Biden’s plan to boost Social Security & Medicare already wobbly - MarketWatch & AMAC
This informative, comprehensive article by Paul Brandus of MarketWatch starts out noting Joe Biden did not have the coattails he thought he would. Democrats lost seats in the House and will likely be in the minority in the Senate. Add to the mix that presidents cannot structurally change Social Security or Medicare by executive order and you see the need for compromise. GOP support will be essential on making changes to entitlement programs, which are in dire need of reform. Biden will have difficulty pushing a payroll tax increase, but a deal to change the way Social Security benefits are calculated could be in the offing.
Currently, Social Security’s annual cost-of-living adjustment (COLA) is based on a gauge called the “CPI-W”—the Consumer Price Index for Urban Wage Earners and Clerical Workers. CPI-W places greater weight on things seniors need less of—like electronics and gasoline—but less weight on things seniors do spend big on, like medical expenses. Social Security benefits have thus been creeping up at a glacial pace. In 2021, beneficiaries will get just 1.3% more. But drug prices have gone up a lot faster than that—3.3% through mid-October for 43 key meds, says GoodRx.
There may be political consensus to change the way COLAs are calculated. Instead of using spending habits of Americans under the age of 62 to determine what kind of an increase seniors should get, legislation has been introduced in Congress to use an “elderly-specific price index” often referred to as the Consumer Price Index for the Elderly (CPI-E). Read the full piece here by Brandus for a more detailed explanation.
Speaking of COLAs, the Association of Mature American Citizens (AMAC) believes Social Security must be preserved and modernized. This can be achieved by making modest changes in them and the retirement age, with no additional taxes on workers. AMAC advocates for a bipartisan compromise, “The Social Security Guarantee Act,” taking selected portions of bills introduced by former Rep. Johnson (R-TX) and current Rep. Larson (D-CT) and merging them with the Association’s own well researched ideas. One component is Social Security PLUS, a new, voluntary plan that would allow all earners to have more income available at retirement. This component is intended to appeal especially to younger workers. AMAC is resolute in its mission that Social Security be preserved and modernized and has gotten the attention of lawmakers in DC, meeting with a great many congressional offices and their staffs over the past several years. Read AMAC’s plan here.