Yes, Voters Will Sit on Their Hands
Unless we believe that younger voters will sit on their hands while
their future payouts are slashed and their taxes are hiked to pay for
the benefits of current retirees, then entitlements will have to be
reformed and spending will be cut.
This basically is what I believe will happen. Despite economists’ assumptions about voter selfishness, almost everyone – old and young, rich and poor – supports Social Security. In the General Social Survey, 3.7% of people 60 and older favor Social Security cuts – versus 7.5% for people under 30. There’s a tiny marginal effect, but support for cuts stands in single digits in every age group.
If you look closer, even this marginal effect slips through your fingers. While 49.9% of people 60 and older support Social Security spending increases, so do 57.3% of people under 30! Overall, age and support for Social Security spending are actually negatively correlated – and this negative correlation is robust to the obvious controls.*
Of course, tax increases aren’t popular either. Neither are deficits, or inflation for that matter. When public opinion demands the impossible, something has to give. Here’s how I think old-age policy reform will go down in practice:
First Reform: The Medicare tax fade-out is already gone. The Social Security tax fade-out is next.
Second Reform: Mild means-testing at the top.
Third Reform: Tax hikes.
They won’t like it, but American voters, young and old, will indeed sit on their hands as these reforms pass, one by one. Depressing? Kind of, but at least the U.S. has relatively good demographics.
* If you want to check my work, regress NATSOC on AGE and any other controls you like. Don’t forget that low answers on NATSOC mean greater support for spending.
Update: The GSS questions on health spending reveal the same pattern: the elderly are, if anything, a little less in favor of health spending.