By Ellen Todras and Nancy Altman
Social Security’s benefits are modest but vital. Three out of five beneficiaries aged 55 and older rely on them for most of their income. One out of three relies on them for virtually all of their income. As important as Social Security is in good economic times, its benefits are even more essential during this pandemic and the resulting economic collapse.
To ensure that Social Security’s already modest benefits don’t erode over time, they are adjusted once a year to account for inflation that makes purchasing food, medicine and other essentials more expensive. Due to a flawed measure, though, the just-announced adjustment for 2021 is only 1.3 percent. Ask seniors and other Social Security beneficiaries whether their expenses have gone up by more than 1.3 percent and you will get a resounding yes.
To ensure that Social Security benefits maintain their purchasing power, Congressman Peter DeFazio (D-OR) has introduced The Emergency Social Security COLA for 2021 Act (HR 8598). DeFazio’s legislation, co-sponsored by 59 fellow Democrats, would provide an emergency 3 percent cost of living adjustment in 2021.
This legislation is both wise and timely. It provides crucial protection to the more than 215,000 Social Security beneficiaries in Oregon’s Fourth Congressional District as well as the nearly 65 million beneficiaries across the nation.
As important as it is to all Oregonians and all Americans, the emergency adjustment is especially important to women, people of color, those who are LGBTQ+ and others who have been discriminated against in the workforce and are the most reliant on Social Security. Moreover, because women and Hispanics, on average, live the longest, they are particularly affected by the cost of living adjustment, which compounds over time.
The emergency adjustment is necessary because the current method of calculating inflation doesn’t accurately measure the expenses faced by Social Security beneficiaries. The automatic adjustment was enacted in 1972. At that time, the government only produced one measure, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W.) But this index, based on the expenses of working people, does not accurately measure the expenses of seniors and people with disabilities.
Social Security beneficiaries have higher health care costs than the general population — precisely the type of costs that have risen and continue to rise most sharply. They tend to spend less on clothes, recreation, and the latest technology — all costs that have risen more modestly. It is time to enact a more accurate measure.
In addition to his emergency 2021 adjustment, DeFazio proposes that permanent fix. He has introduced the Social Security Expansion Act, which would use an inflation index tailored to the expenses of seniors — the Consumer Price Index for the Elderly (CPI-E.) Importantly, his legislation would also expand Social Security benefits across the board, increase the minimum benefit, and restore Social Security to long-range actuarial balance, by requiring those earning $250,000 or more to contribute to Social Security at the same rate as a minimum wage worker.
Expanding Social Security will create jobs and restore the economy. Social Security beneficiaries spend our hard-earned benefits in our local communities. Not surprisingly, an AARP report has found that every dollar of Social Security benefits generates $2 of economic output. In just the month of December 2019, Social Security beneficiaries in Oregon’s Fourth Congressional District received a total of more than $2.9 million!
DeFazio deserves great credit for his leadership and tireless work on behalf of Social Security beneficiaries. He is pursuing both short-term and long-term solutions to this year’s inadequate cost of living adjustment, as well as a broad-based increase in Social Security benefits.
He is in step with Joe Biden and fellow Democrats who favor expanding, not cutting Social Security. This is in stark contrast to Donald Trump, each of whose budget proposals has included cuts to Social Security. And Trump has announced that if re-elected, he plans to “terminate” — his word — Social Security’s dedicated revenue. That would end Social Security as we know it.
Make no mistake: Social Security is on the ballot in Oregon’s Fourth Congressional District and across the nation. If DeFazio is returned to Washington, along with Joe Biden and a Democratic Senate, Social Security will be protected and expanded. If Donald Trump remains in power, Social Security may not survive.
Ellen Todras is a writer and Social Security beneficiary living in Eugene, Oregon. Nancy Altman is the president of Social Security Works.