Web Only / Features » November 6, 2013
A Booster Shot for Social Security
The GOP–and some Democrats–want to cut the program. Progressive Dems want to expand it.
The 'chained CPI' proposal that President Obama has floated as part of a potential deal with Republicans calculates cost of living increases by assuming that as the price of one commodity, like beef, gets more expensive, people will substitute something cheaper, like chicken. It reduces benefits, essentially, by presuming that people can simply live on less and less even as prices continue to increase.
“Right-wing politicians dressed in business suits pulling down good salaries with government-financed health insurance … use every budget impasse as an opportunity to, as they say, ‘reform entitlements.’ … What they really mean is they're going to cut benefits for Social Security—it's as simple as that. They say it's unsustainable, [but] they don't say that about the Defense Department.”
That was Sen. Sherrod Brown (D-Ohio), who made news this week as the latest Democrat—and one from a key swing state—to sign on to a bill calling for expanding, not cutting Social Security benefits. Brown spoke on a conference call today hosted by the Progressive Change Campaign Committee, telling media and PCCC members why he's decided to cosponsor Tom Harkin's (D-Iowa) Strengthening Social Security Act of 2013. The bill is also cosponsored by two other Democratic senators, Mark Begich of Alaska and Brian Schatz of Hawaii.
“We don’t want to reform entitlements [the Republican] way,” explained Brown. “We want to do things like lifting the cap.”
Brown is referring to the fact that Social Security taxes are only collected on the first $113,700 of your annual income. If you make more than that, it's tax-free, meaning the Social Security tax winds up being fairly regressive: The more money you make, the smaller a proportion of your income goes to Social Security. Phasing out that cap, as the Harkin plan proposes, would mean that people who make hundreds of thousands or even millions a year would still pay the same rate, but they’d pay it on all the money they make.
Removing the cap would create more money for Social Security benefits. To decide who gets that money, the Harkin plan would calculate cost-of-living increases using a specifically calculated consumer price index (CPI), called CPI-E, that takes into account that costs such as healthcare and housing tend to be higher for seniors. According to Harkin's office, the bill would “boost benefits for all Social Security beneficiaries by approximately $70 per month, but is targeted to help those in the low and middle of the income distribution.”
Social Security benefits already increase over time because of inflation; if they didn't, recipients would face a steadily declining standard of living. But there are multiple ways to calculate the effects of inflation. Harkin's plan uses a more generous calculation for inflation and thus expands benefits further over time. That’s in stark contrast to the “chained CPI” proposal that President Obama has floated as part of a potential deal with Republicans, which Sen. Brown has called “a direct attack on middle class and working-class voters.” Chained CPI calculates cost of living increases by assuming that as the price of one commodity, like beef, gets more expensive, people will substitute something cheaper, like chicken. It reduces benefits, essentially, by presuming that people can simply live on less and less even as prices continue to increase. Blogger Mike Conrad commented, “Chained CPI compounds as people get older, effectively taxing life itself.”
According to polling commissioned by the PCCC, expanding Social Security is popular by a measure of 2 to 1, even in red states like Texas and Kentucky. Social Security is one of the nation’s few universal social programs, providing benefits regardless of need. Yet the needy particularly rely on Social Security income. Brown noted on the call that “for two-thirds of seniors Social Security provides more than half of their cash income, for more than one-third of seniors, Social Security provides more than 90 percent of their income and for one-fourth of seniors it's their sole source of income.”
In other words, for many low-income seniors, even a relatively small increase of $70 per month would be a noticeable improvement in what they can buy. (And of course, that money goes back into the economy fairly quickly, providing a stimulus rather than the shock that would be caused by cuts to the incomes of people who spend everything they have.)
This is why Brown called Social Security “fundamentally a moral issue.” Economic populism, it turns out, has moral values too.
Sarah Jaffe is a former staff writer at In These Times and author of Necessary Trouble: Americans in Revolt , which Robin D.G. Kelley called “The most compelling social and political portrait of our age.” You can follow her on Twitter @sarahljaffe.
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