President Franklin Roosevelt signed Social Security into law on August 14, 1935. “Since its inception 78 years ago, through good economic times and bad, Social Security has paid out every penny owed to every eligible beneficiary. This is a remarkable success story," said Sen. Bernie Sanders, the head of the Senate’s Defending Social Security Caucus. Unfortunately, senior White House aides this summer reportedly have held secret meetings with Senate Republicans to revive President Obama’s proposal to cut future benefits for retirees, disabled veterans and others. That, Sanders said, would be “a huge mistake.”
The senator thinks the deficit must be lowered. He has proposed ways to reduce red ink. He also has noted that this year is on track to have the smallest deficit in five years thanks to rising revenue and spending cuts. But at a time when corporations are enjoying record profits and the gap between the very rich and everyone else is growing wider, Sanders has said that there are better ways to reduce the deficit than cutting programs for the elderly, veterans and the sick.
President Obama in his budget proposal for the new fiscal year that begins Oct. 1 called for lowering cost-of-living adjustments for millions of retirees, widows, orphans, disabled veterans and others by shifting to a so-called “chained” Consumer Price Index. Under the proposal, a person 65 years old today would earn $658 a year less in Social Security benefits once they turn 75. Benefits would be cut by more than $1,100 a year once they turn 85. In addition to taking money out of the pockets of some 50 million retirees, a chained C.P.I also would cut benefits for more than 3 million disabled veterans and their families. A veteran who began receiving VA disability benefits at age 30 would have benefits reduced by $1,425 at age 45 and by $3,231 at age 65, according to the Congressional Budget Office. The chained C.P.I. also would result in across-the-board tax increases with a disproportionate impact on working families. Many provisions in the tax code (tax brackets, the Earned Income Tax Credit, the Child Tax Credit) are automatically adjusted each year to ensure that taxes don’t go up just because incomes rise with inflation. According to the Congressional Budget Office, switching to a chained C.P.I. would increase taxes by $124 billion over the next decade. Three-quarters of the new revenue raised by the year 2021 would come from Americans making less than $200,000 a year. Those making between $30,000 and $40,000 would be hit the hardest while those making more than $1 million would see virtually no change.
Instead, Sanders wants to implement what President Obama proposed when he was a candidate in 2008: Lifting the cap on Social Security payroll taxes to make the wealthy contribute the same percentage of their income as other workers. “Today, someone making $10 million a year contributes the same amount of money as someone making $113,700. That is absurd,” Sanders said.
To read Sanders’ bill, cosponsored by Senate Majority Leader Harry Reid, click here.
To read a fact sheet on the Keeping Our Social Security Promises Act (S.500), click here.
To read more about Sanders’ tax proposals, click here.