Social Security What's Buzzing

Congress needs to fix the glitch in Social Security

Written by Nancy Altman

Conservatives are working to exploit a Social Security glitch caused by the economic crisis we are facing as a result of the coronavirus pandemic. Allies on Capitol Hill need a red alert to protect Social Security benefits. Social Security Works has launched an emergency campaign to ensure that Congress does not allow Social Security benefits to be cut.

You earn your Social Security benefits. They are based on your individual earnings, adjusted so that they are in line with the growth in economy-wide wages.

The way Social Security benefits are calculated is fair. Virtually all of the time, it works incredibly well. But our economy is collapsing as a result of the novel coronavirus pandemic.  The unprecedented economic collapse resulting from the pandemic has uncovered a technical glitch.

If not corrected, the glitch will mean lower benefits for workers aged 60 this year (and their families) than those with the same earnings history but who had the good luck to celebrate their 60th birthdays last year. If it is not fixed, the Social Security benefits of more than four million workers and their families will be several thousand dollars lower simply because those workers were born in 1960, not 1959!

The cause is complicated but, fortunately, the solution is simple and straightforward. Still, Congress must act to fix it. Congress should fix the glitch as part of the next emergency legislation.

First the cause: Aggregate wage levels normally rise from year to year. Not surprisingly, in 1977, when Congress enacted the current benefit formula, it did not anticipate that there would ever be a drop in aggregate nationwide wages. Consequently, it did not write the benefit formula to address that possibility.

Congress must now address that understandable oversight.

Much as the Social Security cost of living adjustment (COLA) cannot lead to a reduction in Social Security benefits–even if inflation is negative, Social Security’s indexing of earnings should also not lead to a reduction in benefits, even if total wages in the US are declining. It’s a simple fix that would ensure that people turning 60 this year do not have lower Social Security benefits than people who turned 60 last year, simply because they turned 60 in the year of the pandemic.

In fixing the glitch, though, Congress should act carefully so the legislation does not reduce anyone’s benefits.

Conservatives want to take advantage of this glitch as cover to cut benefits. The cuts could be technical, if the fix is not well-drafted, or technical sounding, though anything but.  A longstanding goal of opponents of Social Security is to change the benefit formula in a way that would erode benefits–through something called price-indexing. Over time, with price-indexing, Social Security benefits would have no relationship to people’s earnings history. Instead, they would get an extremely low, subsistence-level benefit.

Congress also should not support President Trump’s call to reduce or eliminate people’s Social Security’s payroll contributions. Those are dedicated funds that can only be used for Social Security. Eliminating them is a first step to cutting benefits, claiming, much like the defendant who murders his parents and asks for leniency as an orphan, that Social Security has insufficient revenue and so must be cut!

Social Security today has a reserve of $2.9 trillion. It has the money to pay people’s earned benefits. Without Social Security, tens of millions of retirees and people with disabilities would be crushed by this pandemic.

This pandemic underscores the need for Congress to expand Social Security. Fortunately, expanding Social Security is profoundly wise policy.  It is also what the American people overwhelmingly want.

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1 Comment

  • …in spite of COVID, living cots continue to rise. Where I am a rent increase was temporarily delayed but will go into effect next month. This increase is about twice what my LCA was for this year so effectively myself along with everyone living in the same building who is on SS pretty much will end up behind what we had last year. Other costs keep going up as well such as for food medications, and other necessities.

    A decrease in benefits would be disastrous for many. We don’t have the advantage of an additional 600$ a week like those on unemployment do. We received a one time payment which for some like myself, went to paying off bills that had accumulated and such. Some in the House have advocated for an increase in monthly SS benefits but so far that and other assistance bills are sitting on Mr. McConnell’s desk while the Senate is on summer vacation. Meanwhile there has been a surge in cases (we are still in the first wave) spurred my states that opened to soon, too fast, and in some situations, carelessly so (like Wisconsin, Arizona, and Florida). A few (like California) are rolling back and re-instituting restrictions but as we are seeing the damage has already been done.

    Mr. Sanders call for an emergency Basic Guarantied Income (which some other nations like Canada have done) would be a proper solution, however, given who controls the Senate that will definitely not happen, Crikey, Mr. McConnell (along with Mr. Trump) doesn’t think a second stimulus payment is warranted. but has no trouble giving even more to the War Department as well as more tax breaks to the wealthy and big business (the latter which siphoned off a major portion of the aid to small businesses via loopholes and government connections).

    Dr. Fauci and other medical experts have mentioned this is a situation which may be with us for a long time. I tend to believe them than the narcissist in the Oval Office who is only trying to preserve his campaign for re-election rather than addressing the well being of this nation and it’s citizens.

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