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Protecting Social Security from inflation tops voters’ wish lists

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Social Security Administration in San Francisco.

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The clock is ticking when it comes to implementing changes to shore up Social Security, which won’t be able to pay full benefits in 13 years.

Potential voters are aware of the program’s problems, according to a June poll by Social Security Works and Data for Progress.

So far, 64% of the 1,335 survey respondents are “very concerned” that the program will run out of funding to cover all the benefits for future generations. Meanwhile, 20% said they were “somewhat concerned” and 10% said they were “only a little concerned,” while the remaining 6% were not at all concerned.

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The survey comes after last month’s release of an annual report from Social Security’s trustees, which said the program would be able to pay only 80% of benefits in 2035 if no changes are made by then.

To shore up the program, lawmakers usually have a choice: raise taxes, cut benefits, or a combination of the two.

Democrats have proposed a pair of bills that would make the benefits more generous largely by raising payroll taxes. Republicans bristled at the idea of ​​increasing taxes.

A new poll sought to gauge how Americans might feel about some of the ideas put forward.

Cost of living protection is high on wish lists

Consumer prices soared to record highs not seen for four decades.

As a result, unsurprisingly, the proposal to increase Social Security benefits for all beneficiaries in line with cost-of-living increases received the most support, with 83% of respondents in favor, 10% against and 8% who said they didn’t know (answers were rounded).

Similarly, respondents strongly agreed with the idea that benefits increase with the cost of living.

The survey found that 84% of respondents were in favor of it, 8% were against it and 8% did not know.

Of course, Social Security’s cost-of-living adjustment already happens every year.

But while those annual changes are measured by one subset of the consumer price index — known as the consumer price index for urban wage earners and employees, or CPI-W — Democrats are calling for a switch to a different index.

That measure — the Consumer Price Index for the Elderly, or CPI-E — is one that claims to better measure the costs paid by older Americans.

However, some studies show that CPI-E does not necessarily lead to larger annual gains in benefits. From 2002 to 2021, the two indexes had nearly identical average annual growth, according to the Boston College Center for Retirement Research.

More payroll taxes for people making $400,000

One proposal, put forward by Rep. John Larson, R-Conn., would re-apply Social Security taxes to people making $400,000 or more.

Currently, those taxes — 6.2%, paid by both employees and employers — apply only to earnings up to $147,000 as of 2022.

These higher taxes will be used to fund increased benefits.

Rep. John Larson, R-Conn., and other lawmakers debate the Social Security Act 2100, which would increase minimum benefits, on Capitol Hill on October 26, 2021.

Drew Ungerer | Getty Images News | Getty Images

Of the respondents, 76% spoke in favor of these changes, 14% – against. The remaining 10% were undecided.

Notably, Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., have proposed another bill that would re-apply Social Security payroll taxes to incomes above $250,000, among other tax increases.

“We support expansion without cuts, and there are many different ways to expand,” said Nancy Altman, president of Social Security Works. “Given the retirement income crisis, we need to expand significantly.”

Higher benefits and other offers

Not surprisingly, the idea of ​​increasing benefits in all areas for all beneficiaries also received strong support – 77%. At the same time, 15% are against and 8% are undecided.

The poll also measured people’s willingness to accept other changes proposed by Democrats, including setting the minimum benefit at 25% above the poverty line, improving widows and widowers benefits and ensuring that teachers, firefighters and police do not have their Social Security benefits cut. taxes were not always withheld from their wages.

While these and other benefits-enhancing measures have also received strong support, it remains to be seen what mix of changes politicians on both sides of the aisle can agree to.

It should be noted that legislation on social security reform cannot be pushed through a one-party majority. Both parties must sign off on any changes to take effect.

Another a recent survey from the University of Maryland Program for public consultations gave respondents a policy simulation where they could see the trade-offs of how certain changes affect the program.

According to the results, respondents tended to spread their choices between increasing income and reducing budget. Most did not reach the maximum level on one side or the other.

However, as in this survey, respondents also strongly favored reinstating the Social Security payroll tax on earnings over $400,000.

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