Policy will repeat mistakes of Great Recession stimulus – contact your member of Congress now!

UPDATE 4/1/20 8 PM PST: The Trump administration has (partly) changed course: Social Security recipients will not have to file tax returns to receive a stimulus check. But: very low-income seniors and people with disabilities who receive Supplemental Security Income, as well as low-income veterans who receive certain benefits from the Veterans Administration, still have to file a tax return. Please contact your member of Congress now and urge them to keep the pressure on for a complete fix!

ORIGINAL POST:

It’s April 1st, but this is no joke: In the middle of the COVID-19 pandemic and growing economic crisis, the Trump administration will require Social Security recipients and many others, who do not usually file a tax return, to do so in order to receive their economic stimulus rebate, according to a recent IRS newsletter.

If history is any guide, requiring a tax return will deprive millions of Americans of needed economic assistance. The 2008 economic stimulus package had a similar requirement: it created confusion and burdens for millions of people, and ultimately about 3.5 million of those eligible did not file, and so never received the payments.

That’s why this time around, Congress did things differently. The just-passed stimulus package (called the Coronavirus Aid, Relief, and Economic Security (CARES) Act) provides Treasury with the necessary legal authority to automatically make those payments – and the federal government already has all of the information it needs to provide these payments without a tax return.

As the Economic Policy Institute notes: “Treasury and IRS can match Form SSA-1099 information with tax-return information to make sure that the beneficiary isn’t part of a tax filing unit that received a stimulus payment based on a tax return. Treasury also can use the Social Security Administration (SSA) data to deliver a stimulus payment using the same payment information as the recipient’s Social Security benefits.” The Veterans Administration can also share similar administrative data.

Given social distancing and widespread closure of many public facilities, senior citizens and people with disabilities will face outsized barriers to filing a tax return. They won’t have easy access to assistance from non-profits or government agencies that could help, and online or phone assistance will be ineffective – especially for those who aren’t computer literate, or lack internet access. Family members won’t easily be able to provide face-to-face assistance, either.

EPI estimates that more than 15 million Social Security recipients currently don’t file tax returns and aren’t otherwise required to do so. The Treasury and IRS should aggressively use their authority to ensure every single person receiving Social Security benefits of any kind also receives their stimulus payment.

Contact your member of Congress now – tell them to call on the Secretary of the Treasury and IRS Commissioner to make a clear public statement that seniors, people with disabilities, veterans, and others who don’t usually file a tax return will automatically receive the economic stimulus rebate Congress intends for them.

[via CNBC.com] Key Points:

• The coronavirus relief package includes one-time checks for low- and middle-income Americans, including those who live off government benefits.
• The payments will be based on your most recent tax return. If you receive government benefits and don’t file a tax return, you may have to file in order to get your payment.
• As government agencies work to firm up details on how they will get that money into beneficiaries’ hands, here is what we know now.

Congress passed new legislation Friday that will put stimulus relief checks in the hands of millions of Americans.

The checks will amount to $1,200 for those who earn $75,000 or less, and $2,400 for couples making $150,000 or less. The legislation now heads to the desk of President Donald Trump, who has said he will sign it.

A big question among individuals who are living on Social Security or other government benefits is whether they will be eligible for a relief check.

The answer is yes, regardless of whether they are on Social Security, Supplemental Security Income, or SSI, or veterans benefits.

“They are eligible,” said Michael Zona, a spokesman for Sen. Chuck Grassley, R-Iowa, chairman of the Senate Finance Committee that put together the legislation.

“There aren’t provisions explaining a list of people eligible — it’s a broad definition, meant to be as all-encompassing as possible,” Zona said.

turns,” said Webster Phillips, senior policy analyst at the National Committee to Preserve Social Security and Medicare.

“But no one knows for now how this will be handled,” Phillips said.

SSI benefits are provided to older, blind or disabled individuals who have little or no income. 

“They’re the very poorest among us,” said Nancy Altman, president of Social Security Works.

While the government already has their addresses and sends them monthly payments, they may still have to file a tax return just to get their stimulus money, she said.

“The people who are really focused on that population are trying to figure out how this is going to work,” Altman said.

Plus, all payments will be disbursed by the Treasury Department and not the Social Security Administration, which is a complication, she said.

Still, both advocacy groups applauded the fact that the package covers Social Security beneficiaries.

“That will go a long way,” Altman said of the $1,200 checks. 

The legislation does not include the extra $200 per month in Social Security benefits that some Democratic senators, including Elizabeth Warren, D-Mass., had proposed.

However,  because additional stimulus legislation is anticipated, there could be another chance to get that passed.

“I think that will present another opportunity to add the proposal to it,” said Dan Adcock, director of government relations and policy at the National Committee to Preserve Social Security and Medicare.

One proposal that did make it into the final legislation is the payroll tax holiday for businesses.

Typically, both workers and employers each contribute 6.2% of wages to Social Security. Now, employers will get a break on those taxes until the end of the year, if they wish.

“We’re concerned that it could be something that would become permanent and make the (Social Security) program more vulnerable to privatization or benefit cuts,” Adcock said.

[by Max Richtman | via Marketwatch] This month’s dramatic losses on Wall Street in the midst of the coronavirus crisis are a reminder of why Social Security is so important — and why privatization of Americans’ earned benefits remains such a bad idea. 

[via Economic Opportunity Institute] President Trump, grappling with a brewing economic crisis precipitated by his failure to manage the federal response to the COVID-19 pandemic, thinks he’s found the answer: a payroll tax cut. It’s the wrong prescription for our economy.

As part of a broader package of emergency response, Congress should instead expand Social Security, which – exactly as intended – delivers crucial economic benefits directly to individuals, communities, and small businesses in cities and rural areas alike, day-in and day-out, even in the midst of a crisis like COVID-19.

There are many drawbacks to cutting payroll taxes right now – here are three of the biggest:

• It won’t help workers who have lost jobs – because they aren’t getting paid – and it won’t benefit the elderly (who are most at risk of COVID-19), because most of them aren’t working.
• For those who are working, it’s of little benefit. For example, half of Washington workers would see a benefit of less than $92 per month – hardly enough to make a significant difference.
• It would reduce revenue going to Social Security, which is entirely financed by payroll taxes. If backfilled with general tax revenue, Social Security’s opponents will push for benefit cuts, if recent history is any guide.

In 2018, Social Security benefits generated 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 Washington alone.[1] In December of that year, Social Security delivered over $1.9 billion in benefits to our local economies – from populous King County ($450 million to 295,000 people) to rural Garfield County ($889,000 to 665 people).[2]

Rep. John Larson’s Social Security 2100 Act is ready and waiting in Congress, with hundreds of co-sponsors already signed on. It would permanently increase the ongoing stimulus that Social Security provides by putting more money in the wallets of millions of retirees, disabled workers, and survivors who struggle now with rapidly rising health care and housing costs – financed largely by applying the existing payroll tax to wages above $400,000.

Other measures under consideration now in Congress would also make a difference, like: enacting federal paid sick time and paid family leave laws; increasing food stamps and other food supports; bolstering public health care systems; infusing money and increasing coverage of state unemployment insurance programs; and providing grants for small businesses most impacted by coronavirus. Congress should also pass those immediately, but reject the president’s payroll tax cut idea.

[via NCPSSM] When it comes to Social Security and Medicare, President Trump can’t help saying the quiet part out loud:  he would like to cut both programs, despite his campaign promises to protect them.  During a town hall on Fox News last night, moderator Martha MacCallum asked the president whether he would cut ‘entitlements’ to reduce the soaring debt.  Trump replied, “We’ll be cutting, but we’re also going to have (economic) growth like we’ve never seen before.”

This is Trump’s second admission in less than two months of his true intentions regarding seniors’ earned benefits.  In January, responding to a CNBC interviewer, the president said that he would “look at” cutting Medicare and Social Security because it’s “actually the easiest of all things, because it’s such a big percentage (of the debt).”

Through these statements, Trump indicates that he has bought into the fiscal conservatives’ fallacy that ‘entitlements’ are the biggest drivers of the debt and therefore must be cut to reduce it.  In fact, ‘tax expenditures’ – revenue that the federal government forgoes through tax breaks (especially the Trump/GOP cuts of 2017) – are the number one contributors to the debt.

Social Security and Medicare Part A are fully self-financed through workers’ payroll contributions and do not add to the national debt.  Medicare Parts B and D are financed, in part, by premiums. There are fairer ways to reduce the debt (including repealing those reckless 2017 tax cuts for the wealthy and big corporations) than cutting benefits for seniors living on fixed incomes. Tomorrow’s seniors will rely even more on their earned benefits to make ends meet.

Earlier this week, the president floated the idea of a temporary Social Security payroll tax cut in order to stimulate the economy amidst the coronavirus epidemic. A payroll tax cut, while providing a few extra dollars for workers in the short-term, would rob Social Security of much-needed revenue for the future.  As NCPSSM president Max Richtman wrote this week in The Hill:

“If the president wants to use Social Security to stimulate the economy, why not boost benefits — instead of cutting payroll contributions? Social Security already provides more than $1.6 trillion in economic stimulus every year — as beneficiaries spend their benefit checks in their communities. Increasing benefits would provide even greater economic stimulus.” – National committee president Max Richtman, The Hill newspaper, 3/5/20

President Trump could honor his promises (most recently, in the State of the Union address) to protect Social Security and Medicare by supporting legislation like Rep. John Larson’s Social Security 2100 Act and the Lower Drug Costs Now Act (H.R. 3).  But, of course, Trump does not support either measure – and neither do his GOP allies in Congress – because the bills challenge conservative orthodoxy that demands earned benefits be cut instead of boosted, even though both pieces of legislation can be paid for without burdening current and future seniors.

It’s ironic that a president who vowed to preserve Social Security, Medicare, and Medicaid has offered budgets that cut all three by more than a trillion dollars over ten years – most recently in his proposed 2021 spending plan:

“This budget would drastically cut programs that benefit America’s oldest — including many vulnerable — citizens.  The president’s spending plan calls for deep reductions to Social Security Disability Insurance, breaking his promise not to touch Social Security.  It also includes cuts in Medicare, another program he promised not to touch. By gutting Medicaid, the president’s budget jeopardizes access to the long-term care covered by the program — violating another Trump campaign pledge.”  – National Committee ‘Viewpoint,’ 2/12/20

This election year, the president has postured as the savior of Social Security and Medicare – claiming Democrats seek to “destroy” both programs. This ‘opposite world’ narrative quickly dissipates by listening to the president’s own pronouncements. The words “cut entitlements’ come up an awful lot in his remarks, reinforced by his actual budget proposals. The words “expand and strengthen” workers’ earned benefits do not.

[Via National Committee to Preserve Social Security and Medicare]

[CBPP] Older Americans are among the many groups that President Trump’s proposed 2021 budget would seriously harm. While running for president, Trump repeatedly promised not to cut Social Security, Medicare, or Medicaid, which serve tens of millions of seniors — and he made a similar promise at his State of the Union just last week. Nevertheless, his budget calls for cutting Social Security and Medicaid as well as cutting or eliminating other critical supports for older Americans, many of them struggling to get by. And that’s even as he proposed to extend the 2017 tax law and he plans even more tax cuts, which would provide a bonanza to the most well-off Americans and profitable corporations.

Here are some details of the harm to older Americans:

• Medicaid cuts would threaten many of their health care. Medicaid provides essential care for 7 million seniors, including nursing home care, long-term services and supports, and other medical care and supportive services that Medicare doesn’t cover, which help many low-income seniors stay independent and healthy. The President’s budget would cut Medicaid, and the Affordable Care Act’s (ACA) premium tax credits that help low- and moderate-income people afford coverage, by $1 trillion over ten years, with cuts growing deeper over time. The budget doesn’t explain how the Administration would implement much of these cuts, but it specifically calls for ending the enhanced federal funding for states that expanded Medicaid under the ACA. That would almost certainly lead states to end coverage for most of the more than 12 million people who have gained coverage through the expansion — including millions of adults aged 50 to 64. Other proposals in the budget would cut Medicaid and threaten access to care for older adults, including requiring all states to take coverage away from adult Medicaid enrollees who don’t meet work requirements, which would threaten coverage for millions of older adults. The budget would also make it harder for seniors to qualify for Medicaid without selling their homes.
• Deep SNAP (food stamp) cuts would cause more elderly people to struggle to afford food. SNAP households with an elderly member receive an average of $121 in benefits each month to help them pay for groceries. For seniors, SNAP participation is linked with reduced nursing home admissions and hospitalization and less frequent skipping of needed medicines, as we’ve detailed. The budget would cut $182 billion, nearly 30 percent, from SNAP over the next decade. The biggest cut would be from radically restructuring SNAP to eliminate about 40 percent of SNAP benefits and use some of the savings to give households a “Harvest Box” of non-perishable foods. This approach would be in lieu of the food that households would otherwise choose to buy with their SNAP benefits. The budget would also end SNAP’s minimum monthly benefit for households with one or two people (currently $16), which mainly goes to low-income seniors and people with disabilities who qualify for a benefit of $15 or less. This change would affect 1 to 2 million people, most of whom would lose benefits altogether. The budget would also raise the age for individuals to be considered “elderly” from 60 to 65, meaning those aged 60 through 64 would no longer qualify under certain eligibility rules and program flexibilities designed to reduce administrative burdens and ease access for vulnerable seniors.
• Social Security Disability Insurance (SSDI) cuts would hit many older Americans. Workers pay into Social Security to protect themselves and their families if they retire, become disabled, or die leaving family members to support. Most SSDI beneficiaries — nearly 6 million — are 55 or older and can’t keep working until their full Social Security retirement age due to serious illness or injury. Though the President has repeatedly promised not to cut Social Security, his budget cuts SSDI by tens of billions of dollars.
• Rental and heating assistance cuts would hurt thousands of seniors. The budget’s deep cuts in rental assistance for low-income families would leave 160,000 fewer households, nearly 45,000 of which include seniors, without housing vouchers that they could use to afford to pay rent. The budget would also eliminate the Low Income Home Energy Assistance Program (LIHEAP), which helps low-income people pay their heating and cooling bills. Over 40 percent of LIHEAP-eligible households include at least one person aged 60 or older.
• The budget eliminates several programs providing social and community services to older people. One is the Social Services Block Grant, which helps states meet the specialized needs of their most vulnerable populations, such as helping seniors stay in their homes, providing Meals on Wheels, and preventing elder abuse. Another is the Legal Services Corporation, which provides legal support to low-income seniors facing foreclosure, eviction, and elder abuse. Finally, the budget would eliminate the Senior Community Service Employment Program, which connects low-income, unemployed people aged 55 or older with part-time work each year.

Read more from CBPP: Trump Budget Round-up »

[The Hill] The Trump administration on Monday finalized a rule that would limit access to Social Security disability benefits for non-English speakers.

“It is important that we have an up-to-date disability program,” Social Security Commissioner Andrew Saul said.

“The workforce and work opportunities have changed, and outdated regulations need to be revised to reflect today’s world,” he added.

One of the steps necessary to claim disability benefits is an assessment of an applicant’s education, part of an effort to check whether they have the capacity to find work outside the scope of their medical condition. Until now, the education assessment would take into account whether the applicant spoke English.

The new rule, which goes into effect April 27, would remove English speaking as a factor of educational attainment, making it more difficult for non-English speakers to qualify for the aid.

Democrats slammed the decision.

“With this rule, the Trump administration will deny people the Social Security disability benefits they’ve earned,” said Rep. John Larson (D-Conn.), who chairs the House Ways and Means Subcommittee on Social Security.

“For years, Social Security’s rules recognized that for an older worker applying for disability benefits with severe health conditions, and with no or little transferable job skills, the inability to communicate in English poses an additional barrier to work. The new rule will end [the Social Security Administration’s] consideration of this obstacle,” he added.

The rule, he estimated, would affect some 10,000 people a year.

Full story: The Hill »