Social Security embodies the best of American values. It rewards hard work. The more workers earn and contribute, the higher their benefits. It is prudently financed and managed. Social Security can only pay benefits if it has enough income to cover every penny of its cost, including the cost of administration. It cannot borrow or deficit-spend.
In a message to Congress proposing the expansion of Social Security, President Eisenhower captured the essence of the program:
“Retirement systems, by which individuals contribute to their own security according to their own respective abilities … are but a reflection of the American heritage of sturdy self-reliance which has made our country strong and kept it free; the self-reliance without which we would have had no Pilgrim Fathers, no hardship-defying pioneers, and no eagerness today to push to ever widening horizons in every aspect of our national life. The Social Security program furnishes, on a national scale, the opportunity for our citizens, through that same self-reliance, to build the foundation for their security.”
In recent years, conventional thinking seems to be that the nation can’t afford our current level of Social Security. This is wrong. We are the wealthiest nation in the world at the wealthiest moment of our history. There is no question we can afford a greatly expanded Social Security, if that is what we choose. The question is one of values and choice, not affordability.
Though politicians may disagree about whether to expand or cut Social Security, there is one matter about which all of them should agree. In his first year in office, President Nixon proposed “that the Congress make certain once and for all that the retired, the disabled and the dependent [beneficiaries of Social Security] never again bear the brunt of inflation. The way to prevent future unfairness is to attach the benefit schedule to the cost of living.”
It took the Democratic Congress several years to respond, but in 1972, legislation was passed automatically indexing Social Security so that inflation did not erode its modest, earned benefits. This is an extremely valuable feature of Social Security. The program provides benefits that you can’t outlive and that, at least in theory, don’t erode over time. The reality is different, unfortunately.
At the time Nixon proposed automatic indexing, the Bureau of Labor Statistics produced only one measure of inflation, the so-called CPI-W, which measures the inflation of urban workers. Seniors and people with disabilities have very different spending patterns from workers. They tend to spend more on health care, with costs that rise rapidly and less on electronic devices with costs that tend to rise slowly or even fall.
As a consequence of this inappropriate measure, still in use today, 70 million beneficiaries will have no cost of living adjustment in 2016, despite their increased costs. Senior beneficiaries, two thirds of whom rely on Social Security for most of their income, will see no inflation adjustment. Neither will veterans receiving veterans benefits, which are indexed to the same inappropriate formula.
It is well past time to switch to a formula that reflects the costs of seniors. A number of bills have been introduced into Congress to do just that. That common-sense change should be enacted. And one other step should be taken. Congress should enact the Seniors and Veterans Emergency (SAVE) Benefits Act, which would respond to the lack of an adjustment in 2016 by providing a one-time payment of $580. That payment is fully paid for by a bipartisan proposal to eliminate a tax loophole.
So far, the SAVE Benefits Act has only Democratic co-sponsors, but that should not be the case. As polarized as Americans are over many issues, we are not polarized about Social Security. Poll after poll reveals that independents, Republicans and Democrats overwhelmingly support Social Security.
In the past, Social Security was supported and expanded on a bipartisan basis. President Reagan, in signing into law the Social Security Amendments of 1983, astutely noted that “this bill … [is] a clear and dramatic demonstration that our system can still work when men and women of good will join together to make it work.”
As an important demonstration that our elected leaders can still work together when the American people are united, surely they can agree to update Social Security’s cost of living adjustment so that it measures the inflation experienced by seniors and people with disabilities. And while Congress is working on that, it should enact the SAVE Benefits Act, a stopgap payment for our seniors and veterans.
Those actions could pave the way for more comprehensive Social Security legislation. All that is necessary for that are two things. First, Social Security legislation should be considered in the sunshine, as it has been historically. Second, “men and women of good will” should embrace what Reagan proclaimed to be “our nation’s ironclad commitment to Social Security.” Today’s politicians should reassure Americans, as Reagan did, “that America will always keep the promises made in troubled times a half a century ago.” Today’s politicians, like Reagan, should reassure “those who are still working that they, too, have a pact with the future. From this day forward, they have our pledge that they will get their fair share of benefits when they retire.”
The American people deserve no less.
• Nancy Altman, founding co-director of Social Security Works, was Alan Greenspan’s assistant when he chaired the so-called Greenspan Commission, whose recommendations were enacted as the Social Security Amendments of 1983.
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