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Larson Introduces Bill to Prevent Social Security Benefit Cuts Due to COVID-19, Expand Benefits

July 9, 2020
Press Release


Hartford, CT – Today, House Ways and Means Social Security Subcommittee Chairman John B. Larson (CT-01) introduced the Social Security COVID-19 Correction and Equity Act. This bill prevents an unintended and unanticipated devastating cut to Social Security benefits for those who turn 60 in 2020, and expands benefits for those who need it most during COVID who have faced long term systemic economic inequalities. 

As a result of the COVID-19 economic crisis, aggregate wages are predicted to drop dramatically for 2020. Because of how Social Security benefits are calculated, this will reduce Social Security benefits for everyone who turns 60 this year (born in 1960), creating a “notch” – that is, sharply lower benefits for one group of retirees compared to those received by people just one year before them.  Those affected will receive a significantly reduced benefit for their entire life unless this is fixed.  

“No one could have predicted the COVID-19 pandemic, especially not in 1977 when the Social Security benefit formula was created. Through no fault of their own, more than 4 million Americans will lose out on the Social Security benefits they’ve earned, because of an unexpected drop in the Average Wage Index used to calculate benefits. For a median earner born in 1960, this could mean a reduction of $2,000 a year for the rest of their life,” said Larson

“As Chairman of the Social Security Subcommittee, I have been working on a solution to this problem with Ways and Means Chairman Neal that will prevent these dire consequences and avoid cutting benefits for anyone. It also provides us with an opportunity to address some of the systemic economic inequalities facing lower income individuals, especially people of color and women most affected by the virus. 42 million Americans have lost their jobs or been furloughed due to the pandemic, including Black Americans with the highest unemployment rate of 16.8 percent.  We cannot further exacerbate the economic disparities that already exist – we must underscore that Black Lives Matter.  

“We have a solution to both fix the notch problem for those born in 1960 and thereafter, as well as improve benefits for the duration of the virus that will be more equitable to those left behind and facing economic inequality.  That’s why today, we’re introducing the Social Security COVID-19 Correction and Equity Act. This legislation will not only prevent millions of Americans from losing out on their earned benefits, but it will expand benefits on an emergency basis for current beneficiaries.” 

The Social Security COVID-19 Correction and Equity Act will fix the notch and address the inequities as follows:  

  • prevents the cut in benefits due to the notch for those born in 1960 (or any year in the future, if a similar situation reoccurs) by ensuring that the Average Wage Index as used for these purposes never drops below the previous year’s level – while carefully avoiding any benefit cut compared to current law;  
  • increases benefits by 2 percent; 
  • increases the threshold to 125 percent of the poverty level for the special minimum benefit, lifting more lifelong workers out of poverty; 
  • reduces taxation on benefits for lower-middle income beneficiaries who are struggling to provide for themselves and their families, and  
  • includes provisions to help grandparents provide for dependent grandchildren, assist dependent students so that they can get the education they need to get a good job, expand benefits for dependent widows/widowers so they can make ends meet, and provide more help to the poorest of all by expanding eligibility for Supplemental Security Income.