Tag Archives for Max Richtman

Social Security ’21 Cola Increase Anemic

Published in RINewsToday.com on on October 19, 2020

With the Social Security Administration’s (SSA) announcement of next year’s Social Security and Supplemental Security Income’s (SSI) meager cost-of-living adjustment (COLA), over 70 million beneficiaries will only see an increase of 1.3 percent in their monthly checks in 2021.  Last year’s COLA increase was 2.8 percent, the largest in seven years.

According to SSA, the 1.3 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2021. Increased payments to more than 8 million Supplemental Security Income (SSI) beneficiaries start on December 31, 2020. 

SSA ties the annual COLA to the increase in the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statistics. 

The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $142,800 from $137,700, says SSA.

The earnings limit for workers who are younger than “full” retirement age will increase to $18,960. (SSA deducts $1 from benefits for each $2 earned over $18,960.)

The earnings limit for people reaching their “full” retirement age in 2021 will increase to $50,520. (SSA deducts $1 from benefits for each $3 earned over $50,520 until the month the worker turns “full” retirement age.)

There is no limit on earnings for workers who are “full” retirement age or older for the entire year. 

Next Year’s COLA Increase Not Enough 

Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare (NCPSSM) calls the increase as inadequate especially for COVID-Ravaged Seniors and noted that it’s the lowest since 2017.  

“The timing could not be worse. The COVID pandemic has devastated many older Americans both physically and financially.  Seniors living on fixed incomes need a lifeboat; this COLA increase is more like an underinflated inner tube,” says Richtman.

The average Social Security beneficiary will see a paltry $20 month more in benefits in 2021, calculates Richtman. “This COLA is barely enough for one prescription co-pay or half a bag of groceries. Worse yet, seniors could lose almost half of their COLA increase to a rise in the Medicare Part B premium for 2021, the exact amount of which has not yet been announced,” he warns.  

“The current COLA formula – the CPI-W – is woefully inadequate for calculating the true impact of inflation on seniors’ pocketbooks. It especially under-represents the rising costs that retirees pay for expenses like health care, prescription drugs, food, and housing. We support the adoption of the CPI-E (Consumer Price Index for the Elderly), which properly weights the goods and services that seniors spend their money on,” says Richtman. 

Examining the Growth of SSA COLAs 

Social Security checks in 2020 are almost 20 percent lower than they otherwise would be, due to the long-term impact of extremely low annual inflation adjustments, according to a newly released analysis by The Senior Citizens League (TSCL).  The analysis comes as SSA announced that the 2021 COLA will be just 1.3 percent, making it one of the lowest ever paid. 

“People who have been receiving benefits for 12 years or longer have experienced an unprecedented series of extremely low cost-of-living adjustments (COLAs),” says TSCL’s Mary Johnson, a Social Security policy analyst for the Alexandria, Virginia nonpartisan senior advocacy group. “What’s more those inflation adjustments do not account for rapidly rising Medicare Part B premiums that are increasing several times faster than the COLA,” she says, noting that this causing those with the lower Social Security benefits to see little growth in their net Social Security income after deduction of the Part B premium.  

Johnson’s COLA analysis, released on Oct. 13, compared the growth of retiree benefits from 2009-through 2020 to determine how much more income retirees would receive if COLAs had grown by a more typical rate of 3 percent. TSCL’s analysis found that an “average” retiree benefit of $1,075 per month in 2009 has grown to $1,249 in 2020, but, if COLAs had just averaged 3 percent, that benefit would be $247 per month higher today (19.8 percent higher), and those individuals would have received $18,227.40 more in Social Security income over the 2 010 to 2020 period. 

During that period COLAs have averaged just 1.4 percent. In 2010, 2011, and 2016 there was no COLA payable at all and, in 2017, the COLA was 0.03 percent. “But COLAs have never remained so low, for such an extended period of time, in history of Social Security,” says Johnson, who has studied COLAs for more than 25 years.  Over the 20-year period covering 1990 to 2009, COLAs routinely averaged 3 percent annually, and were even higher before that period. 

According to Johnson, the suppressed growth in Social Security benefits not only creates ongoing benefit adequacy issues, but also Medicare budgetary programs when the COLA is not sufficient to cover rising Part B premiums for large number of beneficiaries. When the dollar amount of the annual Medicare Part B premium increase is greater than the dollar amount of an individual’s annual COLA, the Social Security benefits of about 70 percent of Medicare beneficiaries are protected by the hold-harmless provision in the Social Security Act.  The Medicare Part B premium of those individuals is reduced to prevent their net Social Security benefits from being lower than the year before, she says. 

However, Johnson notes that the people who are not covered by hold harmless include higher income beneficiaries, beneficiaries who have not started Social Security yet and who pay for Medicare by check and about 19 percent of beneficiaries whose incomes are so low that their state Medicaid programs pay their Medicare Part B premiums on their behalf. 

Johnson says, “that a provision of a recently enacted government spending bill restricts Part B premium increases in 2021. The bill caps the Part B premium increase for next year at the 2020 amount plus 25 percent of the differences between the 2020 amount and a preliminary amount for 2021.”

Don’t look for the “potential Part B spike” to go away, warns Johnson. “Unless Congress acts to boost Social Security benefits and finds a better way to adjust benefits for growing Medicare costs, this problem will continue occur with greater frequency in the future,” she says.

Fixing SSA’s COLA Problem Once and For All

During the COVID-19 pandemic seniors are relying more on their Social Security check but continue to face cost increases each year beyond the extra income provided by the COLA, says Social Security Subcommittee Chairman John B. Larson (D-Connecticut) in a statement following SSA’s announcement of its tiny 2021 COLA increase. “It’s time to fix that by enacting the Social Security 2100 Act.,” says the Connecticut Congressman calling for passage of his legislative proposal that would strengthen SSA benefits by basing the COLA on what seniors actually spend on items such as medical expenses, food, and housing. Under this new CPI-E index, a beneficiary would experience benefits that are 6 percent higher by the time they reach age 90. 

Meanwhile, Congressman Peter DeFazio (D-Oregon) sponsored and Larson, a co-sponsor, have proposed emergency legislation to increase next year’s COLA up to 3 percent. “Due to the COVID-19 pandemic, seniors are facing additional financial burdens in order to stay safe,” said DeFazio.  “This absolutely anemic COLA won’t even come close to helping them afford even their everyday expenses, let alone those exacerbated by COVID-19. Raising the COLA to 3 percent 2021 will provide seniors with an immediate, crucial lifeline during the ongoing coronavirus crisis,” says the Oregon Congressman. DeFazio’s legislative proposal, the Social Security Expansion Act, would also provide a permanent fix to the COLA formula, like Larson using a CPI-E index to factor in seniors’ actual, everyday expenses.

Opposition Builds Against Elimination of Social Security’s Payroll Tax

Published in the Pawtucket Times on September 28, 2020

With the looming 2020 presidential elections, the National Committee to Preserve Social Security and Medicare (NCPSSM) announces its first ever Presidential endorsement, throwing its support to the Joe Biden/Kamala Harris campaign. The Washington, DC-based aging advocacy group, founded by James Roosevelt, Jr., the son of President Franklin D. Roosevelt, who is credited with founding Social Security, fears for the retirement program’s future survival under a second Trump term. NCPSSM’s endorsement breaks the National Committee’s 38-year tradition of steering clear of Presidential campaigns in order to focus its resources on House and Senate races.

NCPSSM support of Biden follows the endorsements of other aging advocacy groups including AARP, Social Security Works, Alliance for Retired Americans, Medicare for All, American Federation of Government Employees and National Treasury Employees Union.

“During the past four years, we’ve seen this president pay lip service to seniors’ needs while actively undermining their best interests, the latest example being his reckless pledge to terminate the payroll taxes that fund Social Security and Medicare,” says NCPSSM’s president and CEO Max Richtman. “As the pandemic has worsened, we have seen an abject failure to protect nursing home residents and workers, who represent 40 percent of all COVID deaths. Never in our organization’s history have we seen such a consistent level of threats to the health and retirement security of America’s seniors,” he added, noting that the most effective way to protect the solvency of Social Security is to elect Joe Biden as president,” he said.

Adds, James Roosevelt, Jr., Vice-Chairman of the National Committee’s advisory board, “By enacting Social Security, my grandfather, President Franklin Roosevelt, gave workers the promise of dignity and financial security in retirement. Thirty years later, President Lyndon Johnson signed Medicare into law, providing older Americans with affordable, accessible health insurance. There’s a reason Social Security and Medicare have been around for 85 and 55 years, respectively. Americans value and depend on them. My father and grandfather would be outraged that President Trump and his allies want to dismantle both programs. I am 100 percent behind the National Committee’s decision to endorse Joe Biden, the candidate who can be trusted to protect seniors’ earned benefits from any attempts to undermine or privatize them.”

Trump’s Changing Policy Positions on Social Security

On Oct. 4, 2016, at vice presidential debate at Longwood University, Democratic vice-presidential nominee Tim Kaine noted that in 2000, Donald Trump wrote a chapter in a book, The America We Deserve, calling Social Security a” Ponzi scheme” [an investment fraud] and stating that “privatization [of the program] would be good for all of us. ”

One month before Trump formally announced his candidacy on June 16, 2015, with a campaign rally and speech at Trump Tower in New York City, he tweeted, “I am going to save Social Security without any cuts. I know where to get the money from. Nobody else does.”

As a presidential candidate, Trump continued calling for protecting Social Security, long regarded as one of the most successful and popular social programs ever enacted by Congress. During a June political rally in 2016, Trump claimed, “We’re going to save your Social Security without killing it like so many people want to do” and throughout the 2016 presidential campaign repeatedly promised “not to touch” seniors’ earned benefits and to “protect your Social Security and your Medicare.”

Once in the Oval Office, Trump’s views changed. Congress was forced to block his proposed budget cuts and rule changes that would hurt Social Security beneficiaries, says Richtman.

“Trump has betrayed older Americans through his bungled response to the COVID pandemic and by blatantly breaking his promises to protect senior’s cherished social insurance programs. He has proposed more than $1 trillion in cuts to Social Security, Medicare and Medicaid. He has vowed to eliminate the payroll taxes that fund seniors’ retirement and health benefits if re-elected to a second term. He has urged the Supreme Court to strike down the Affordable Care Act, which improved Medicare benefits and solvency. In short, the President has listened to advisors who want to dismantle the country’s most effective social safety net programs” says NCPSSM’s top official.

A Stark Warning

On August 8, Trump has signed an Executive Order, Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster, to authorize a payroll tax holiday/deferral to give American taxpayers extra cash as they deal with the coronavirus pandemic. The president’s action allows employers to stop deducting the 6.2 percent employee payroll contribution toward Social Security for the rest of the year.

An Aug. 28 IRS memo noted that employers who participate in the payroll tax holiday will then have to pay back the taxes starting in 2021. Simply put, more money will take out paychecks from Jan. 1 to April 30 in 2021 to repay the taxes owed.

Richtman warns, don’t count on payroll tax forgiveness. “Unless Congress passes legislation to address this, the workers will ow every cent of that payroll tax deferral in 2021, and employers would have to deduct more from their paychecks starting January to repay it,” her says.

NCPSSM, Democratic lawmakers, and Social Security advocacy groups don’t see Trump’s elimination of the Social Security payroll taxes as an effective economic stimulus especially to unemployed workers. This action could effectively defund the Social Security and Medicare programs could ultimately bankrupt these programs.

In the letter released on Sept. 23 , Nancy A. LeaMond, AARP’s Executive Vice President and Chief Advocacy and Engagement Officer said “As AARP raised in letters to Congress back in March and President Trump and Treasury Secretary Mnuchin in August, we believe suspending, reducing, or eliminating contributions to Social Security will interfere with the program’s long-term funding stream… This deferral, along with the President’s recent statements on the permanent elimination of the Social Security payroll tax contribution, are engendering uncertainty among older Americans and the general public about Social Security and its ability to pay promised benefits. As such, AARP supports the resolution of Congressional disapproval.”

Trump counters NCPSSM, AARP and others condemning his Executive Order. He claims that eliminating the Social Security tax would not impact the solvency of Social Security, because the money would be shifted from the government’s general fund. Both continuing his payroll tax cut and shifting funds would require Congressional action. That, also, would require an act of Congress.

With this first time political endorsement, NCPSSM hopes to see a Democratic administration take over the White House to strengthen and expand Social Security, not weaken it by eliminating the program’s payroll taxes. “After nearly four decades of fighting to protect American seniors, the National Committee has determined that many older Americans cannot afford – let alone survive – another four years of President Trump. By endorsing Joe Biden and Kamala Harris today, we will work tirelessly to help voters of all ages understand that Trump’s promises are empty. He offers seniors a one-way ticket to nowhere. Americans deserve a President who will protect and strengthen the federal government’s commitment to older Americans.”

This article was updated on Sept. 24.

Can Trump Politically Survive Cutting Social Security’s Payroll Tax?

Published in the Pawtucket Times on May 11, 2020

As Congress begins to hammer out the fifth coronavirus stimulus package to continue its efforts to jump start the nation’s economy, President Donald Trump warns he will not sign any bill that does not include a payroll tax cut.

“We’re not doing anything without a payroll tax cut,” Trump bluntly warns at a two-hour “virtual town hall” event hosted by Fox News, at the Lincoln Memorial in Washington, D.C. According to Nielson Media Research, nearly 4 million viewers tuned into this the town hall, entitled “America Together: Returning to Work,” aired on May 3, that focused on COVID-19 and the reopening of the nation’s economy.

Aging advocates and Democratic lawmakers charge that trump is using the virus pandemic as an excuse to slash payroll contributions, Social Security’s dedicated funding. Cutting the Social Security payroll taxes would reduce the amount of money withheld from employee paychecks, increasing their take-home pay.

Payroll Tax Cuts: Reducing Social Security’s Financial Stability

The Washington, DC-based National Committee to Preserve Social Security and Medicare (NCPSSM) quickly released a statement warning that Trump’s efforts to remove the payroll tax by a provision in the next COVID-19 stimulus package will ensure the fiscal insolvency of Social Security, threatening the program’s ability to continue paying benefits to 64 million Americans who depend on those benefits to financially survive their retirement years.

“President Trump set off alarm bells for America’s seniors and their advocates by insisting once again on eliminating Social Security payroll taxes – both employer and worker contributions. The President even threatened to hold hostage the next phase of badly-needed Coronavirus relief legislation unless he gets his reckless payroll tax cuts. Make no mistake: by pushing to cut off the program’s funding stream, President Trump is taking the first step toward dismantling Social Security, says NCPSSM’s president and CEO, Max Richtman in a statement.
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“While we agree that providing tax relief to middle class Americans is an important consideration as we respond to Coronavirus pandemic, we do not believe that cutting, eliminating or deferring the Social Security payroll tax is an appropriate way to accomplish this goal, says Richtman.

In an April 24 correspondence to Trump, NCPSSM’s top official reminded the president that Social Security is an earned benefit fully funded by the contributions of workers throughout their working lives. He pointed out that a payroll tax cut is an assault on that fundamental idea, equally true even if the funds are replaced by general revenues from the Treasury.

In his correspondence, Richtman suggests that a payroll tax cut should not be viewed as an economic stimulus because it leaves out large segments of the population. “Large numbers of federal, state and local government workers do not pay into Social Security, and therefore would not benefit from the payroll tax cut. Ironically, the senior population, those who are directly affected by taking their money from the trust fund, will not see a single dime of relief since most of them are not working,” he note.

Richtman also identified alternatives to the payroll tax cut that he believes would be more targeted and effective to fire up an economy slowed by the spread of the coronavirus. “Another one-time payment by the federal government can put money in the hands of taxpayers quickly, and the Making Work Pay Tax Credit can be passed by Congress rapidly as can an expansion of the Earned Income Tax Credit. Spending in other programs that directly help those who lose employment as a result of the virus can be the most targeted relief of all,” he suggests.

“In light of the recent Social Security Trustees report, it is clear that Social Security needs more revenue – not less,” observes Richtman, who served as a former staff director of the Senate Special Aging Committee.
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“The President’s campaign to eliminate payroll taxes is a violation of his patently false promises to seniors ‘not to touch’ Social Security. This proposal goes way beyond ‘touching.’ Choking off Social Security’s funding stream is an existential threat to seniors’ earned benefits,” charges Richtman.

Nancy Altman, president of Social Security Works, came out swinging when she heard Trump stating that he will block all coronavirus response measures unless they include cuts to the payroll tax, whose revenue is dedicated to Social Security.

In a statement, Altman stated: “More than 30 million Americans are newly unemployed due to the coronavirus pandemic. Their paychecks are gone, but their rent, utility, grocery bills and other expenses still must be paid. Seniors in nursing homes are dying at alarming rates. Hospitals are desperate, as are state and local governments.”

Dead on Arrival on Capitol Hill????

“Trump made it clear weeks ago that his obsession with cutting payroll contributions has nothing to do with the coronavirus or the resulting economic fallout,” says Altman, noting that he said he’d like a “permanent” reduction in payroll contributions, and that he’d support it “regardless” of the current situation. He has also said he wants to cut Social Security once he is re-elected, she added.

While Democratic lawmakers push for strengthening and expanding the Social Security Program, GOP lawmakers are signaling their opposition and aversion to risking political capital on supporting Trump’s efforts to cut the payroll tax. Trump’s calls for this tax policy change are falling on deaf ears. According to Politico, when asked if he supports Trump’s ultimatum that a payroll tax must be placed in the next stimulus package, Sen. Chuck Grassley (R-Iowa), the Senate Finance Committee chair, responded, “Right now, not much.”

“I’m going to give it due consideration, if I can see a strong group of people who think it’s the right thing to do,” added Grassley, whose Senate committee oversees federal tax policy, in the May 5 Politico article. “The president proposes, we dispose,” he quips.

Although Senate Majority Leader Mitch McConnel (R-Kentucky) is not ruling out payroll tax cuts, he is focusing his efforts to put liability protections provisions in the next major stimulus package to protect businesses against virus-related lawsuits from workers, stockholders, and consumers.

Stepping on the “Third Rail”

Political insiders consider Social Security to be the “third rail of a nations politics.” Wikipedia states that this metaphor comes from the high-voltage third rail in some electric railway systems. Stepping on it usually results in electrocution and the use of the term in the political arena refers to “political death.”

At an Iowa campaign rally in 2016, Republican presidential candidate Trump boasted that his loyal voter base would still standby him even if he shot someone in the middle of 5th Avenue in New York City. Many political pundits responded to his comment by rolling their eyes and chuckling.
Can Trump politically survive, keeping his loyal voter base, if he steps on the “third rail” by continuing his efforts to cut Social Security’s payroll taxes, pushing the program toward fiscal insolvency. When the dust settles after the upcoming November 2020 elections, we’ll see if the older voters consider Social Security an untouchable program.