Issues

Social Security

At a time when the “baby boomers” are aging, and when younger, working Americans wonder how they will secure their retirement incomes, Social Security, Medicare, and institutions that protect seniors are of great concern to me. Democrats in Congress—most notably Elizabeth Warren and Bernie Sanders—are fighting vigorously to protect Social Security and Medicare, while Republicans have consistently worked to derail the system by claiming it is broken or heading toward insolvency. The ostensible goal of these efforts is to privatize Social Security, thereby forcing Americans to invest in private financial market ventures. While such a program would create a highly lucrative profit center for Wall Street, it would also cause an unstable future for working Americans. Privatization is not the answer.

Social Security works well. However there are some changes that need to be made. First, we must increase monthly benefits for seniors by adopting a more realistic cost-of-living index. (Read the Op-Ed that I wrote for the Menefee Buzz) Additionally, in the very near future—less than two years—Congress needs to agree to pass legislation to resolve the funding issue that is expected to arise in the mid-2030’s.

These are fixes that numerous senior citizen advocacy groups such as Social Security Works, The National Committee to Preserve Social Security and Medicare, and numerous others, many leading economists, and a fervent constituency in Congress agree must be done. These are changes that I will support when I’m in Congress.

House Republican Attempts to Change or Disrupt Social Security to allow it to become a Profit Center for Banks and Other Financial Institutions Should Be a Concern for All Americans

Some in Congress want to drastically cut benefits. In fact, many Republicans want to push fundamental structural changes in Social Security. They want to privatize the program. Privatizing Social Security would be a disaster for those who rely upon it to meet their everyday expenses.

Why Privatization is Not the Answer

Social Security was signed into law in 1935 to address a growing problem of older Americans falling into poverty after they retired. With the legislative fixes I’ve outlined below, it will be easily able to continue its mission over the next seventy-five years.

History has repeatedly demonstrated that private market and investment failures can subject aging Americans to poverty. It is evident that we need a safety net that does not expose seniors to market vicissitudes, or requires private citizens to attain expert financial market knowledge just to maintain their standard of living. Most of us recall Enron, Worldcom, and other catastrophic raids of private pension funds, and the devastating effect that these raids had on contributors.

In October 2011, Ellen E. Schultz of the Wall Street Journal wrote a succinct expose’ of private pension fund raiding in her article titled, “How Employers Raid Pension Plans.” She notes how vulnerable employees are when they invest in private pensions:

“The Government Accountability Office found last year that 10 large companies that hadn’t made required contributions to their pension plans paid top executives $350 million shortly before terminating their underfunded pension plans in bankruptcy.”

This is my gravest concern with any move toward disbanding or limiting Social Security. How do we protect ourselves from raids, bad investments and manipulated markets, when in the past decade we have seen the demise of some of the oldest, and seemingly most stable financial institutions? How many bailouts can citizens afford?

I believe that even the most responsible individual investors in pensions are vulnerable when contributing to market ventures or employer-held pension funds.

Outdated Index for Measuring the Need of a Cost-of-Living-Adjustment (COLA) Increase

Advocates for seniors recognize that the current cost-of-living-adjustment (COLA) index, CPI-W, is flawed as it measures types of consumer goods that are not always relevant to senior living. They propose using a more realistic index, CPI-E, which is based upon what senior citizens normally buy. I support the change to the CPI-E to ensure more consistent yearly increases in Social Security payments.  Recently, I wrote an Op-Ed for the Menifee Buzz on this topic.

Congress Should Change The Consumer Price Index That The Social Security Administration Uses To Calculate The Annual Cost of Living Adjustment (COLA)

Last October, the Social Security Administration announced that beneficiaries would not receive a Cost of Living Adjustment (COLA) in 2016.  This was the third time in eight years that this has happened.  The problem is obvious for those who rely on Social Security, especially for senior citizens whose sole source of income is Social Security. Their cost of living, specifically health care and food, rises every year.  As a result, seniors and other beneficiaries facing this situation find themselves falling further behind, making it more difficult, if not impossible to make ends meet.

Fortunately, there is a relatively simple solution to this problem –  Congress needs to change the particular Consumer Price Index that the Social Security Administration uses to calculate the annual COLA.  Unfortunately, those in Congress have been unwilling to do so.

Currently, the Social Security Administration uses a price index called the Consumer Price Index for Urban Wage Earners (CPI-W) to determine the COLA.  CPI-W measures costs that a person living in an urban setting faces.  It does not, however, take into account the living expenses particular to senior citizens, namely health care costs.  Without considering these costs, CPI-W does not provide a true picture as to the appropriate COLA that should be implemented for senior citizens.

To remedy this issue, Congress should adopt a CPI called Consumer Price Index-Elderly or CPI-E for calculating a COLA. CPI-E is a more realistic and fair method for determining Social Security benefits.

It is generally accepted that spending patterns between the elderly and the general population differ greatly, especially in the health care category.  With health care costs increasing at a much greater rate than the general rate of inflation, Seniors 65 and older spend more than double, and those over 75 spend almost triple on health care versus the younger population.  The current price index (CPI-W) does not take these critical differences in cost of living into consideration.

Without changing the index, senior citizens are taking a pay cut each year as increases do not keep up with living expenses. This increases poverty among seniors nationwide. Social Security is designed to mitigate poverty in our old age, but if it does not keep up with costs, it cannot accomplish its basic purpose.  Menifee Buzz Summer 2016 Volume 6, Issue #2, p. B3 

Proposed Fixes

Social Security keeps nearly 15 million seniors, 1 million children and 6 million non-elderly adults out of poverty. Social Security provides the majority of income for two out of three retirees, and seven out of ten households receiving disability benefits. For those of us aging, or with aging parents and grandparents, we know this safety net works!

I agree with Nancy Altman, the founding co-director of Social Security Works, when she says:

“Social Security is the most universal, secure, and efficient source of retirement income that we have, providing a guaranteed, inflation-protected source of income that one will never outlive.”

Democrats in Congress have repeatedly fought and voted to protect Social Security and Medicare Benefits. Most recently with H.Res. 393, a resolution expressing Congressional support for efforts to protect and expand Social Security while securing its long-term future, supported by Representatives Jan Schakowsky, Doris O. Matsui, Patrick Murphy and 57 of their colleagues.

There are currently several proposals by Democrats in the House and Senate that easily fix immediate shortfalls and address the need for cost of living increases, including a bill proposed by Elizabeth Warren to take funds from CEO “performance pay” tax subsidies and redirecting them into a one-time emergency payment for seniors. I am in favor of this bill.

You only have to Google “Social Security fixes” to find numerous proposed ways of preserving Social Security for now, and for future generations. I do not believe that privatizing Social Security, or disbanding it altogether in favor of investment at an individual’s discretion, would work.

Actions and Options

With the above in mind, I fundamentally disagree with Republican assertions that Social Security—arguably the most important safety net in our country’s history—will be broken by 2034.

I feel there are clear solutions to the present Social Security crisis:

  • First: Raise wages. The more folks earn, the more FICA tax gets paid.
  • Second: Take action to reduce income inequality – it is generally recognized that CEO’s make 300% more than their workers. Because there is a cap on the amount of income on which people pay FICA tax, the greater disparity between what CEO’s earn versus workers means less money going into the SS Trust Fund.
  • Third: A creative alternative to entirely eliminating the cap. I think completely eliminating the cap would hurt middle class folks. Instead I support the keeping the cap, but subject those who make more than a certain amount – say $500,000 – to pay additional FICA tax above that amount.
  • Fourth: Rescind the rule prohibiting rebalancing of OSA and DI funds, and find creative measures (such as that proposed by Elizabeth Warren) to provide future revenue for Social Security funds.

23 1/2 year incumbent Congressman Ken Calvert’s position

The voting record and stated positions of my opponent, 23 1/2 year incumbent Congressman Ken Calvert, regarding Social Security is extreme. Although experts and legislators have suggested numerous bills and resolutions to fix antiquated or broken aspects of Social Security, my opponent continually votes for measures that chip away at the safety net and support privatization.

Max Richtmann, the President and CEO of the National Committee to Preserve Social Security and Medicare writes of current Congressional inaction to reinforce Social Security:

Rather than acknowledge our national retirement crisis and propose policy prescriptions to improve the ability of average Americans to save for retirement and boost benefits for Social Security and Medicare, policy proposals of most of the Republican Presidential candidates do just the opposite—cut benefits and shift more costs to middle-class families.

In Summary

I cannot emphasize enough that 2016 is a seminal year for protecting Social Security benefits and the institution as a whole. Congress is unfortunately divided along party lines as to whether to maintain and improve our Social Security and Medicare safety net institutions, or to leave retirement planning and investment up to the individual and the exposure of market fluctuations.

I believe in the success and importance of the institutions of Social Security and Medicare, and understand how important this topic is in a district with a large percentage of aging voters. I will work to prevent Congress and special interests from forcing a weakening, or privatizing of either of these safety net programs.

 

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