Social Security is our nation’s most effective anti-poverty program. The system’s modest but vital benefits lifted 21.4 million Americans out of poverty in 2014, including 1.1 million children. It could lift millions more if we expand the program’s benefits—but things have taken a distressing step in the opposite direction.
In recent years, low and non-existent cost-of-living adjustments (“COLAs”) have been gradually eroding the value of Social Security benefits. These COLAs are calculated using an inflation measure that is intended to reflect costs faced by workers. The measure does not accurately account for costs faced by seniors and Americans with disabilities, who spend a far higher percentage of their income on health care.
To the wealthy few, the extra $40 or $50 a month from a COLA increase might not seem like a big deal. But to elderly Social Security beneficiaries, this increase is much-needed income that they can use to put food on the table and pay for lifesaving prescriptions.
That’s why Social Security’s 59 million beneficiaries were devastated to hear the news that, for only the third time in 40 years, there will be no COLA in 2016. They know that the cost of basic necessities, including medical care, prescription drugs, food, and housing, has continued to increase. But their benefits are not increasing accordingly and are losing their purchasing power. If this trend continues, younger generations will have effectively lower benefits, even though the decline of pensions and rising inequality means that they will be even more reliant on these benefits than their parents and grandparents are.
And this isn’t just hurting Social Security beneficiaries. The same formula is used to calculate the COLA for many other programs, including Supplemental Security Income (SSI) and various veterans’ benefits including Disability Compensation benefits, pension benefits, and Military Retirement Pay. For the millions of Americans—particularly veterans—who receive Social Security as well as one or more of these other benefits, a year without a COLA is a double or triple whammy.
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But there is hopeful news. Senator Elizabeth Warren, a longtime champion of Social Security, is on the case. She is sponsoring the SAVE Benefits act, a bill—already supported by twenty of her colleagues—which would send every Social Security beneficiary (as well as others impacted by the lack of a COLA) a one-time payment of about $581 to cover next year’s lack of a COLA increase.
That payment would make a serious difference in the lives of millions of beneficiaries. For many seniors, it could cover over three months of groceries. For others, it may cover the average Medicare out-of-pocket spending on prescription drugs. It’s no surprise that the SAVE Benefits Act would lift over one million Americans out of poverty.
Senator Warren’s bill is fully funded by closing the “performance pay” loophole, which allows big corporations to take a tax deduction for the lavish compensation packages they give their wealthy CEOs. This loophole costs taxpayers about $9.7 billion dollars every year. The SAVE Benefits Act uses some of these savings to provide the 70 million Americans who are not receiving a COLA with the much-needed $581 checks. The rest would go into the Social Security trust fund to bolster the program’s long-term actuarial balance.
Passing the SAVE Benefits Act is an essential step, but it is only the first step. To permanently address the gradual erosion of Social Security benefits, Congress must pass legislation adopting an updated measurement tailored to reflect the real living costs (such as high health care expenses) that seniors and Americans with disabilities face, for calculating future COLAs. And to permanently tackle our country’s looming retirement income crisis, and address the millions of seniors and people with disabilities already living in poverty, Congress must expand Social Security’s modest benefits.
This is a powerful movement that is gaining momentum every day. The American people overwhelmingly support expanding Social Security’s benefits by requiring the wealthiest Americans to pay their fair share. Forty-three Senators and over 100 U.S. Representatives have pledged to support expanding benefits, not cutting them.
Social Security has been a resounding success for over 80 years. Now is the time to build upon that legacy.