Social Safety Net

Social Security
Social Security, established in 1935 to ensure that American retirees have a decent income, is one of our country’s greatest success stories. Today Social Security has become more important than ever. Barely half of American workers have access to a retirement plan through their jobs. With wages stagnating around the country, many individuals and families have been unable to save for retirement. Today, 90 percent of people over the age of 65 receive Social Security benefits. Social Security is a good program that needs to be strengthened, not dismantled.

Social Security benefit levels average a very modest $14,900 a year for retirees. Six in 10 seniors rely on Social Security for more than half of their income, and about a third of retirees have little more than Social Security on which to live. Because of the reforms made in 1983 to account for baby boomers, by 2030 the share of pre-retirement earnings that Social Security checks replace at age 65 will be 25 percent less than in 1983 according to the National Academy of Social Insurance.

 

Social Security Trust Fund and Privatization
Social Security has never contributed a penny to the deficit and by law is prohibited from doing so. The program has built up a substantial surplus that is expected toreach a peak of $3.7 trillion in 2022. This surplus is invested in government bonds backed by the full faith and credit of the United States government.

Rep. Grijalva will not support any attempts to privatize Social Security. The stock market is extremely unpredictable and is no guarantor of millions of Americans’ retirement security. Taking savings from Social Security and investing it in Wall Street is irresponsible. Diverting money from trust funds into private accounts would be extremely costly and could cause benefits to be scaled back.

 

The Cost of Living Adjustment and Chained CPI
The Social Security COLA is set annually according to a formula dating to 1975. The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). It is calculated by comparing the CPI-W from the third quarter of the current year to the prior year. Over the past decade, these cost of living adjustments have averaged a mere 3 percent per year.

Recently, some have suggested changing the way the COLA is calculated by using what is called the Chained CPI measurement. Unfortunately, the current formula already underestimates the costs that seniors deal with on a daily basis. The Chained CPI would make that even worse. The current CPI formula assumes that beneficiaries substitute certain items when prices rise on things they need. Chained CPI would make these assumptions even more drastic and unrealistic. The change would cut benefits for current beneficiaries, including more than 9.3 million veterans.



Women and Social Security
Social Security is exceptionally important for women in the United States. Women earn less money than men and, overall, spend less time in the workforce. They are more likely to take time to raise children and take care of family members. Shorter work history and lower wages means women typically have less lifetime income. Women are also less likely to have pensions or savings than men.

 

Legislation to Strengthen The Program
Rep. Grijalva supports the Protecting and Preserving Social Security Act to strengthen the solvency of the program and protect it from attempts to privatize and dismantle it. The Act would strengthen Social Security solvency while improving benefits by fixing the outdated cost of living adjustment (COLA) formula. Currently, people do not pay Social Security tax on earnings above $113,700. It is unfair to ask some to pay taxes on their entire income and let the wealthy only pay taxes on a small portion. This bill gradually phases out this loophole and maintains Social Security’s tradition of increased benefits for increased contributions. This bill would improve the current COLA formula by indexing it to seniors’ costs through the creation of a Consumer Price Index for the Elderly.

 

No Loopholes in Social Security Taxes Act
He cosponsors this bill to close the payroll tax loophole and make sure every American pays their fair share into Social Security. Ninety-four percent of Americans pay Social Security tax on all of their income. The wealthiest six percent, those with incomes above $113,700, are exempt from the Social Security tax. Closing this loophole for the wealthy will ensure that Social Security remains solvent and able to pay full benefits for at least the next 50 years.

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