New polling shows that trust in the Social Security system is low and that President-elect Barack Obama's proposed reforms are not certain to make the program more popular. Fifty-six percent of respondents in a poll released by Rasmussen Reports lacked confidence that Social Security would pay all the benefits they have been promised. Respondents favor Obama's plans to impose new taxes on high earners, but they also believe that citizens should receive more benefits for higher taxes. Instead, the Obama plan uses new taxes to pay benefits to low earners, which would make Social Security a welfare program and undermine its public support.

Resident Scholar  Andrew G. Biggs

Rasmussen Reports polling has interesting new survey data on public attitudes toward Social Security and Social Security reform. A plurality of likely voters surveyed in late December say that working-age Americans should be allowed to opt out of social security (46% to 38% opposed). Interestingly, however, almost the exact same percentages believe that Social Security is a good deal for current workers. This seems to imply that while Americans think workers should have the option to drop out of Social Security, many people wouldn't actually choose to exercise that option if allowed.

This again is interesting, given that 55% of voters surveyed are either not very confident or not at all confident in receiving their promised Social Security benefits. Only 39 percent are somewhat or very confident in getting what they've been promised. While the cross-tabs aren't available online, it's likely that confidence is highest among those who are currently or about to retire, with younger Americans less confident in the system.

The poll had mixed results for President-elect Obama's plans for Social Security reform. Consistent with other survey data, a majority of 60% favor applying the Social Security tax to earnings above the current payroll tax ceiling of $106,800 for 2009. Imposing a new payroll tax on earnings above $250,000 was the centerpiece of Obama's plans for Social Security, so these results indicate support for his proposal.

However, 62% believe that workers paying more taxes should also be award more benefits. This is consistent with Social Security's historical practice, in which taxes and benefits have always been based on the same wage base, in effect meaning that higher taxes have always implied higher benefits.

The problem for Obama's proposal of imposing a 2-4% tax on earnings above $250,000 is that it solves only around 15% of the long-term Social Security deficit even if no additional benefits are paid. If additional benefits were paid on the higher taxes, as past practice and public opinion seems to support, then the improvement in Social Security's finances would be even smaller. In others, the tax policy most consistent with public attitudes leaves a very large financing hole to be filled.

Public attitudes toward Social Security and reform are obviously a mixed bag for both sides of the political aisle. While no solution will be easy, it may become easier by broadening the debate and opening a larger number of policy options for the public and Congress to think over.

National Survey of 1,000 Likely Voters Conducted December 21, 2008 By Rasmussen Reports

1) How confident are you that the Social Security system will pay you all promised retirement benefits during your lifetime?

13% Very confident
26% Somewhat confident
33% Not very confident
23% Not at all confident
4% Not sure

2) Should working Americans be allowed to opt out of Social Security and provide for their own retirement planning?

46% Yes
38% No
16% Not sure

3) Is Social Security a good deal for working Americans today?

46% Yes
37% No
18% Not sure

4) Currently, people pay Social Security taxes on the first $102,000 workers earn each year. People who make more than that do not pay Social Security taxes on salary and wages above that level. Should Social Security taxes be paid on ALL OR MOST OF THE income workers earn each year?

60% Yes
29% No
11% Not sure

5) Should people who pay more in Social Security taxes receive more Social Security benefits when they retire?

62% Yes
22% No
16% Not sure

NOTE: Margin of Sampling Error, +/- 3 percentage points with a 95% level of confidence

Andrew G. Biggs is a resident scholar at AEI.