How to Keep Lengthening Life Expectancies from Broadening our Budget Deficit?

The FINANCIAL — Social security and Medicare are often treated collectively as something of a third rail in politics.

The FINANCIAL — Social security and Medicare are often treated collectively as something of a third rail in politics (though there is admittedly no shortage of those). However, as American life expectancy has increased and as Baby Boomers are now eligible for early retirement and are approaching full retirement benefits eligibility, there is a sense of agreement that something needs to be done in order to keep increasing costs of these programs from forcing the federal budget deficit ever higher. As such, many have recognized that the government will have to modify the Medicare and Social Security programs in some manner to make them sustainable, even if there has been a lack of consensus among our political leaders as to how this might be accomplished. Looking at public sentiment though, Americans appear to favor – given the options on the table – raising the eligibility age for Social Security and Medicare and encouraging more people to work over the age of 65 as the most palatable options, according to The Harris Poll.

When given five choices and asked what they think should happen over the next five years to meet these increasing costs while controlling the budget deficit, the policies chosen by the most Americans are increasing the age at which one is eligible for Social Security and Medicare and encouraging many more people over 65 to work (37% each).

"Roughly one-fourth (24%) believe that we should increase taxes in order to accomplish this goal, while fewer than one in ten believe we should reduce either Medicare or Social Security benefits (7% each)."

When asked which two of the five policy options people would choose if they had to pick two, the overall percentages grow but the top, middle and bottom rankings remain relatively unchanged. Encouraging many more people over 65 to work (54%) and increasing the age of eligibility (53%) top the list, followed by increasing taxes (36%) in the middle position, while fewer than one in ten indicate a preference for reducing either Medicare (9%) or Social Security (8%) benefits, according to Harris Interactive Inc.

There are some considerable differences at play when examining the results across generational lines. Most notably, Matures, who at 68 and older are already universally eligible for full benefits, are more likely than any other generation to favor increasing the age of eligibility (53%, vs. 28% of Baby Boomers, 36% of Gen Xers, 41% of Echo Boomers). Baby Boomers, whose age range of 49-67 has them either nearing or just at the full retirement benefits age, are only half as likely as Matures to support such a course of action.

Looking at gender, men are more likely than women to support several of the options provided, including increasing the age of eligibility (41% men vs. 33% women), encouraging many more over 65 to work (40% vs. 33%) and increasing taxes (30% vs. 18%), according to Harris Interactive Inc.

While substantial differences do exist along political divisions as to the role (if any) that tax increases should play, the real news is perhaps that Americans across both party and philosophical lines show no significant differences from one another in their support of the top two courses of action:

By political party:
Increasing the age of eligibility – 39% of Republicans, 35% of Democrats and 40% of Independents believe we should do this.
Encouraging many more people over 65 to work – 33% of Republicans, 38% of Democrats and 39% of Independents believe we should do this.
Increasing taxes – Democrats (34%) are more likely than Independents (23%) to support this; Independents, in turn are more likely to support this than Republicans (15%).
By political philosophy:
Increasing the age of eligibility – 37% each of Conservatives and Moderates, and 36% of Liberals, believe we should do this.
Encouraging many more people over 65 to work – 35% or Conservatives, and 37% each of Moderates and Liberals, believe we should do this.
Increasing taxes – Liberals (38%) are more likely to support this than Moderates (25%), who in turn are more likely than Conservatives (12%) to support this course of action.