Mention Social Security and most people immediately think of the monthly checks received by the program’s 62 million beneficiaries. Each day we see and hear how retirement, disability and survivor benefits keep people afloat and prevent them from falling into poverty. (Nearly half of beneficiaries rely on Social Security for all or most of their income). But that money isn’t just a lifeline to beneficiaries and their families, it’s an economic boon for their communities and the entire nation. Every year, $800 billion dollars flow to beneficiaries who spend much of their income locally. They do business at the grocery store, the pharmacy, the auto repair shop, the theater and the hairstylist. They purchase clothing, pay rent and other basic expenses – stimulating and strengthening the economy.
The spending power of older Americans, bolstered by Social Security benefits, is a potent financial force. Businesses offer senior discounts to entice retirees, who tend to spend more of their money than other age groups. When Social Security beneficiaries help local businesses to prosper, those businesses hire additional workers and order more supplies, infusing the economy with even more money.
Thanks to this ‘multiplier effect,’ every dollar paid in Social Security benefits produces $2 in stimulus to the economy. That adds up to more than $1.6 trillion dollars in national economic stimulus annually. Social Security benefits are responsible for sustaining some 10 million jobs, including roughly $400 billion in salaries and wages. With figures like these, even Wall Street must acknowledge that Social Security is incredibly good for Main Street.
“Seniors are really important to local businesses,” says Abraham Kapusuz, former managing partner of a New Jersey restaurant that thrives on an older customer base. “During the early bird special, at least 80% of the customers are seniors. Most of their income is from Social Security. They contribute to the business – and the economy – bigtime.”
But the opposite is also true. If Social Security benefits are cut, seniors will have less income to spend on goods and services – which is bad for Main Street. “If the government cuts Social Security benefits, it would affect the bottom line tremendously,” says Kapusuz. “Now you have to start laying off employees, which has a chain reaction throughout the local economy.”
The National Committee to Preserve Social Security and Medicare has compiled fresh data on the economic impact of Social Security on congressional districts in all 50 states and U.S. territories. Most Americans would be surprised at how much money flows into their communities from those monthly Social Security checks, including red and purple states represented by aspiring benefit-cutters in Congress:
- In Florida, Social Security injects $70 billion into the state’s economy every year in the form of benefit checks to 4,532,000 retirees, disabled workers, survivors and children.
- Texas receives a $61 billion annual cash infusion through payments to 4,126,000 beneficiaries.
- 2.3 million Ohioans receive a total of $35 billion in Social Security benefits each year.
It’s ironic that conservatives who purport to believe in ‘fiscal responsibility’ and a strong economy do not appreciate – or willfully ignore – these figures. Instead, they blew a $2 trillion hole in the federal debt with the Trump/GOP tax scheme (which has not trickled down to working people) and propose to cut Americans’ earned benefits to close the gap. If anything, this is the height of fiscal irresponsibility. The economic engine of Social Security is already humming. Why choke it with benefit cuts?
The political right would like to use not only the Trump/GOP tax cuts, but projections about the program’s long-term finances, to cut Social Security. While it’s true that the Social Security trust fund will be able to pay roughly 80% of benefits after 2034 if Congress takes no action, legislation has already been introduced that would keep the program financially sound for the rest of the century while modestly boosting benefits, mainly by asking the wealthy to pay their fair share.
In fact, the authors of two of those bills, Senator Bernie Sanders (I-VT) and Rep. John Larson (D-CT) have just launched “Expand Social Security” caucuses in the House and Senate, along with Senator Elizabeth Warren (D-MA) and other key members of Congress. The formation of these caucuses crystallizes the efforts of Social Security advocates and lawmakers to put more – not less – much-needed income into the hands of America’s seniors. This means not only boosting monthly benefits, but adopting a more accurate consumer price index for the elderly (CPI-E) and increasing the minimum benefit formula – all of which will provide even greater economic stimulus.
Efforts to boost Social Security have languished in the Republican-controlled Congress. But that could change after November’s elections. There is no better way to help Main Street than to elect members of Congress who appreciate Social Security’s immensely positive impact on our economy – and will work hard to expand on the program’s promise.
Max Richtman is president and CEO of the National Committee to Preserve Social Security and Medicare. He is former staff director at the United States Senate Special Committee on Aging.