Social Security’s Biggest Boost in Decades

By Yuval Rosenberg

Happy humpday! Big news today for Social
Security beneficiaries — and it could affect the outlook for the
program's trust funds. Here's wha you need to know.

Social Security Benefits Set for Biggest Boost in Decades

Social Security benefits will increase by 5.9% in 2022, the
largest increase since 1982, the Social Security Administration
announced Wednesday.

“This would be the highest COLA that most beneficiaries living
today have ever seen,” Mary Johnson, Social Security and Medicare
policy analyst for The Senior Citizens League,
told CNN.

The cost-of-living adjustment will affect about 70 million
people overall, including 64 million retirees and 8 million
Supplemental Security Income recipients. (Some beneficiaries
receive payments from both programs.)

The adjustment will boost the average individual retirement
payment to $1,657 per month next year, an increase of $92, and to
$2,753 per month on average for couples, an increase of $154.

With the annual increase in benefits averaging just 1.65% over
the last decade, the latest adjustment is much larger than in
recent years. The administration also announced that the maximum
amount of earnings subject to the Social Security tax will rise by
2.9% next year, increasing to $147,000 from $142,800.

Inflation surges: While seniors will welcome the boost,
the increase in benefits is driven by inflationary pressures that
have been larger and lasted longer than many economists predicted
in the wake of the coronavirus pandemic.

The Labor Department said Wednesday that the consumer price
index rose by 0.4% on a monthly basis in September, and 5.4% on an
annual basis. That means that much if not all of the Social
Security adjustment will be claimed by higher prices for all kinds
of goods, from gasoline to groceries.

The annual increase in benefits is not intended to provide an
increase in real purchasing power. Rather, it is designed to
maintain purchasing power at a steady level. But some advocates say
the government program has failed to do that over the years, in
part because of inaccurate inflation measures.

“This is welcome but inadequate — health care and prescription
drug costs have been going up way faster than seniors’ cost of
living,” Nancy Altman, co-director of the advocacy group Social
Security Works,
told The Washington Post. “People’s Social
Security benefits have been eroding for decades, and will continue
to erode even with this increase.”

Raising the long-term cost: Higher benefit payments will
put additional pressure on the Social Security trust funds. The
Old-Age and Survivors Insurance Trust Fund, which provides benefits
for retirees, is currently projected to deplete its reserves in
2034, at which point recipients will see a 22% cut in benefits,
assuming Congress doesn’t act before then.

Anqi Chen of Boston College’s Center for Retirement Research
told
The Wall Street Journal that the latest upward
adjustment could move the depletion date forward by about three
months, though much depends on how wages keep up with
inflation.

“If wages are not increasing at the same rate as inflation in a
given year, then what’s going in is going to be increasing less
than what’s going out in benefits,” Chen said. “That’s when you get
the mismatch.”

Poll of the Day: Most Democrats Want to Go Big on Build Back
Better Act

As Democrats continue to debate how much and how to pare back
their planned $3.5 trillion bill to expand the social safety net
and combat climate change, a new CNN poll finds that 41% of
American adults and 75% of Democrats prefer legislation that
includes all of the proposed policy changes over a scaled back
version that costs less.

Three in 10 respondents, and 20% of Democrats, said they prefer
a bill that enacts fewer policy changes and costs less. And 29% of
adults overall, including 55% of Republicans, say they prefer
Congress not pass any version of the bill.

Among independents, 36% prefer the full bill while 32%
want the smaller version and another 32% don’t want the legislation
at all, though most independents who lean Democratic say Congress
should enact the full package while most of those who lean
Republican say Congress should scrap it altogether.

Democrats’ messaging problem: Democrats have
struggled to sell the bill to the American public, at least in part
because its size and scope have resulted in it being described

in terms of its cost rather than its content. A

CBS News poll earlier this week found that only
10% of Americans say they know a lot of specifics about the plan,
compared to 29% who say they don’t know what’s in it. Asked what
they’ve heard about the proposed legislation, nearly 60% in the CBS
poll cited the $3.5 trillion price tag and tax increase for
high-income individuals while just 40% cited proposals to add
dental, vision and hearing coverage to Medicare or lower drug
prices in the program.

The new CNN poll adds to those messaging concerns, as it finds
that just 25% of respondents say their family would be better off
if Congress passed both a bipartisan infrastructure bill and
Democrats’ Build Back Better plan. Nearly a third say they would be
worse off and 43% say they’d fare about the same.

The CNN poll finds President Joe Biden with 50% approval and 49%
disapproval.

The poll, conducted by SSRS from October 7 through October
11, surveyed 1,000 adults and has an overall margin of error
of 4.2 percentage points.

Quote of the Day

“This puts [Senate Minority Leader Mitch] McConnell in a box
canyon where he has to be tough and fight the debt limit. He lost
face during that debate and now he’s going to have to step up and
actually be tougher on the second go on the debt limit and force
Democrats to use reconciliation.”

– Brian Darling, a GOP strategist and former Senate aide,
in a piece at
The Hill citing Republicans saying that
McConnell’s agreement to raise the debt limit until December has
cost him with his own party, meaning that “he doesn’t have any more
political capital to spend on helping Democrats raise the debt
limit again.”

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