Some economists have argued that seniors are wealthier than the reporting shows so they do not need an increase in their Social Security benefits.

Very few Americans believe they are so well off that they can get by without Social Security.  Even those who are reasonably financially stable today are well aware that this could be a very temporary condition.  One fall could land them in a nursing home, and the average annual cost of $100,000 would rapidly wipe-out any savings they may have accumulated.

As President Franklin Delano Roosevelt so famously stated, Social Security was created to “provide some measure of protection to the average citizen and to his family” against the hazards and vicissitudes of life.  It is not merely a retirement program, it is a contributory social insurance program.  And it is most assuredly not welfare.  It is an earned benefit that American workers contribute to with each and every paycheck.  It provides a financial bulwark against an uncertain financial world – a world in which Americans are acutely aware of their vulnerability.

But the more important point is that Social Security doesn’t just provide benefits to seniors.  That represents the old ‘generational transfer’ argument that improving Social Security means our children and grandchildren will be taking money out of their pockets and giving it to their parents and grandparents.  This cannot be further from the truth.

Social Security lifts more children out of poverty today than any other permanent federal program.  It provides younger workers with insurance – both life insurance and disability insurance – which can be unavailable or unaffordable, especially for workers in hazardous occupations or those with health issues.

One-in-four of today’s 20-year-olds will become disabled before reaching age 67 yet the vast majority of workers have no long-term disability insurance.  For a young disabled worker with a spouse and two children, the disability insurance value of the benefit they get through Social Security is over $580,000.  In addition, about one-in-nine of today’s 20-year-olds will die before reaching the full retirement age of 67.  Many workers do not have life insurance to protect their families, but the survivor’s benefits provided through Social Security is worth over $725,000.

Some economists believe Americans would be better off strengthening their retirement savings through Individual Retirement Accounts (IRAs) and other retirement plans than depending on the government for Social Security.  Dr. Andrew Biggs argues he has polling that shows most Americans across the political spectrum agree – they would rather divert some of their payroll taxes into IRAs they own and can control than putting more of their hard-earned dollars into Social Security.

Some people continue to promote privatization of Social Security, in some cases citing polls that appears to show a preference by Americans to invest their payroll contributions in the stock market rather than increasing their contributions to Social Security.  Our members, and the multitudes of your constituents who participate in town hall meetings would beg to differ.  We believe former President George W. Bush discovered this fact when he proposed privatizing Social Security during his second term as President.  Large majorities of the American public resoundingly opposed his efforts, and the more he promoted his plan, the steeper public support dropped.  What we have discovered with many polls showing strong public support for privatization is that the wording of the questions plays an important role in the results.

For example, the poll commissioned by Dr. Biggs created the false equivalence between a secure Social Security benefit and the riskiness of investing in the stock market.  Not surprisingly, large numbers of respondents chose the investment option.  Questions that acknowledge the level of risk involved in private retirement accounts show markedly different results, as President Bush discovered.  While there is a place for private investments for retirement, it should be to supplement the foundation provided by Social Security – not to replace it.

Polls also never acknowledge all that would be lost by privatizing Social Security.  A poll that said: “in addition to risking your hard-earned money in the stock market, you would also need to use those same dollars to buy life insurance and long-term disability insurance for your family’s peace of mind – assuming you are even insurable in the private market – now do you want to give up your Social Security benefits?” – would inevitably result in poll numbers strongly supporting Social Security.

Some have expressed concern that the Social Security 2100: A Sacred Trust Act only extends solvency by 4 years 

That is one way of looking at it, and at the National Committee we believe it is vitally important to close this gap completely and look forward to working with Congress to explore the best avenues to achieve this goal.  But it is also important to see the improvements in financing that the bill would accomplish.  According to the Social Security Administration’s Chief Actuary, H.R. 5723/S. 3071 would slash the long-range actuarial deficit by one-half, from 3.54 percent of payroll to 1.71 percent.   The bill also dramatically improves the percentage of scheduled benefits that are projected to be payable on a timely basis from today’s 78 percent to 87 percent.  This represents a solid first step toward eliminating the financing gap entirely.

There are concerns that the solvency improvement might be a fiscal gimmick because the tax increases continue forever and the benefit expansions lapse after 5 years.

Providing breathing space for the American people to think about their priorities and communicate them to their representatives is no gimmick.  There would be at least 2 federal elections during the half-decade that the benefit improvements would be in effect – plenty of time for voters to let their representatives in the House of Representatives and Senate know whether they believe the improvements are worth keeping.  Multiple polls tell us strong majorities across the political spectrum are willing to pay slightly higher taxes in order to strengthen and improve Social Security, but there is nothing like an election to verify the polling.  In the meantime, millions of Americans would be receiving critical financial support, helping them afford their medications, put food on the table, and pay for housing, heating and other expenses.  Not a single one of these Americans would refuse to accept this help because the benefit improvements are not a permanent change in the law or because some academics call them ‘gimmicks’.  If benefits are extended they will be paid for, unlike massive tax cuts mostly for the rich and large profitable corporations enacted under former President Donald Trump.

Some fiscal conservatives believe benefits should be secured without increasing taxes.  They claim increasing payroll taxes to pay for Social Security improvements would protect today’s beneficiaries on the backs of their children and grandchildren.  Today’s retirees don’t want that either. 

Today’s retirees do not want their benefits to be improved at the expense of their children and grandchildren, and the Social Security 2100: A Sacred Trust Act does not include any increase in the payroll tax rate.  There are numerous polls that show the American people are more than willing to pay higher payroll taxes if they can be assured their money will be dedicated only to Social Security because they understand the value not only to existing beneficiaries but to their families as well.

Some oppose the elimination of the taxable maximum included in H.R. 5723/S. 3071 claiming it will result in a significant payroll tax increase for job creators and other hard working Americans.

Most Americans are shocked to discover there is a payroll tax cap at all, and public support for raising or eliminating it is very strong.  American workers do not understand why they are required to make payroll contributions on every single penny of their wages while their employers often stop paying into Social Security after a few short months.  Social Security was originally intended to cover about 90 percent of wages – not because the architects believed high-wage people should stop paying into the program but because they feared the political backlash if really wealthy people began collecting very large Social Security benefits.  This 90 percent threshold has dropped to about 82 percent, largely due to the income and wealth inequality we have experienced over the decades.  That slippage may not sound like much, but it represents billions of dollars that did not go into the program as expected.  H.R. 5723/S. 3071 ensures that more high-income earners contribute their fair share to the Social Security program and that they and their families receive the benefits they earn when they retire, become disabled or die.

Some critics ask why extremely wealthy people should be eligible for Social Security benefits.  They argue it would be better to focus Social Security on low-income people.

Those with lower lifetime earnings should not be punished for working hard at minimum wage jobs their entire lives – which is why improving benefits for those at the lower end of the wage scale is one area where Democrats and Republicans agree.  Where we strongly disagree is the notion of turning Social Security from an earned benefit to a program that looks more like welfare.

It is very disingenuous to suggest that the best solution to improve Social Security’s finances is to cut or eliminate benefits for multi-millionaires and billionaires.  The fact is, there simply aren’t enough super-rich to make a dent in Social Security’s long-range finances.  To do that, you need to significantly cut benefits for those who need Social Security the most – workers making $40,000-50,000 a year – or in other words, the heart of middle-class America.  These are the workers who have been left most vulnerable from decades of stagnant wages and rising income inequality.  To suggest cutting their Social Security to pay for their even lower-income neighbors simply adds insult to injury.  Proponents of means-testing or otherwise income-limiting Social Security will not admit publicly that in order to make the concept work, the cuts cannot be limited to the jet-set.

Everyone knows we are living longer, which is why some economists argue the retirement age should be raised, just like Congress did in 1983.

Basing the decision of the most appropriate retirement age on longevity is extremely problematic because increases in life-expectancy are very uneven and very much linked to standard of living.  Although in general women today who reach age 65 can expect to live about 2.5 years longer than comparable men, this disparity breaks down when you dig a little deeper.  Men working in offices with good health insurance are likely to live longer than women of color working backbreaking service jobs with no paid sick leave and no health insurance.  Raising the retirement age hurts these workers most of all.

In addition, although for many years life expectancy on average was increasing, this may no longer be the case.  The most recent report on longevity in the United States from the Centers for Disease Control and Prevention shows that people are not living longer. The report highlights a decline of one year in US life expectancy from 2019 to 2020. For men the decline was 1.2 years, for women 0.9 year.  For African Americans the decline was even worse – 2.7 years; for Latinos it was 1.9 years; for whites 0.8 year.  This decline in life expectancy continues a trend occurring over the last four years. While the COVID pandemic may account for some of the recent decline, other factors such as increased obesity, and drug (e.g. opioid crisis) and alcohol-related deaths have contributed to the trend.

The entire notion of raising the Social Security retirement age is built on the presumption that most workers quit working voluntarily and what we need to do is provide incentives for them to stay in the workforce.  That is not the reality for most older workers.  Most workers end up retiring before they planned due to health reasons – either their own or a spouses’.  Raising the retirement age simply means they must stretch out lower Social Security benefits for a longer period of time.  And even if you set aside forced retirements due to health, workers with white-collar jobs are much more likely to be able to find other jobs if they are downsized because of a recession or pandemic irrespective of their age, while it is much harder for older blue-collar workers to find new jobs in a tight economy.

An April 2016 report released by the US Government Accountability Office (GAO) found that lower-income men approaching retirement live, on average, 3.6 to 12.7 fewer years than higher income men. That is, most of the increase in life expectancy for those who reach age 65 is enjoyed by workers with higher incomes. This is not surprising considering they are less likely to have physically demanding jobs and more likely to be covered by high-quality employer-sponsored health insurance.

Many critics argue that young people in particular do not believe Social Security will be there for them and therefore they would prefer to invest in the private market rather than paying into Social Security.

Many millions of dollars have been spent over the years convincing people, and especially younger people, that Social Security will not be there for them when they retire and so they need to put their hard-earned dollars into private accounts.  But when they are asked a follow-up question of whether they support cutting Social Security benefits, the answer for most is a resounding NO.  They understand how important the program is for their parents and grandparents.  And even though they have been deluged by messages telling them the program is “broke” or “facing bankruptcy” or similar language, they understand the risks of Wall Street and the need to have something they can rely on themselves.

Numerous studies have found that only about one-half of workers have any retirement savings at all – despite decades of incentives in the tax code to help them save.  This is an untenable situation as Social Security was never designed to be the sole source of income in retirement.  But the answer is not to take money out of the one program that is working and bet it on the private retirement system to fill the gap – especially considering the loss of the non-retirement benefits as well.  The answer is to help boost the wages of American workers so they can save more – not only through Social Security but also through the private retirement system.

Some conservative economists argue the current formula for calculating annual Cost-of-Living-Adjustments (COLAs) overstates inflation because it does not adequately take into account substitute purchasing and therefore instead promote using the chained CPI to calculate benefits.

First, the current formula does take into account some types of substitutions – such as switching to hamburger or chicken if the price of steak goes up (though there are a lot of seniors who cannot afford the price of steak in any event).  More importantly, there are even more respected economists who believe the current use of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) significantly understates the impact of inflation on seniors because it does not adequately represent the things they spend their money on.  In fact, the Bureau of Labor Statistics has tested an experimental Consumer Price Index for the Elderly (CPI-E) designed to better reflect the purchasing patterns of seniors.  This CPI-E shows if it was used instead of the current CPI-W for calculating COLAs for Social Security, benefits would have increased by an average of 0.2 percent per year.

It is self-evident that the average market basket purchased by younger wage earners living in any urban area is going to look very different from the basket of goods purchased by their parents and grandparents.  It is inevitable that the seniors’ spending will include significantly more spending on health services and medicines by the older citizens than the younger ones.  Medical inflation has traditionally risen significantly faster than inflation generally, and this is the heart of the problem.  COLAs are designed to help seniors keep up with inflation since most are on fixed incomes and even those with retirement savings accounts can find them rapidly depleted.  Social Security is the only wage replacement program with automatic COLAs built into the program – most other retirement programs either don’t provide a COLA or only provide one intermittently and we greatly appreciate that critical feature of the program.  But a COLA that doesn’t adequately keep up with inflation in the things most seniors purchase will result in a steady decrease in their standard of living over time.

H.R. 5723/S. 3071 replaces the outdated use of the CPI-W with the CPI-E – a change that is critical to help Americans keep up with the increases in price of the goods they are most likely to purchase.