We must sound the alarm on need to fix Social Security glitch
The COVID-19 pandemic has led to an unprecedented health and economic crisis. More than 150,000 Americans have been killed by this disease. At its peak, 42 million Americans were unemployed.
Now we’re facing a new crisis. Five million Americans could see a drastic cut in their Social Security benefits as a direct result of the COVID-19-induced economic downturn. Due to a quirk in the benefit formula, those born in 1960 are at risk of a permanent reduction in their benefits that could be as much as $2,000 per year.
Congress must step in to prevent this. As Chairman of the Ways and Means Social Security Subcommittee, I have introduced a legislative fix that I am urging my colleagues to take up right away.
In its 85-plus year history, Social Security has never missed a payment. It has always been there for Americans.
During times like these, Social Security benefits are needed now more than ever.
That’s why I’m sounding the alarm today, to both prevent this benefit cut, and to boost benefits for current beneficiaries who are struggling.
What does COVID-19 have to do with your Social Security benefits?
The answer is a quirk in the formula that determines your benefit amount. In the year you turn 60, the Social Security Administration takes a snapshot of average wages of every worker in the country and factors it into your benefit calculation.
In normal times, this helps to ensure that your benefits keep up with inflation. But as we all know, these are not normal times, and the COVID-induced economic recession has caused an unprecedented downturn in wages this year.
For example, if wages were to drop between 6 percent and 15 percent this year, which is a realistic possibility, then a medium earner born in 1960 would lose respectively $1,400 to $2,000 a year for the rest of their life. Individuals becoming eligible for disability and survivors’ benefits in 2022 would also be harmed.
That is why I introduced the Social Security COVID Correction and Equity Act with Ways and Means Committee Chairman Richard Neal. Our bill would prevent this devastating cut from taking place and would ensure that you receive all the benefits you have earned.
Moreover, we need to help the very people hurting the most — the millions who have lost their jobs or been furloughed due to the pandemic including Black Americans with the unemployment rate of nearly 17 percent. That is why our bill also includes a targeted boost in Social Security benefits to those who have been left behind. We cannot further exacerbate the economic disparities that already exist — we must underscore that Black Lives Matter and provide financial assistance.
The Social Security COVID Correction and Equity Act:
• Increases benefits by 2 percent on average;
• Increases the minimum benefit to 125 percent of the poverty level, lifting more life-long workers out of poverty;
• Reduces the taxation of benefits for lower-middle income beneficiaries who are struggling to provide for themselves and their families,
• Helps grandparents provide for dependent grandchildren;
• Assists dependent students ages 18-22 so that they can receive the education they need to get a good job;
• Expands benefits for dependent widows/widowers so they can make ends meet;
• And provides more help to the poorest of all, by expanding eligibility for Supplemental Security Income.
During a recent congressional hearing that I chaired, I emphasized how urgent it is for the House to act and address this issue now.
People of color, specifically women of color, disproportionately rely on Social Security for their retirement income as compared to white Americans, and many retire into poverty despite the Social Security benefits they earned with every paycheck. Social Security lifts 9 million women out of poverty, including 90 percent of senior women. Without Social Security, 43 percent of older women would be living in poverty. Even with Social Security five million beneficiaries are left behind and live below the poverty line.
No one knows when this pandemic will end. Once we start to recover, the economic and health effects will be felt for years to come. Many Americans will be relying on Social Security for not only their retirement, but for disability benefits and survivors’ benefits for their families.
Now is not the time to be complacent, we must prevent this harmful benefit cut. The Republicans in Congress should join with House Democrats and correct this anomaly with the Social Security COVID Correction and Equity Act.
John B. Larson is the U.S. representative for Connecticut’s 1st District.