Senate bills look to fairly adjust Social Security for seniors

The 121,000 people who receive Social Security benefits in Snohomish County will be getting a rude non-surprise on Jan. 1.

That’s because they will not see any COLA increase in their Social Security checks. Why not? The COLA, the annual cost-of-living adjustment, accounts for inflation through the consumer price index. That index has shown no increase in the past twelve months, so no COLA. But senior citizens purchase different proportions of services than younger people. Consider medical expenses: inflation for medical care has gone up 2.5 percent. But that extra expense for the elderly is not factored into the consumer price index to determine the COLA.

In 2010, when inflation was zero, Social Security recipients received an emergency payment of $250 as part of the American Recovery and Reinvestment Act stimulus bill. So here we are with 2016 around the corner, and again, no COLA. That doesn’t mean that elderly citizens are any better off. The average Social Security payment is $1,335 a month. Two-thirds of seniors rely on Social Security for the majority of their income. For one quarter of seniors, Social Security is their sole source of income. So it makes sense to figure out how to increase Social Security checks.

There is a way to measure the price changes the seniors face. It’s called the CPI-E — the E is for elderly. If the Social Security Administration were to use that measure to calculate COLAs, Social Security checks would increase to keep pace with the price changes that the elderly face.

If seniors are getting the short end of the stick, who is running away with the long end? According to data from the top 350 corporations in the U.S., average CEO pay rose 3.9 percent in 2014, to $16.3 million — a $612,000 increase in one year. How about if we also increase the average Social Security payment by 3.9 percent? That would be a $580 one-time emergency benefit. And since every dollar of Social Security benefits generates about $2 of economic output, that increase would be worth about $300 million in new economic activity in Snohomish County alone. Washington state would see benefits totaling more than $3.1 billion!

How would we pay for it? From a policy point-of-view, that’s a relatively easy problem to solve. Buried in the federal tax code is a provision that enables corporations to fully deduct components of executive compensation that are “performance-based.” So corporations can pay their executives tens of millions of dollars, and at the same time write off those costs from their taxable income — with billions in lost tax revenue in the process. Closing this loophole would generate would generate about $51 billion a year. That’s $10 billion more than needed to pay for the one-time $580 emergency benefit for all Social Security recipients.

Sen. Elizabeth Warren, D-Massachusetts, is proposing just this trade-off. She is introducing a bill this week to give all Social Security recipients and Supplemental Security Income recipients a $580 one-time payment in 2016. She’ll close the corporate executive performance loophole to pay for this. Sen. Patty Murray, D-Washington, also is a sponsor of the legislation.

Sen. Warren’s proposal, the Seniors Before CEOs Act, has another benefit: Since the loophole closure is permanent, future revenue will go into the Social Security Trust Fund. That would help make increased Social Security payments possible in the future, such as switching to the CPI-Elderly, which takes into account what older people purchase. That is the CPI-E proposal that Sen. Maria Cantwell, D-Washington, introduced in 2005 in the U.S. Senate.

It made sense then, and it makes sense now. So one step at a time: first Sen. Warren’s legislation and then Sen. Cantwell’s CPI-E bill. Two-thirds of seniors rely on Social Security for the majority of their income. After decades of work, they should be able to stay out of poverty, and gain a bit more, not having to worry about running out of money at the end of each month.

John Burbank is the executive director of the Economic Opportunity Institute, www.eoionline.org. Email him at john@eoionline.org.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Opinion

toon
Editorial cartoons for Tuesday, Feb. 11

A sketchy look at the news of the day.… Continue reading

CNA Nina Prigodich, right, goes through restorative exercises with long term care patient Betty Long, 86, at Nightingale's View Ridge Care Center on Friday, Feb. 10, 2023 in Everett, Washington. (Olivia Vanni / The Herald)
Editorial: Boost state Medicaid funding for long-term care

With more in need of skilled nursing and assisted-living services, funding must keep up to retain staff.

Sentencing reforms more complicated than column described

I read Todd Welch’s Jan. 29 column. He is certainly entitled to… Continue reading

President Trump running nation like his failed businesses

We’ve seen it before; President Trump will do or say anything to… Continue reading

Intent of Trump’s nominees is to subvert good government

It is clear that Donald Trump has something specific in mind with… Continue reading

Comment: Musk’s USAID shutdown an attack on most vulnerable

Even promises of ‘waivers’ are falling short and allowing medical efforts to dry up, endangering millions.

bar graph, pie chart and diagrams isolated on white, 3d illustration
Editorial: Don’t let state’s budget numbers intimidate you

With budget discussions starting soon, a new website explains the basics of state’s budget crisis.

Curtains act as doors for a handful of classrooms at Glenwood Elementary on Monday, Sept. 9, 2024 in Lake Stevens, Washington. (Olivia Vanni / The Herald)
Editorial: Schools’ building needs point to election reform

Construction funding requests in Arlington and Lake Stevens show need for a change to bond elections.

FILE- In this Nov. 14, 2017, file photo Jaìme Ceja operates a forklift while loading boxes of Red Delicious apples on to a trailer during his shift in an orchard in Tieton, Wash. Cherry and apple growers in Washington state are worried their exports to China will be hurt by a trade war that escalated on Monday when that country raised import duties on a $3 billion list of products. (Shawn Gust/Yakima Herald-Republic via AP, File)
Editorial: Trade war would harm state’s consumers, jobs

Trump’s threat of tariffs to win non-trade concessions complicates talks, says a state trade advocate.

Comment: Real dangers loom with Trump’s incoherent trade policy

Even if Trump could settle on a justification for his tariffs, the results could leave the country far. weaker.

toon
Editorial cartoons for Monday, Feb. 10

A sketchy look at the news of the day.… Continue reading

Comment: Trump can go only as far as the courts will allow

Most of Trump’s executive orders are likely to face court challenges, setting the limits of presidential power.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.