Editor’s Note: Sen. Elizabeth Warren, a Democrat, represents Massachusetts. The opinions expressed in this commentary are hers.
Sen. Elizabeth Warren: More than 70 million Americans will go without a cost of living raise unless Congress intervenes
Recipients of Social Security deserve to get an increase in benefits equal to average big company CEO, she says
On Veterans Day we recognize and honor the sacrifices our service members and their families make for our country. We owe our service members the very best, but unless Congress acts, on January 1 more than 9 million veterans who rely on Social Security benefits or pension and compensation benefits will not get their annual cost of living increase.
This freeze in funds, which has happened only two other times since 1975, will be really tough on veterans among the 71 million Americans who depend on Social Security and other benefits to help make ends meet. Two-thirds of seniors depend on Social Security for the majority of their income, and for 15 million Americans, Social Security is all that stands between them and poverty.
While vets and seniors get no raise, CEOs at the top 350 American companies received, on average, a 3.9% pay increase last year. That’s a lot of money. The average CEO at one of the top 350 American companies made $16.3 million and got more than half a million in pay raises. So CEOs get huge raises, while seniors, veterans and others who’ve worked hard don’t get an extra dime. Why? It’s not an accident. It’s not inevitable. It’s the result of deliberate policies set by Congress.
Social Security is supposed to be indexed to inflation so that when prices go up, benefits go up, too. But Congress’ formula samples the spending patterns of about a quarter of the country, and the formula isn’t geared to what older Americans actually spend.
Projections for the costs of core goods and services show inflation is up about 2%, but seniors won’t get a cost of living increase – mostly because of falling gasoline prices, which don’t mean as much to millions of seniors who don’t commute to work. So seniors, who are already struggling to scrape by to cover rent and exploding prescription drug prices, will be left scrambling.
Skyrocketing CEO pay is also, in part, the result of policies set by Congress. Taxpayers subsidize CEOs’ huge pay packages through billions of dollars in tax giveaways, including subsidies like special tax-deferred compensation accounts and a crazy loophole that allows corporations to write off obscene bonuses as business expenses.
Sure, companies should make their own decisions about how much to compensate executives, but because of the laws Congress has passed, American taxpayers are forced to subsidize these multimillion-dollar pay packages.
It’s time for Congress to make different choices. That’s why last week I introduced the Seniors And Veterans Emergency (SAVE) Benefits Act. The SAVE Benefits Act will give seniors on Social Security, veterans, those with disabilities and others a one-time payment in 2016 equivalent to an average increase of 3.9% – the same as the taxpayer-subsidized raise that CEOs received last year.
We can afford to give seniors and vets a raise. In fact, we can increase pay for seniors and vets without adding a single penny to the deficit simply by closing the bonus loophole for corporate executives. According to the chief actuary of the Social Security Administration, closing this loophole will create enough revenue to help millions of Americans and still have enough left over to help extend the life of the Social Security trust fund.
Seniors and vets would get an increase of about $581 next year — a little less than $50 a month. That $581 increase would cover almost three months of groceries for seniors or a year’s worth of out-of-pocket costs on critical prescription drugs for the average Medicare beneficiary. That $50 a month is worth a lot to those 71 million Americans. According to an analysis from the Economic Policy Institute, that little boost could lift more than 1 million Americans out of poverty.
Giving vets and seniors a little help and stitching up these corporate tax write-offs isn’t just about economics; it’s about our values. For too long, we’ve listened to a handful of people with money and power who say: Cut taxes for those at the top, cut rules and regulations that keep everyone honest, and let everyone else fight over the scraps. We tried trickle-down economics, and it failed.
But we can make different choices – choices that reflect our values. We don’t have to ignore this problem. We can give a small boost to 71 million Americans who have earned it and who need it.
We can lift over 1 million people out of poverty. We can extend the life of Social Security. And we can do it by shutting down taxpayer giveaways to a handful of wealthy corporations that will do fine without them. For me, this is simple. Our spending should reflect our values, and that means passing the SAVE Benefits Act.