BLAHOUS: Americans should be less complacent about Social Security 

FILE - A Social Security card is displayed on Oct. 12, 2021, in Tigard, Ore. A growing number of older adults are in debt in retirement, according to the 2022 Survey of Consumer Finances from the Federal Reserve. Supplementing retirement savings and Social Security benefits with part-time earnings can make your money go further and help you pay off remaining debt. (AP Photo/Jenny Kane, File)

(This article first appeared Discourse magazine published by the Mercatus Center at George Mason University.) 

In December 2023, Gallup released the results of its latest survey of Americans’ expectations of Social Security. They show a slight uptick in Americans’ optimism that Social Security will make good on future benefit promises, producing Gallup’s headline finding: “Americans More Upbeat About Future Social Security Benefits.” 

Unfortunately, the optimism expressed by Gallup’s respondents is at odds with the reality of Social Security’s deteriorating finances. Never before have Americans had greater reason for concern that they will not receive the benefits Social Security is promising. The reason Americans are feeling blithe about Social Security’s future is not because of its actual condition, but because elected officials and media figures avoid a subject whose harsh realities contradict their preferred political narratives. 

Americans remain split nearly in half on their expectations from Social Security. Nearly half of current retirees expect their benefits to be cut at some point while roughly half (53%) do not. Among non-retirees, roughly half expect to be able to claim any benefits at all (50%), while roughly half do not (47%). These broad generalities, however, obscure age-specific trends.  

For example, among non-retirees, 66% of those over the age of 50 expect to receive benefits, whereas much lower percentages of younger Americans do.  

Attitudes toward Social Security have stayed essentially the same even as the situation of Social Security has grown markedly worse. Twenty years ago, most survey respondents had ample reason to believe, based on historical experience, that Social Security would someday pay them benefits — even if the amounts of those benefits might be adjusted. Further, it was reasonable for most existing retirees to believe their benefits would not be cut because lawmakers had never cut benefits for previous recipients.  

Today, however, those risks are growing rapidly. 

The longer lawmakers delay Social Security financing corrections, the more likely it becomes that its framework of self-financing solvency will be abandoned, and general revenues used to bail out the program. That would likely result in fundamentally changed political dynamics surrounding Social Security, for example potentially involving means tests, asset tests or other contingencies for benefit eligibility that have historically typified programs financed from the general government fund.  

This new context validates the concerns of Americans who express fears that they won’t receive any benefits at all, as well as of current retirees who fear their benefits will someday be cut. 

It is not widely publicized that Social Security benefits are automatically increased each year, from one retiree cohort to the next, pursuant to indexing provisions enacted in the 1970s. These automatic benefit increases were purposely established to replace a pattern of ad hoc benefit increases enacted in previous decades. Some politicians today actively promote misunderstanding of current law by inaccurately claiming that Social Security benefits have not been increased in “nearly 50 years.” When common information sources misleadingly claim that Social Security benefits are not increasing, Americans will naturally misinterpret responsible proposals to slow future benefit growth as reductions from current levels, especially if they are described as “curbing” benefits. 

It is impossible to know how Americans would react once abstract phrases employed in opinion surveys give way to the realities of legislation. At some point, lawmakers would need to acknowledge that paying currently projected benefits, let alone expanded ones, would require substantial tax increases not just on the wealthy but on middle-income workers. Moreover, any benefit changes — that is, slower rates of future benefit growth — proposed to preserve solvency would probably not involve the reductions from current levels that Americans say they oppose. Current survey data cannot tell us how Americans would react to these realities once they are encountered and contrasted with prior expectations. 

It’s clear that continuing on the road we’re traveling — that is, delaying action and eventually resorting to a general revenue bailout and abandoning Social Security’s historic design — would come as a severe shock to countless Americans. With Social Security, our two major parties’ national leaders are being indistinguishably irresponsible, and this does not bode well.  

Americans today express opposition to “benefit cuts” of a type no elected leaders are currently proposing. At the same time, politicians cite public opposition as an excuse for their failure to do something quite different: namely, to simply moderate future cost growth.  

If this dynamic continues much longer, it will ultimately force the abandonment of Social Security’s current design, replacing it with another framework in which benefits actually would be on the chopping block each year. The tragic irony is that by resisting cuts that aren’t really cuts until it’s too late, political advocates are putting Social Security participants at risk of exactly the type of real benefit cuts they most oppose and fear. 

Charles Blahous is Senior Research Strategist at the Mercatus Center at George Mason University, and a Visiting Fellow with the Hoover Institution at Stanford University.