CHICAGO (Reuters) – Charlie Rich, the late country music singer and songwriter, had it right when he crooned this famous line: “Oh, no one knows what goes on behind closed doors.” We need to remind Congress of the truth of that line as it tries to push a plan to negotiate changes to Social Security and Medicare as part of its latest pandemic relief bill.

Yes, you heard that right – in the midst of a raging pandemic, Senate Republicans are focusing on cuts to Social Security and Medicare.

That is the essence of the ironically named TRUST Act, the brainchild of Senator Mitt Romney, a Utah Republican. The bill is on track to be folded into the GOP relief plan. It would create a behind-closed-doors process for legislators to make changes to the Social Security and Medicare trust funds. Translation: it would allow lawmakers to do something the public clearly does not want – namely, cut benefits.

Read more: Reuters »

Until now, cuts to Social Security payroll taxes seemed like mostly a Trump thing, with GOP leaders rather…skittish…about a proposal that would cut funding for Social Security, one of America’s most beloved and beneficial government programs.

Now it looks like a party-line proposal, as Bloomberg news reporter Erik Watson tweets that according to GOP Leader Kevin McCarthy, the proposed GOP stimulus bill includes a payroll tax cut.

How terrible an idea is this? Los Angeles Times columnist Michael Hitzik says it real loud for those in the back:

A payroll tax cut…would do nothing to help Americans who need the most help. To benefit from the cut, a worker must be paying the payroll tax. That’s not happening for the roughly 32 million Americans who have filed for unemployment benefits in the last few months because of the pandemic, because by definition they’re no longer on a payroll.

The tax cut would have zero benefit for millions of Americans who don’t pay into Social Security, including many state and local workers who aren’t covered by the system and seniors already receiving Social Security benefits, who are no longer paying the tax.

Moreover, even for many workers still receiving paychecks, the tax cut would be relatively trivial. If the payroll tax of 6.2% were to be cut in half, that would give a household collecting $50,000 a year in wages a benefit this year of $1,550, or about $30 a week.

So why the interest in a proposal that will do so little for so many? Just follow the money: according to the non-partisan Institute for Taxation and Economic Policy, the richest 20% of Americans would get two-thirds of the benefits:

Color me…unsurprised.

As Hitzik also points out, a payroll tax cut is disdained by economists across the political spectrum — including Michael R. Strain, director of economic policy studies at the pro-business American Enterprise Institute.

But by pushing to cut off the program’s funding stream, President Trump is taking the first step toward dismantling Social Security — a long-sought goal of the far-right politicians who want to portray Social Security and Medicare as the cause of the federal deficit, even after multibillion-dollar tax cuts for corporations and the wealthy.

Aaron Keating is Managing Director at the Economic Opportunity Institute, where this post was originally published.

The Social Security 2100 Act would be a huge step toward a secure retirement for all — but Senator Patty Murray and Senator Maria Cantwell have yet to sign on. Please urge both of Washington’s senators to support Senate Bill 269, which will:

• Ensure Social Security pays full benefits for the remainder of this century.
• Expand Social Security’s modest benefits for the 63 million Americans receiving them now, and all future beneficiaries.
• Switch to a more accurate cost of living adjustment to reflect the costs faced by seniors.
• Require the wealthy to pay a fairer share of their income toward Social Security than they presently do

See below for contact information and sample text for your message — thank you!

Senator Patty Murray
Phone: (202) 224-2621
Email: https://www.murray.senate.gov/public/index.cfm/contactme/

Senator Maria Cantwell:
Phone: (202) 224-3441
Email: https://www.cantwell.senate.gov/contact/email/form

SAMPLE TEXT — PLEASE EDIT, A UNIQUE MESSAGE HAS MORE IMPACT!

Dear Senator:

I urge you to sign on to the Social Security 2100 Act (S.269). Social Security is more than a safety net. It improves economic security, stability and growth for me and all of your constituents in Washington.

Social Security provides income for 30 percent of the Washington’s households. More than 1.3 million state residents (18 percent of Washington’s population) receive Social Security benefits. Average retirement benefits are just $1,490/month, and kept an estimated 317,000 Washingtonians age 65 or older out of in poverty in 2018. Social Security is also the primary insurance protection for 95 percent of Washington’s 1.8+ million children and families in the event a parent or spouse were to die or be disabled.

Social Security significantly boosts Washington’s economy. In 2018, benefits an estimated $42.3 billion in economic activity, more than 268,000 jobs and nearly $2.2 billion in state and local tax revenue. In December of 2018 alone, more than $1.9 billion in Social Security benefits went directly to local economies – from populous King County ($450 million to 295,000 people) to rural Garfield County ($889,000 to 665 people).[10]

Half of Americans not yet retired have yet to put away more than $10,000 towards their future retirement. If nothing is done now to fix Social Security, millions will be impacted — including me and my family. Cutting benefits is not the answer. We need to expand and improve Social Security.

I urge you to sign on in support of S.269, the Social Security 2100 Act. This is not just important to me now, but to ensure my children and grandchildren will have Social Security when they need it.

Sincerely,

NAME:
ADDRESS:
PHONE OR EMAIL:

The New York Times lays out some of the key issues and questions facing older workers navigating the last part of their careers in the pandemic, noting:

Many older workers, generally those over 40, say they will need to work longer because of the economic crisis. For example, 37 percent of baby boomers and 39 percent of respondents from Generation X said they had delayed retirement or were considering doing so, according to a recent survey by TD Ameritrade.

But that will be easier said than done: Between 2014 and 2016, just over half of workers who retired between ages 55 and 64 did so involuntarily because of ill health, family responsibilities, layoffs and business closings, according to research by the Schwartz Center for Economic Policy Analysis at the New School for Social Research.

This is exactly why protecting and expanding Social Security is critical for everyone – because you never know what the future holds.

Many people think of Social Security as a retirement savings program — but that’s not the case. It is actually a nationwide insurance policy. Social Security exists to insure workers and their families against old age, premature death, and disability.

Legislation now in Congress would expand Social Security and ensure that all benefits can be paid in full and on time into the 22nd century: the Social Security 2100 Act.

Led by Rep. John Larson (D-Conn.), the chairman of the Social Security Subcommittee, the bill has 210 co-sponsors – nearly 90 percent of House Democrats – and an identical bill has been introduced in the Senate.

But to get this legislation across the line your elected leaders need to hear from you:

• Contact Speaker Nancy Pelosi to urge her to hold a vote on this important legislation. (sample text here)
• Urge your state’s senators to sign on to the Senate legislation. (sample text here)

[Via CBPP] The next COVID-19 relief bill should fix an unintended benefit “notch” under which, due to the pandemic and resulting recession, Social Security benefits will be significantly lower for workers who turn 60 this year and will be eligible for early retirement benefits in 2022. Those becoming eligible for disability or young survivors benefits in 2022 will also see lower benefits.

Here’s why:

Social Security benefits for each new age cohort of retirees are designed to replace about 41 percent of a typical worker’s career-average earnings if one claims benefits at the normal retirement age, which is 67 for those turning 60 in 2020 or later. The benefit formula is progressive: workers with below-average earnings receive a higher replacement rate, and those with above-average earnings receive a lower one. Before computing a worker’s average earnings, Social Security adjusts earnings from years before a worker turns 60 to account for the growth in economy-wide wages, using an “average wage index.”

Normally, average earnings in the economy rise from one year to the next. Due to the sudden, sharp unemployment increase in 2020, however, many workers will suffer a big decrease in their annual earnings. And those decreases will cause the economy-wide average annual wage to fall as well. That, in turn, will reduce the average indexed earnings and Social Security benefits of workers turning 60 in 2020 compared to those with similar earnings who turned 60 in 2019. If the average wage falls by 5 percent in 2020, as now seems likely, the retirement benefit of a 60-year-old worker with average earnings will drop by about $1,200 a year for each and every year of retirement. If the average wage falls more, the decreases will be even larger.

People shouldn’t suffer a large, permanent drop in their Social Security benefits just because they turn 60, become disabled, or experience the loss of a breadwinner around the start of a deep recession. Policymakers should fix this unfair result. One solution would be to specify that the wage-indexing factor couldn’t fall from one year to the next, even when the average wage index declines.

Social Security already includes two provisions that prevent reductions in taxes or benefits in unusual circumstances. The amount of annual earnings subject to the Social Security payroll tax doesn’t decline even if average wages fall. And cost-of-living adjustments don’t reduce benefits when the consumer price index drops. Retired and disabled workers and survivors should have similar protection from lower benefits because of a decline in average wages.