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New Bill in U.S. House Boosts Social Security Benefits, Keeps System Solvent for Decades

 

Legislation just introduced in the U.S. House would put extra money in Social Security beneficiaries’ pockets while keeping the system solvent through the rest of this century.  Rep. John Larson’s Social Security 2100 Act does all of that and something more:  It gives lie to the myth that Social Security is going bankrupt and the only way to fix it is by cutting benefits.

Larson’s solution is simple… and fair.  It asks the wealthy to pay their fair share of Social Security payroll taxes. In exchange, the legislation ensures Social Security stays solvent through the year 2100 – with no benefit cuts and no turning over the program to Wall Street, which budget hawks have long dreamed of doing. 

The Act provides much needed relief to seniors who are having a difficult time paying for basic expenses like healthcare, housing, and utilities.  The bill includes a modest 2% benefit increase for all beneficiaries, higher cost of living adjustments (COLAs), and a tax break for 11 million seniors.  Since 2014, the National Committee’s Boost Social Security Now campaign has lobbied Congress to pass expansion legislation on behalf of its millions of members and supporters.  

In a Facebook Live interview with the National Committee, Congressman Larson says he hopes his bill will ride the wave of grassroots energy that defeated the GOP healthcare plan last month.  “What we saw was people saying, ‘Wait a minute, keep your hands off my healthcare.’  It’s the same with Social Security.  We want to continue to build a groundswell in this country.” Larson says the bill has already attracted more than 150 cosponsors in the House. The Congressman calls on President Trump to support it, based on his campaign promises to “protect” Social Security.

In order to keep the system solvent through the year 2100, the Larson bill would apply the Social Security payroll tax to wages above $400,000, which only would affect the top 0.4% of wage earners.  (Currently, earnings above $127,200 are exempt from the payroll taxes.)  Eventually, the cap would be phased out completely.  In addition, the legislation would gradually raise the overall payroll tax rate by 1% over 25 years – an increase of only 50 cents per week for a worker making $50,000 per year (or, as Larson himself is fond of pointing out, the price of one Starbucks coffee drink every nine weeks).  These financing changes would not only keep Social Security flush, they would allow for a modest 2% benefit increase for all beneficiaries --- and a tax break for 11 million seniors earning under $50,000 a year (or $100,000 for older married couples).

The Larson bill not only provides an increase in benefits, it would help retirees better keep up with inflation by linking cost of living adjustments (COLAs) to an index called the CPI-E (Consumer Price Index for the Elderly).  The CPI-E takes into consideration what seniors really spend for crucial goods and services, including housing and medical costs. 

The National Committee has enthusiastically endorsed the Social Security 2100 Act.  As President and CEO Max Richtman explains, “This bill is a win-win for beneficiaries and the entire country, because it protects the commitment to hard working Americans who pay into the system and enhances benefits.”

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Watch Congressman Larson’s full Facebook Live interview here.

Watch the Social Security 2100 Act event on Capitol Hill Facebook Live here

 


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Trump Snubs Seniors in Speech to Congress

Millions of current and future retirees were no doubt hoping that President Trump would use last night’s speech to Congress to reaffirm his promises not to touch Social Security and Medicare.  Instead, the President ducked and covered.  He did not even utter the words “Social Security” or “Medicare” in his entire hour-long address.  As for Medicaid – which millions of American seniors rely upon for skilled nursing care – the President only touched on it once, with a veiled reference to converting guaranteed benefits into block grants, which would hurt beneficiaries.   

This begs the question – why the silence on Social Security and Medicare?  After all, during the campaign the President broke with Republican orthodoxy and repeatedly promised not to cut either earned benefit program. “I am going to protect and save your Social Security and your Medicare.  You made a deal a long time ago,” he told a crowd of supporters in November.  The most likely explanation for omitting America’s retirement security programs from last night’s speech is that the President knows his fellow Republicans on Capitol Hill vehemently disagree with him.  

There are proposals in both the House and Senate to cut and privatize Social Security and Medicare.  In fact, voucherizing Medicare is one of Speaker Paul Ryan’s highest priorities.  Perhaps the President did not want to unnecessarily ruffle feathers on the Hill last night.  If so, his refusal to recommit to protecting Social Security and Medicare is not an encouraging sign. If he’s afraid to even mention his position in a speech to Congress, he may roll over on campaign promises under pressure from the Congressional GOP.

President Trump may also be leaving himself wiggle room in negotiations with Congress over Social Security and Medicare.  The problem is, any compromise on his promise will hurt seniors and people with disabilities who depend on these programs, whether it’s cutting benefits, raising the retirement age, or trimming COLAs.  He may also be setting up a dodge, where the Congress agrees not to cut Social Security or Medicare for current retirees while leaving open the possibility of downsizing or privatizing both programs for younger Americans.  This approach is based on the falsehood that cutting benefits for future retirees doesn’t hurt current seniors, and cynically pits one generation against the others for political expediency. Mark Miller of Reuters has an excellent piece today explaining this ploy:

"The [Republicans’] political goal will be to defang public opposition, since younger workers tend not to focus much on retirement when it is several decades away. But that approach is not going to work. Retirees and their advocacy groups will fiercely resist cutting benefits down the road, because they understand the critical importance of Social Security and Medicare benefits. They also care about the future retirement of their own children.  - Mark Miller, Reuters

Social Security and Medicare are commitments that the government made to working class Americans who paid into the system most of their lives.  The President could have confirmed that commitment last night and comforted seniors who are worried about losing their retirement security and healthcare.  His silence on Capitol Hill was not reassuring.

 

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New Cost of Living Formula Could Put Real Money in Seniors' Pockets

 

There is a new push on Capitol Hill to link Cost of Living adjustments (COLAs) for federal retirement programs to a much more powerful indicator of the prices seniors really pay for crucial goods and services.  It’s called the Consumer Price Index for the Elderly (CPI-E), an experimental metric by the Bureau of Labor Statistics that more accurately reflects senior’s costs than the traditional Consumer Price Index (CPI), or even the Consumer Price Index for Wage Earners (CPI-W), which the government currently uses to calculate COLAs for Social Security.  Switching over to the CPI-E could mean a substantial increase in benefits for retirees.  

Congressman John Garamendi (D-CA) is reviving a 2015 House bill to mandate that the CPI-E be used to calculate cost of living adjustments for federal retirement programs. The National Committee has endorsed Garamendi's legislation.

"The consumption patterns of seniors are different from those of younger people. Using the CPI-E will ensure that benefits for retirees are not diluted by disproportionately rising costs in sectors affecting seniors. The CPI-E is the most accurate and balanced measure of the real costs that seniors face in retirement."  – Rep. John Garamendi (D-CA)

Like the standard CPI, the new index calculates the prices of a typical basket of goods and serves that are affected by inflation.  The difference is that the CPI-E looks at a basket that reflects the kinds of items seniors spend money on.  For instance, housing and medical costs make up a much bigger chunk of seniors’ expenses (58%) in the CPI-E than in the traditional CPI.  On the other hand, food and transportation costs are de-emphasized in the CPI-E, since seniors typically spend less of their money on those items than the general population does. 

If Congressman Garamendi’s bill were to become law, the CPI-E could mean serious new money in retirees’ pockets.  Research compiled from Bureau of Labor Statistics data (based on the current CPI-E model) reveals:

  • If the CPI-E had been in effect for the past 30 years, retirees would have received 22% more in cost-of-living increases.
  • If you as an average worker retired in 2015 with the current CPI-E in place, you would receive nearly $30,000 in additional benefits for the rest of your lifetime.

With 1 out of 3 seniors relying on Social Security for all or most of their income, those increases could make a huge difference.  At a time when Congressional Republicans (most notably Rep. Sam Johnson of Texas) are planning to cut COLAs, the Garamendi bill plants a flag on a crucial issue that could mean the difference between financial stability and poverty for millions of seniors.

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Scrapping the Cap: National Committee endorses Bernie’s new Social Security Bill; Marks the Day Millionaires Stop Paying payroll taxes.

Senator Bernie Sanders and Rep. Peter DeFazio introduced landmark legislation yesterday to keep Social Security solvent for the next six decades --- without cutting anyone’s benefits.  The National Committee endorses the bill, titled the Social Security Expansion Act, introduced on the day when the average millionaire reaches the payroll tax income cap of $127,000 per year.

National Committee President Max Richtman joined Senator Sanders, Senator Elizabeth Warren, Rep DeFazio and other dignitaries and advocacy groups on Capitol Hill to mark the day and support the new legislation, which would require high-earners to pay Social Security taxes on annual income over $250,000. 

The bill doesn’t “scrap the cap” right away; but for now only income between $127,000 and $250,000 would be exempt from payroll taxes.  Eventually the cap would phased out and completely scrapped.   The expanded payroll taxes (which only affect the top 1.5% of earners) would keep the Social Security Trust Fund flush until at least 2078.   

"We can expand the life of Social Security for 61 years, if we have the guts to tell millionaires and billionaires they’re going to have to pay more in taxes.” – Sen. Bernie Sanders

Senator Warren passionately defended the bill, saying it is necessary because, under current law:

"...Once [the wealthy] hit the cap, they can earn and earn and earn without paying into the system.  We want a Social Security system that works of all America, not just the millionaires and billionaires.” – Sen. Elizabeth Warren

NCPSSM President Max Richtman referred to a favorite metaphor involving a high-earning NBA superstar paying into Social Security.  “He’s already hit the cap and is done contributing before the first quarter of the first game of the season is over.” On a more serious note, he continued, “We are here today to say that for those who have so much, it is only right that they pay their fair share into the Social Security program.”

Richtman used the occasion to recall the words of President Franklin D. Roosevelt, who started the Social Security system:

"The test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have little."  - FDR

In addition to lifting the cap, the Sanders-DeFazio bill increases Social Security benefits by an estimated $65 a month, improves the Special Minimum Benefit by making it easier for low-income workers to qualify for benefits, and links the cost-of-living adjustment (COLA) formula to a new Consumer Price Index for the Elderly (CPI-E) to factor in costs seniors traditionally face such as prescription drugs, utility bills and property taxes. 

 

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Paul Ryan and House GOP on Fast-Track to Repeal ACA, Putting Millions of Insured at Risk

Speaker Paul Ryan and the House GOP are on a tear to repeal the Affordable Care Act (ACA), without being any closer to agreement on a replacement plan. The House will likely introduce a budget reconciliation bill to effectively repeal the ACA in the next two weeks… with no immediate replacement.  Ryan and his troops hope to have a replacement plan by April, but Max Richtman, the President of the National Committee to Preserve Social Security and Medicare is skeptical: 

 

"Given the potential political risk of displacing 20 million Americans who now have health coverage through the ACA, the legislative battle will probably take longer than they think."

Republicans meeting in Philadelphia this week to strategize about replacements for the Affordable Care Act were unable to come to a consensus. The disarray in the GOP caucus made for an alarming headline in this morning’s Los Angeles Times:  Republicans divided over whether millions of Americans should lose government-subsidized health coverage.

In the meantime, if Congress repeals the ACA soon but blows past April struggling to replace it, says Richtman, that could destabilize the health insurance market and endanger ACA policyholders’ coverage.

 
"If key parts of the ACA are repealed now, and insurance companies think the situation is too unpredictable, you have an immediate de facto loss of coverage for more than 20 million Americans."

The nearly 60 million seniors and disabled on Medicare are also at risk of losing benefits that the ACA mandated, including annual wellness visits and preventative screenings with no out of pocket costs, and will have to pay an average $1,000 per year more for prescription drugs unless those parts of Obamacare are retained.  Of course, at this point no one knows which of the ACA’s benefits will stay or be shredded, including House Republicans.

 
In a related development, the Washington Post reports the White House is pulling ads for ACA enrollments in advance of the 2017 enrollment deadline.

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