majority of respondents said that they supported raising the cap on taxable wages (currently $110,000). In addition, an overwhelming majority also said that they would rather see the tax rate increased than face a cut in benefits.
The conclusion of the Post piece tells readers:
“But ultimately, despite listing the deficit as a priority, most Americans — about 60 percent in a 2011 poll — would prefer to maintain benefits than take steps to reduce federal spending. As Kohut explains, this puts legislators in a real bind: ‘They are dealing with a public that is demanding solution to a problem which it has declared to be a major priority, but at the same time Americans are resistant, or divided at best, on the sacrifices that would be required to achieve a solution.'”
Contrary to what Kohut asserted, legislators are not in a bind if they want to follow public opinion. They can easily deal with the problems facing Social Security by raising the cap on taxable wages and phasing in an increase in tax rates over many decades in the future. If ordinary workers again share in the economy’s productivity growth, as the Social Security trustees projections assume, these tax increases would be a small fraction of future wage gains.
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