Time to Share the Sacrifice : Social Security Recipients Should Forgo Next Small Increase
Much is being written about the awesome political clout of 28 million retired Americans. There is no question that it’s real. But when you look at efforts to sweeten the formula for triggering cost of living adjustments in Social Security benefits, you have to wonder if “gray power” is always used in the long-term interests of senior citizens.
Back in 1972, Congress, recognizing the special vulnerability of older Americans to inflation, enacted a law providing for annual cost-of-living adjustments (COLAs, in economic jargon) to Social Security pensions.
Without this law it is hard to imagine what would have happened during the years of high inflation to the millions of senior citizens who depend entirely, or almost entirely, upon Social Security pensions for economic survival.
However, the senior citizens’ lobby would do well to remember that the 1972 law could not have been enacted without broad-based political support, and that the money for the cost-of-living adjustments comes from the pockets of working Americans who themselves are of pre-retirement age. It follows that older people should be careful to avoid doing things that might undermine broad political support for the Social Security and Medicare systems.
The present case in point is the move to suspend or eliminate the trigger mechanism for the Social Security COLAs.
The 1972 law provides for cost-of-living adjustments in Social Security retirement benefits whenever the inflation rate is 3% or more. If inflation falls below the 3% threshold, the adjustment in Social Security checks is postponed until the cumulative rise in living costs does reach 3%.
Under this rule Social Security beneficiaries have received a raise every year since the law was passed, although one year there was a six-month delay. But with inflation on the wane, it appears that living costs this year will go up by no more than 2% and possibly less. Unless the law is changed, therefore, there will be no benefits increase next January.
Members of Congress obviously are convinced that older Americans have become conditioned to expect a yearly increase in their Social Security checks, and will punish incumbent lawmakers at the polls unless something is done to give them a raise next year.
Both the House Budget Committee and the Senate have passed budget resolutions providing for a 2% cost of living adjustment in Social Security pensions next year, but leaving the 3% trigger in place for future years.
Sen. John Heinz (R-Pa.), chairman of the Senate’s Special Committee on Aging, wants to go further. He would remove the 3% trigger provision from the law entirely and provide annual Social Security COLAs commensurate with inflation rates, whether living costs go up by 1% or by double-digit proportions.
Viewed in isolation, that makes sense. But senior citizens should ponder the old saw about winning battles but losing wars.
The fact is that the federal government is in the throes of a painful budget squeeze, brought on by soaring deficits going far beyond anything this country has ever known in peacetime. These deficits must be controlled if we are to avoid the possibility of economic calamity, including a return to double-digit inflation.
Narrowing the federal budget deficits will require cuts both in military and domestic spending programs and, in all likelihood, some kind of tax increase. Plain old fair play calls for an equitable sharing of the pain--by older Americans along with everybody else.
Leaving the 3% trigger in place, and thereby accepting a delay in the Social Security cost-of-living adjustment, would save the government some $4 billion in fiscal 1987 and $7 billion in fiscal 1988, according to some estimates.
It has become fashionable among young economists and social activists to say that the elderly are the least poverty-stricken age group in America these days. This rosy generality does not apply to millions of senior citizens who live at or below the poverty line. In any event, older Americans who spent 40 or 50 years in the work force--paying Social Security deductions all the while--should hardly be expected to feel guilty if they don’t sink into abject poverty after retirement.
The fact is, though, that adjusted for inflation, the average paychecks of working Americans have gone down, not up over the last decade. Meanwhile, because of the way increases in living costs are measured for Social Security COLAs, Social Security benefits have stayed a little ahead of inflation. All of which means that it is not unreasonable to ask Social Security recipients to accept a delay in the small cost-of-living adjustment to which they would otherwise be entitled next January.
If senior citizens are unwilling to make a reasonable sacrifice, they shouldn’t be surprised if younger Americans--who are paying up to $3003 each into the Social Security fund this year--become less sensitive to the real needs of older Americans in such important areas as Medicare coverage, supplemental medical insurance and protection of pensioners’ rights in company retirement plans.
Older Americans are a very large and politically potent minority. But they are a minority. That’s worth remembering.
