Republicans Right to Reject Trump Payroll Tax Cuts, Wrong to Include TRUST Act in Corona Relief
The National Committee issued the following statement today in response to the latest reporting from Capitol Hill about GOP plans for the next Coronavirus relief bill.
“Republicans have jettisoned the President’s reckless payroll tax cut from their Coronavirus relief plan – at least for now. But seniors and their advocates must stay vigilant as the Trump administration remains laser-focused on payroll tax cuts, which pose a direct threat to Social Security. While Republicans did the right thing by setting aside Trump’s payroll tax cuts, they reportedly are considering injecting an equally menacing element into their relief bill.
The TRUST Act would set up special committees to decide the fate of federal trust funds, including Social Security and Medicare. This would allow benefit cuts to be fast-tracked through Congress. Seniors and people with disabilities need their benefits boosted, not slashed. Like payroll tax cuts, the TRUST Act is bad medicine for everyday Americans struggling to stay financially afloat, especially during the COVID crisis.
There is, however, some financial relief for seniors from other provisions of the GOP plan: another direct payment similar to the first relief bill, a freeze on Medicare Part B premium prices for 2021, and an extension of expanded telehealth coverage through next year. Measures like these will help protect seniors from rising costs during the financial crisis and ensure safe access to much-needed care as COVID continues to ravage our communities.” – Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare
For more information on payroll tax cuts and Social Security, click here.
Advocates Alarmed by GOP Leaders’ Embrace of Trump Payroll Tax Cut
House GOP leader Kevin McCarthy: next COVID bill to include Trump’s payroll tax cut proposal
President Trump’s push for a payroll tax cut has received the blessing of GOP leadership on Capitol Hill, who promise that the proposal will be included in new Coronavirus relief legislation. Some Republicans – and almost all Democrats – oppose payroll tax cuts. But the proposal gaining a foothold on Capitol Hill has understandably alarmed Social Security and Medicare advocates – and is receiving fresh scrutiny in the media.
“Make no mistake: payroll tax cuts are the first step in dismantling Americans’ earned benefits. In acceding to the President’s payroll tax ploy… Republican leadership makes plain that they stand with those who least need help and against American families struggling every day to make ends meet.” – Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare
“Trump to Social Security: Drop Dead” reads the headline for Michael Hiltzik’s recent column in the Los Angeles Times, echoing one from 45 years ago in the New York Daily News. That headline, “Ford to City: Drop Dead,” chiding President Gerald Ford for seemingly refusing to bail out New York City in the depths of a fiscal crisis, was credited (in part) with his failed re-election bid. Hiltzik clearly feels the stakes are similarly high for President Trump in pressuring Congress to cut the payroll taxes that fund Americans’ earned benefits.
“Trump has been fixed on this idea virtually since the start of his presidential term. Occasionally he has toyed with the idea of eliminating the payroll tax entirely, which would pile stupidity upon stupidity. Never has he offered a thoughtful, logical rationale for cutting the tax wholly or in part.” – Michael Hiltzik, Los Angeles Times, 7/17/20
Of course, there is no thoughtful, logical rational for cutting payroll taxes – especially as a means of stimulus during a pandemic. Payroll tax cuts are an ineffective and unfair means of stimulus that would do little for the unemployed and lower-income Americans who need the most help during the COVID crisis. But eliminating payroll taxes could be an extremely efficient way to undermine Social Security and Medicare (programs that President Trump promised to protect), as Forbes columnist Ziv Shahar noted on Monday:
“Critics fear that the real aim is to tighten the screws on Social Security Medicare by constricting their sole funding source. ” – Ziv Shahar, Forbes, 7/20/20
Analysts are unsure whether the President actively desires to dismantle these programs (a long-held dream of hardline conservatives) or whether he simply does not understand the implications of tampering with their funding streams. Either way, payroll tax cuts are dangerous for Social Security and Medicare, because they deprive the programs of much-needed revenue at a time when both face fiscal challenges.
“Since payroll taxes fund the Social Security and Medicare systems, cutting those taxes means sapping revenue from their respective trust funds, which will need to cover benefits as the number of retirees relative to current workers rises in the coming years.” – Paul Waldman, Washington Post, 7/20/20
Even if payroll taxes are temporarily replaced by general federal revenue, the policy still undermines Americans’ earned benefits. First of all, it compromises the worker-funded nature of our social insurance programs. Secondly, it allows so-called ‘fiscal hawks’ to claim that Social Security and Medicare are driving federal deficits, paving the way for potential cuts to both programs. Seniors struggling to stay financially and physically healthy cannot afford cuts to their earned benefits. If anything, these benefits need to be boosted to meet the needs of today’s and tomorrow’s seniors.
It’s telling that the Chairman of the Senate Finance Committee, Charles Grassley (R-IA), opposes Trump’s proposal – and has warned the President and fellow Republicans that messing with Americans’ earned benefits is a risky political play.
“Social Security people think we’re raiding the Social Security fund. And we are raiding it, but we have always put in general fund revenue in it so it is made whole. But that creates — it might create political problems.” – Sen. Charles Grassley, 7/20/20
He’s right. Surveys show that Americans want their earned benefits expanded and protected – not defunded and dismantled under the guise of Coronavirus relief.
Fixing the Benefit “Notch” & Boosting Social Security During COVID
Rep. John Larson greets a constituent in Connecticut
The National Committee has endorsed a bill to avoid a significant drop in Social Security benefits for future retirees turning 60 this year. Rep. John Larson’s Social Security COVID-19 Correction and Equity Act repairs a glitch in current law which, if unchecked, would result in a sizable “notch” in retirement income for this age group.
Social Security benefits are calculated according to a formula that incorporates the average wage for the year that beneficiaries reach 60 years of age. Workers born in 1960 will have their benefits determined according to the average wage for 2020, which will be lower than usual due to the COVID crisis. The average beneficiary would take a $2,000 annual hit in their future Social Security benefits – and not just once, but for life.
“Rep. Larson’s bill would spare workers turning 60 this year from a painful and permanent benefit cut. Tomorrow’s retirees will depend even more on Social Security than the current generation of seniors. Americans should not be deprived tens of thousands of dollars in retirement income simply because they were born in the wrong year. The COVID-19 Correction and Equity Act offers a commonsense fix to an unintended consequence of Social Security law.” – Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare
Larson’s bill corrects this problem – the result of flawed legislative language in the Social Security amendments of 1977 – by ensuring that the Average Wage Index (for Social Security’s purposes) never drops below the previous year’s level.
In addition to repairing the “notch,” Larson’s bill would make improvements to Social Security that would help ease the financial pain of the COVID crisis for retirees and people with disabilities, including millions of new claimants.
Here are some of the other major provisions in the Social Security COVID-19 Correction and Equity Act:
- Increases benefits by 2 percent;
- increases the threshold to 125 percent of the poverty level for the special minimum benefit, lifting more lifelong workers out of poverty;
- Reduces taxation on benefits for lower-middle income beneficiaries who are struggling to provide for themselves and their families.
“Certainly, the seniors who would lose massive amounts in Social Security benefits will thank Rep. Larson for finding a solution to the ‘notch.’ But the broad array of program improvements that have been included in the bill will benefit all Americans. We believe that they will prove to be especially helpful to women and those in communities of color who have been hardest hit by the COVID pandemic.” – Max Richtman
If Larson’s legislation passes the House, the bill as a whole may face headwinds in the Senate, where many pieces of legislation to help everyday America’s have perished in Leader McConnell’s “graveyard.” At the same time, the provision to fix the “notch” – an important technical correction more than a sweeping policy proposal – may survive. As Social Security champions in Congress continue to boost and strengthen the program during the COVID crisis and beyond, repairing the notch would spare those turning 60 this year an arbitrary and unnecessary benefit cut.
Read the National Committee’s endorsement letter of Rep. Larson’s bill here.
Independence for Seniors Requires Better Dental Coverage
With Independence Day close at hand, we’re reminded that good health is key to seniors remaining independent as they age. We have known for some time that good dental health, in particular, is fundamental to older Americans’ overall well-being. But a new survey by the Centers for Disease Control suggests that many seniors fall short of the mark in this area. Among other things, the survey shows that more than one in ten older Americans not only suffers from serious dental issues, but loses all of their teeth.
According to the National Health and Nutrition Examination Survey, roughly 13% of adults 65 and older suffer from complete tooth loss. For those 75 and older, the rate jumps to nearly 18%. Men, on average, had more severe tooth loss than women. The data also shows clear ethnic disparities, with 25% of non-Hispanic black seniors losing all of their teeth. These numbers are unacceptable in one of the wealthiest countries in the world.
Tooth loss and poor dental health in general can lead to problems with eating, speaking, and appearance – which can impede social interaction. Social interaction is a cornerstone of mental health for seniors. But tooth decay and loss also has been linked with serious medical conditions, including diabetes, hypertension, and cardiovascular disease.
The good news is: acute dental issues usually can be prevented with proper dental care. The bad news: two thirds of American seniors lack dental insurance. Patients without insurance are less likely to seek regular dental care. By the time they go to the dentist, their oral health may already be seriously compromised.
Unfortunately, traditional Medicare does not include routine dental coverage. Medicare beneficiaries must pay out of pocket for services such as oral exams, cleanings, fillings, bridges and crowns. The costs can easily run into the thousands of dollars. That’s unaffordable for many Medicare beneficiaries, whose average income is only $26,000 per year.
NON-HISPANIC BLACK SENIORS SUFFER TOOTH
LOSS SIGNIFICANTLY MORE THAN WHITES
Source: Centers for Disease Control
Routine dental care is not the only coverage that Medicare excludes. The program also does not cover routine vision or hearing care, even though problems with the eyes and ears can also lead to more serious medical issues. The National Committee to Preserve Social Security and Medicare has long advocated that Medicare be expanded to include all three – dental, vision, and hearing care, because it no longer makes sense to provide coverage for every part of seniors’ bodies except their eyes, ears, and teeth.
In fact, expanding Medicare to include these coverages could save the program money in the long run. Good dental, vision, and hearing care leads to better overall health outcomes – meaning fewer sicker seniors in the future. Medicare expansion is not a pie-in-the sky idea. In fact, the House of Representatives took a major step in this direction with the passage of H.R. 3, a landmark bill that would lower Medicare’s drug costs and use some of the savings for partial dental, vision, and hearing coverage.
A bill introduced by Rep. Lucille Roybal-Allard (D-CA) goes further. The Seniors Have Eyes, Ears, and Teeth Act would provide Medicare beneficiaries with comprehensive dental, vision, and hearing coverage. Meanwhile, Rep. Lloyd Doggett’s (D-TX) Medicare Dental, Vision, and Hearing Benefit Act would phase-in coverage over eight years, with some limitations.
Unfortunately, none of these bills is likely to be taken up by the Senate on Majority Leader Mitch McConnell’s watch. As one journalist put it, “There’s zero chance of that. Or less.” But if the 2020 elections result in a new President and new Senate majority, we would likely witness a Medicare expansion– including these crucial coverages. As with so many other issues affecting American seniors, their independence from serious dental, hearing and vision issues and the ensuing medical consequences – hinges on the outcome of November’s elections.
Workers Turning 60 This Year Face “Notch” in Benefits
Future Social Security beneficiaries turning 60 this year are in for a rude surprise: their monthly benefits may be lower than those born in previous years. Benefits for each age group are calculated based on the Average Wage Index (AWI) for the year they turn 60. Normally, average wages rise from year to year. But this year, because of the COVID pandemic, wages are likely to decrease by as much as 20%. Benefits for wage-earners in 2020 would then be as much as 15% lower than for workers hitting that milestone birthday in 2019. This incipient reduction is sometimes referred to as a “notch” in benefits for people born in 1960.
The notch for workers turning 60 this year is due to a glitch in Social Security law. Social Security benefits are based on the highest 35 years in a worker’s earning history. The Average Wage Index is applied to each year’s earnings in order to ensure that benefits are based on the dollar value of today’s wages vs. the year the wages were earned (which, for someone just turning 60, could date as far back as the late 1970s).
The AWI was introduced into the formula by the Social Security Amendments of 1977. The drafters of that legislation clearly did not anticipate that average wages would fall precipitously from one year to the other. In fact, since 1977, average wages have only declined one other time – at the height of the Great Recession in 2009. That dip was a relatively small 1.5% and “not big enough to catch people’s attention because the effects on benefits was negligible,” says Webster Phillips, NCPSSM’s chief Social Security expert.
Unfortunately, if no remedial action is taken, the benefit reduction for workers turning 60 in 2020 will be permanent. Their benefits will be lower than workers’ born before 1960 for life. Paul Van de Water of the Center on Budget and Policy Priorities provided a conservative estimate of the dollar-amount hit that this age cohort could take:
“If the average wage falls by (even) 5 percent in 2020… the retirement benefit of a 60-year-old worker with average earnings will drop by about $1,200 a year for each and every year of retirement.” – Paul Van de Water, Center on Budget and Policy Priorities
Of course, that worker’s annual cost-of-living adjustments (COLAs) would also be permanently reduced, causing further financial hardship. With 40% of seniors relying on for Social Security for all or most of their income – and many just skirting the edges of poverty on already modest benefits – a steep falloff in the AWI could cause retirees real financial distress.
“People shouldn’t suffer a large, permanent drop in their Social Security benefits just because they turn 60, become disabled, or experience the loss of a breadwinner around the start of a deep recession.” – Paul Van de Water, Center for Budget and Policy Priorities
In order to avoid unintentionally punishing people who turn 60 this year, Congress must take action before those workers begin claiming Social Security. (Sixty-two is the youngest age a worker can collect benefits; 67 is the Full Retirement Age for this age group.) Any change in Social Security law requires a 60-vote majority in the Senate.
Of course, the “notch” issue is only one of the challenges facing the program. Social Security will need a revenue boost in order to remain financially healthy for the remainder of this century. Retirees will need a benefit boost and a more accurate cost-of-living adjustment formula – simply to keep up with the increasing cost of essentials, from groceries to housing to health care. Seniors cannot afford benefit cuts – unintended or otherwise. Majorities in both Houses of Congress must summon the political will to increase revenues and benefits for the future. The best way to ensure that outcome is for voters to elect lawmakers in 2020 who are committed to just, equitable, and common-sense solutions that put the interests of American workers first.
Republicans Right to Reject Trump Payroll Tax Cuts, Wrong to Include TRUST Act in Corona Relief
The National Committee issued the following statement today in response to the latest reporting from Capitol Hill about GOP plans for the next Coronavirus relief bill.
“Republicans have jettisoned the President’s reckless payroll tax cut from their Coronavirus relief plan – at least for now. But seniors and their advocates must stay vigilant as the Trump administration remains laser-focused on payroll tax cuts, which pose a direct threat to Social Security. While Republicans did the right thing by setting aside Trump’s payroll tax cuts, they reportedly are considering injecting an equally menacing element into their relief bill.
The TRUST Act would set up special committees to decide the fate of federal trust funds, including Social Security and Medicare. This would allow benefit cuts to be fast-tracked through Congress. Seniors and people with disabilities need their benefits boosted, not slashed. Like payroll tax cuts, the TRUST Act is bad medicine for everyday Americans struggling to stay financially afloat, especially during the COVID crisis.
There is, however, some financial relief for seniors from other provisions of the GOP plan: another direct payment similar to the first relief bill, a freeze on Medicare Part B premium prices for 2021, and an extension of expanded telehealth coverage through next year. Measures like these will help protect seniors from rising costs during the financial crisis and ensure safe access to much-needed care as COVID continues to ravage our communities.” – Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare
For more information on payroll tax cuts and Social Security, click here.
Advocates Alarmed by GOP Leaders’ Embrace of Trump Payroll Tax Cut
House GOP leader Kevin McCarthy: next COVID bill to include Trump’s payroll tax cut proposal
President Trump’s push for a payroll tax cut has received the blessing of GOP leadership on Capitol Hill, who promise that the proposal will be included in new Coronavirus relief legislation. Some Republicans – and almost all Democrats – oppose payroll tax cuts. But the proposal gaining a foothold on Capitol Hill has understandably alarmed Social Security and Medicare advocates – and is receiving fresh scrutiny in the media.
“Make no mistake: payroll tax cuts are the first step in dismantling Americans’ earned benefits. In acceding to the President’s payroll tax ploy… Republican leadership makes plain that they stand with those who least need help and against American families struggling every day to make ends meet.” – Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare
“Trump to Social Security: Drop Dead” reads the headline for Michael Hiltzik’s recent column in the Los Angeles Times, echoing one from 45 years ago in the New York Daily News. That headline, “Ford to City: Drop Dead,” chiding President Gerald Ford for seemingly refusing to bail out New York City in the depths of a fiscal crisis, was credited (in part) with his failed re-election bid. Hiltzik clearly feels the stakes are similarly high for President Trump in pressuring Congress to cut the payroll taxes that fund Americans’ earned benefits.
“Trump has been fixed on this idea virtually since the start of his presidential term. Occasionally he has toyed with the idea of eliminating the payroll tax entirely, which would pile stupidity upon stupidity. Never has he offered a thoughtful, logical rationale for cutting the tax wholly or in part.” – Michael Hiltzik, Los Angeles Times, 7/17/20
Of course, there is no thoughtful, logical rational for cutting payroll taxes – especially as a means of stimulus during a pandemic. Payroll tax cuts are an ineffective and unfair means of stimulus that would do little for the unemployed and lower-income Americans who need the most help during the COVID crisis. But eliminating payroll taxes could be an extremely efficient way to undermine Social Security and Medicare (programs that President Trump promised to protect), as Forbes columnist Ziv Shahar noted on Monday:
“Critics fear that the real aim is to tighten the screws on Social Security Medicare by constricting their sole funding source. ” – Ziv Shahar, Forbes, 7/20/20
Analysts are unsure whether the President actively desires to dismantle these programs (a long-held dream of hardline conservatives) or whether he simply does not understand the implications of tampering with their funding streams. Either way, payroll tax cuts are dangerous for Social Security and Medicare, because they deprive the programs of much-needed revenue at a time when both face fiscal challenges.
“Since payroll taxes fund the Social Security and Medicare systems, cutting those taxes means sapping revenue from their respective trust funds, which will need to cover benefits as the number of retirees relative to current workers rises in the coming years.” – Paul Waldman, Washington Post, 7/20/20
Even if payroll taxes are temporarily replaced by general federal revenue, the policy still undermines Americans’ earned benefits. First of all, it compromises the worker-funded nature of our social insurance programs. Secondly, it allows so-called ‘fiscal hawks’ to claim that Social Security and Medicare are driving federal deficits, paving the way for potential cuts to both programs. Seniors struggling to stay financially and physically healthy cannot afford cuts to their earned benefits. If anything, these benefits need to be boosted to meet the needs of today’s and tomorrow’s seniors.
It’s telling that the Chairman of the Senate Finance Committee, Charles Grassley (R-IA), opposes Trump’s proposal – and has warned the President and fellow Republicans that messing with Americans’ earned benefits is a risky political play.
“Social Security people think we’re raiding the Social Security fund. And we are raiding it, but we have always put in general fund revenue in it so it is made whole. But that creates — it might create political problems.” – Sen. Charles Grassley, 7/20/20
He’s right. Surveys show that Americans want their earned benefits expanded and protected – not defunded and dismantled under the guise of Coronavirus relief.
Fixing the Benefit “Notch” & Boosting Social Security During COVID
Rep. John Larson greets a constituent in Connecticut
The National Committee has endorsed a bill to avoid a significant drop in Social Security benefits for future retirees turning 60 this year. Rep. John Larson’s Social Security COVID-19 Correction and Equity Act repairs a glitch in current law which, if unchecked, would result in a sizable “notch” in retirement income for this age group.
Social Security benefits are calculated according to a formula that incorporates the average wage for the year that beneficiaries reach 60 years of age. Workers born in 1960 will have their benefits determined according to the average wage for 2020, which will be lower than usual due to the COVID crisis. The average beneficiary would take a $2,000 annual hit in their future Social Security benefits – and not just once, but for life.
“Rep. Larson’s bill would spare workers turning 60 this year from a painful and permanent benefit cut. Tomorrow’s retirees will depend even more on Social Security than the current generation of seniors. Americans should not be deprived tens of thousands of dollars in retirement income simply because they were born in the wrong year. The COVID-19 Correction and Equity Act offers a commonsense fix to an unintended consequence of Social Security law.” – Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare
Larson’s bill corrects this problem – the result of flawed legislative language in the Social Security amendments of 1977 – by ensuring that the Average Wage Index (for Social Security’s purposes) never drops below the previous year’s level.
In addition to repairing the “notch,” Larson’s bill would make improvements to Social Security that would help ease the financial pain of the COVID crisis for retirees and people with disabilities, including millions of new claimants.
Here are some of the other major provisions in the Social Security COVID-19 Correction and Equity Act:
- Increases benefits by 2 percent;
- increases the threshold to 125 percent of the poverty level for the special minimum benefit, lifting more lifelong workers out of poverty;
- Reduces taxation on benefits for lower-middle income beneficiaries who are struggling to provide for themselves and their families.
“Certainly, the seniors who would lose massive amounts in Social Security benefits will thank Rep. Larson for finding a solution to the ‘notch.’ But the broad array of program improvements that have been included in the bill will benefit all Americans. We believe that they will prove to be especially helpful to women and those in communities of color who have been hardest hit by the COVID pandemic.” – Max Richtman
If Larson’s legislation passes the House, the bill as a whole may face headwinds in the Senate, where many pieces of legislation to help everyday America’s have perished in Leader McConnell’s “graveyard.” At the same time, the provision to fix the “notch” – an important technical correction more than a sweeping policy proposal – may survive. As Social Security champions in Congress continue to boost and strengthen the program during the COVID crisis and beyond, repairing the notch would spare those turning 60 this year an arbitrary and unnecessary benefit cut.
Read the National Committee’s endorsement letter of Rep. Larson’s bill here.
Independence for Seniors Requires Better Dental Coverage
With Independence Day close at hand, we’re reminded that good health is key to seniors remaining independent as they age. We have known for some time that good dental health, in particular, is fundamental to older Americans’ overall well-being. But a new survey by the Centers for Disease Control suggests that many seniors fall short of the mark in this area. Among other things, the survey shows that more than one in ten older Americans not only suffers from serious dental issues, but loses all of their teeth.
According to the National Health and Nutrition Examination Survey, roughly 13% of adults 65 and older suffer from complete tooth loss. For those 75 and older, the rate jumps to nearly 18%. Men, on average, had more severe tooth loss than women. The data also shows clear ethnic disparities, with 25% of non-Hispanic black seniors losing all of their teeth. These numbers are unacceptable in one of the wealthiest countries in the world.
Tooth loss and poor dental health in general can lead to problems with eating, speaking, and appearance – which can impede social interaction. Social interaction is a cornerstone of mental health for seniors. But tooth decay and loss also has been linked with serious medical conditions, including diabetes, hypertension, and cardiovascular disease.
The good news is: acute dental issues usually can be prevented with proper dental care. The bad news: two thirds of American seniors lack dental insurance. Patients without insurance are less likely to seek regular dental care. By the time they go to the dentist, their oral health may already be seriously compromised.
Unfortunately, traditional Medicare does not include routine dental coverage. Medicare beneficiaries must pay out of pocket for services such as oral exams, cleanings, fillings, bridges and crowns. The costs can easily run into the thousands of dollars. That’s unaffordable for many Medicare beneficiaries, whose average income is only $26,000 per year.
NON-HISPANIC BLACK SENIORS SUFFER TOOTH
LOSS SIGNIFICANTLY MORE THAN WHITES
Source: Centers for Disease Control
Routine dental care is not the only coverage that Medicare excludes. The program also does not cover routine vision or hearing care, even though problems with the eyes and ears can also lead to more serious medical issues. The National Committee to Preserve Social Security and Medicare has long advocated that Medicare be expanded to include all three – dental, vision, and hearing care, because it no longer makes sense to provide coverage for every part of seniors’ bodies except their eyes, ears, and teeth.
In fact, expanding Medicare to include these coverages could save the program money in the long run. Good dental, vision, and hearing care leads to better overall health outcomes – meaning fewer sicker seniors in the future. Medicare expansion is not a pie-in-the sky idea. In fact, the House of Representatives took a major step in this direction with the passage of H.R. 3, a landmark bill that would lower Medicare’s drug costs and use some of the savings for partial dental, vision, and hearing coverage.
A bill introduced by Rep. Lucille Roybal-Allard (D-CA) goes further. The Seniors Have Eyes, Ears, and Teeth Act would provide Medicare beneficiaries with comprehensive dental, vision, and hearing coverage. Meanwhile, Rep. Lloyd Doggett’s (D-TX) Medicare Dental, Vision, and Hearing Benefit Act would phase-in coverage over eight years, with some limitations.
Unfortunately, none of these bills is likely to be taken up by the Senate on Majority Leader Mitch McConnell’s watch. As one journalist put it, “There’s zero chance of that. Or less.” But if the 2020 elections result in a new President and new Senate majority, we would likely witness a Medicare expansion– including these crucial coverages. As with so many other issues affecting American seniors, their independence from serious dental, hearing and vision issues and the ensuing medical consequences – hinges on the outcome of November’s elections.
Workers Turning 60 This Year Face “Notch” in Benefits
Future Social Security beneficiaries turning 60 this year are in for a rude surprise: their monthly benefits may be lower than those born in previous years. Benefits for each age group are calculated based on the Average Wage Index (AWI) for the year they turn 60. Normally, average wages rise from year to year. But this year, because of the COVID pandemic, wages are likely to decrease by as much as 20%. Benefits for wage-earners in 2020 would then be as much as 15% lower than for workers hitting that milestone birthday in 2019. This incipient reduction is sometimes referred to as a “notch” in benefits for people born in 1960.
The notch for workers turning 60 this year is due to a glitch in Social Security law. Social Security benefits are based on the highest 35 years in a worker’s earning history. The Average Wage Index is applied to each year’s earnings in order to ensure that benefits are based on the dollar value of today’s wages vs. the year the wages were earned (which, for someone just turning 60, could date as far back as the late 1970s).
The AWI was introduced into the formula by the Social Security Amendments of 1977. The drafters of that legislation clearly did not anticipate that average wages would fall precipitously from one year to the other. In fact, since 1977, average wages have only declined one other time – at the height of the Great Recession in 2009. That dip was a relatively small 1.5% and “not big enough to catch people’s attention because the effects on benefits was negligible,” says Webster Phillips, NCPSSM’s chief Social Security expert.
Unfortunately, if no remedial action is taken, the benefit reduction for workers turning 60 in 2020 will be permanent. Their benefits will be lower than workers’ born before 1960 for life. Paul Van de Water of the Center on Budget and Policy Priorities provided a conservative estimate of the dollar-amount hit that this age cohort could take:
“If the average wage falls by (even) 5 percent in 2020… the retirement benefit of a 60-year-old worker with average earnings will drop by about $1,200 a year for each and every year of retirement.” – Paul Van de Water, Center on Budget and Policy Priorities
Of course, that worker’s annual cost-of-living adjustments (COLAs) would also be permanently reduced, causing further financial hardship. With 40% of seniors relying on for Social Security for all or most of their income – and many just skirting the edges of poverty on already modest benefits – a steep falloff in the AWI could cause retirees real financial distress.
“People shouldn’t suffer a large, permanent drop in their Social Security benefits just because they turn 60, become disabled, or experience the loss of a breadwinner around the start of a deep recession.” – Paul Van de Water, Center for Budget and Policy Priorities
In order to avoid unintentionally punishing people who turn 60 this year, Congress must take action before those workers begin claiming Social Security. (Sixty-two is the youngest age a worker can collect benefits; 67 is the Full Retirement Age for this age group.) Any change in Social Security law requires a 60-vote majority in the Senate.
Of course, the “notch” issue is only one of the challenges facing the program. Social Security will need a revenue boost in order to remain financially healthy for the remainder of this century. Retirees will need a benefit boost and a more accurate cost-of-living adjustment formula – simply to keep up with the increasing cost of essentials, from groceries to housing to health care. Seniors cannot afford benefit cuts – unintended or otherwise. Majorities in both Houses of Congress must summon the political will to increase revenues and benefits for the future. The best way to ensure that outcome is for voters to elect lawmakers in 2020 who are committed to just, equitable, and common-sense solutions that put the interests of American workers first.