Social Security checks set to increase
WASHINGTON (Gray DC) - People who receive Social Security deposits are about to see a bigger number on their checks.
An 8.7% increase will take effect in 2023 for nearly 70 million Americans. It’s the largest cost of living adjustment (COLA) in 40 years. The increase will impact around 7 million people on December 30, and then another 65 million beneficiaries in January.
AARP (American Association of Retired Persons) calls the COLA increase vital to seniors who have been dealing with inflation while living on fixed incomes.
Read more on the COLA adjustment in 2023
“I think you have to understand, when you’re talking about seniors, you’re really talking about a population whose average income is less than $30,000 a year. That means you have a tremendous number who are really living on much smaller amounts. And for most seniors, Social Security is their largest source of income. And the cost of living adjustment, which is built into Social Security, is absolutely critical for people to keep up,” said David Certner of AARP. “And, you know, we could talk about sort of the year to year changes, but it’s really super important. Now, we have this call over time and you can imagine what the impact of one year of high inflation is, but you can see what happens over a period of years. You fall further and further behind each year.”
Yet the COLA increase is a short term fix to a long term problem. Social Security officials have warned the programs cost will rise by 2035 and if nothing changes, current taxes will only be able to cover around 75% of the benefits. They blame the increase in costs on population aging and declining birth rates.
Read more on Social Security’s long term sustainability issues
Rep. John Larson (D-Conn.) is a long time supporter of Social Security He emphasized the urgent need for Congress to act in order to strengthen Social Security for future generations.
“Congress hasn’t done anything with regard to enhancing Social Security in 51 years. Richard Nixon was the President of the United States, and a loaf of bread cost $0.72. That’s how dire it is in this time, during the middle of a pandemic, a global pandemic that has impacted the population over 65,” he said.
He has unveiled a plan that calls for multiple upgrades to the program.
“They’re going to get a big bump because of the pandemic this year but that formula needs to be fixed. And everybody needs an across the board increase because there hasn’t been one in 51 years,” he said.
Plus he wants to get rid of a tax cap that he says protects the rich from paying into the program all year round by limiting the amount of earnings subject to taxation for a given year. The Social Security website notes: “this limit changes each year with changes in the national average wage index. We call this annual limit the contribution and benefit base. This amount is also commonly referred to as the taxable maximum. For earnings in 2023, this base is $160,200.”
Larson’s legislation would apply the payroll tax to the top 0.4% of wage earners.
“Who are they? People making over $400,000 who for many stop paying into Social Security on January 2nd. So why shouldn’t everybody pay the fair rate? So we’re lifting the cap that has been imposed by law on people so that the wealthy will be paying the same thing that a waitress making $30,000 is. That’s all,” he said.
He added it’s important for future generations to urge Congress to preserve the program, “it’s up to that generation who will be more reliant on Social Security, because they’ve been saddled with all kinds of college debt, because they’re making less than their parents have, because they’re having a harder time of getting homes, etc. So they’ll have fewer assets and therefore need to have that program there for them.”
But Sen. Rick Scott (R-Fla.) countered, “the easiest thing always for Democrats is to raise taxes and raise fees and all that does is... you know hurt the economy.”
Scott has called for all federal programs, including Social Security, to be re-evaluated every 5 years instead of being automatically renewed. It is included in point #6 of a plan he released.
Democrats have accused him of wanting to cut the program. But Scott told Washington News Bureau reporter Jamie Bittner, “I have no interest in cutting. I will not cut Medicare benefits or Social Security benefits.”
He added, “I put out a plan. You can go to rescueamerica.com. And what I said is that Congress is going to have to start telling people what they’re going to do. If we want to protect Medicare and Social Security, which I want to do and I know every Republican does, we’re going to have to start telling people what we’re going to do. That means if we really care about Social Security and Medicare, we’re going to have to grow our economy faster. We’re going to have to balance our budgets. We’re going to have to reduce our debt. We’re going to have to do what your family does. We’re going to have to start living within our means.”
Scott continued, “I think what you’ve got to do is you’ve got to look at programs and say, how did these programs work? Now we know that Social Security works. We know that Medicare works. We know our defense budget works. We allocate our defense budget once a year. We don’t say, oh, because we don’t allocate that over a 20 year period of time we’re going to shut it down. No. What you’re saying is, how do we allocate the dollars to make sure we do the right thing on defense, do the right thing on Social Security, to do the right thing on Medicare?”
Meanwhile, Sen. Ron Johnson (R-Wisc.) has suggested Congress approve Social Security funding every year instead of it being automatically renewed.
Other Republicans have suggested raising the retirement age from 67 to 70 or updating the payment formula. The Republican party as a whole hasn’t endorsed any one plan to modernize Social Security.
Meanwhile, President Joe Biden has accused Republicans of wanting to cut the program. Republicans counter they only seek to update Social Security to keep it from bankruptcy.
Learn more about where each party stands on social security here.
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