Social Security Headed for Biggest Bump in 40 Years

Social Security Headed for Biggest Bump in 40 Years

By Yuval Rosenberg and Michael Rainey
Wednesday, September 14, 2022

Good Wednesday evening. President Joe Biden and his administration are working to avert a rail strike that could wreak havoc on U.S. supply chains, fuel inflation and damage the economy. With a Friday deadline looking, Amtrak announced that it was already canceling all long-distance routes.

Here’s what else you should know.

Social Security Headed for Biggest Bump in 40 Years

With inflation running at an 8.3% annual rate as of August, Social Security beneficiaries are set to receive the largest cost-of-living adjustment in four decades.

Based on government data released Tuesday, the Senior Citizens League estimates that the annual inflation adjustment to Social Security will be 8.7% for 2023. That boost would raise the average retiree benefit of $1,656 by $144, according to the group, which lobbies for seniors.

The adjustment for 2022 was 5.9% and the actual increase for 2023 will be set by the Social Security Administration next month after inflation data for September is released. The annual adjustment is based on the change in a specific inflation measure, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), from the third quarter of last year to the third quarter this year.
The projected 8.7% increase for 2023 “is extremely rare and would be the highest ever received by most Social Security beneficiaries alive today,” the Senior Citizens League said in a press release Tuesday. Since automatic adjustments first started, the years from 1979 to 1981 were the only times the annual increase was higher. But the forecast change for 2023 is now lower than it was just last month, when the seniors group said it expected a 9.6% hike. The revised estimate is the result of a slight cooling in the government inflation data.

Medicare premiums projected to see little change: “Rising Medicare premiums often take a significant bite out of COLAs; the premium for Part B (which covers outpatient services, like doctors’ visits) typically is deducted from Social Security benefits,” Mark Miller if The New York Times explains. “Large increases in Part B can sharply reduce, or even eliminate, a COLA. But next year, most experts expect the standard Part B premium to rise very modestly, or even stay flat at the current $170.10 per month.”

Number of the Day: $900 Million

President Joe Biden toured the Detroit Auto Show on Wednesday, getting behind the wheels of a bright orange Chevrolet Corvette Z06 and an electric Cadillac SUV. As part of his administration’s push to promote the manufacturing of electric vehicles — Biden has set a goal for EVs to make up 50% of all vehicles sold in the United States by 2030 — Biden announced the approval of the first $900 million in funding from the 2021 bipartisan infrastructure law to build charging stations in 35 states.

The infrastructure legislation Biden signed last year calls for investing $5 billion over five years to build a nationwide network of charging stations. Read more at Reuters or CBS News.

IRS Whistleblower Program Running Out of Steam

An IRS whistleblower program that has produced more than $6 billion in payments since 2007 is languishing due to a lack of funding, The Hill’s Tobias Burns reports Wednesday.

The IRS Whistleblower Office rewards people who provide information about tax cheats after the tax agency recovers what it is owed. The rewards vary from 15% to 30% of what is recovered, and according to the program’s most recent annual report, between 2007 and 2021 the program collected $6.39 billion from “non-compliant taxpayers” while paying out $1.05 billion to whistleblowers – a hefty 6-to-1 ratio.

But funding for the program has declined in recent years, along with the amounts of money it has recovered. According to a Senate Finance Committee report, the number of investigations fell from 43 in 2014 to just six in 2020. Revenues have been falling, too, from $1.4 billion in 2018 to $245 million in 2021.

A tool to catch wealthy tax cheats: The whistleblower program is discussed in a recently released report from the Senate Finance Committee that highlights an investigation into allegations that billionaire software executive Robert Brockman concealed approximately $2.7 billion in income from the IRS. In what is the largest tax evasion case brought against an individual in U.S. history, Brockman was indicted, with key evidence in the case coming from a whistleblower.

“Brockman’s scheme may have gone undetected by the IRS and federal prosecutors were it not for evidence provided by a whistleblower and the cooperation of several co-conspirators,” the Senate Finance report says.

The report also notes that Brockman’s elaborate scheme to hide income, which involved lightly regulated offshore bank accounts, may be just the tip of the iceberg – an iceberg the IRS is currently unequipped to explore. An enhanced whistleblower program could help the IRS gain more traction in that battle.

“Congress and Treasury should strengthen the IRS Whistleblower Office and better utilize incentives available for whistleblowers to come forward with information to detect offshore tax evasion,” the Finance Committee recommended. “Whistleblowers can serve as effective partners for the federal government to unpack sophisticated tax evasion schemes used by wealthy taxpayers and large corporations.”

In line for an upgrade: While the IRS is still developing a detailed plan on how to spend the $80 billion in additional funding it will receive over 10 years thanks to the Inflation Reduction Act, the whistleblower program is a likely target for more money and personnel. Lawmakers from both sides of the aisle have lobbied to boost the program, most recently in the 2021 IRS Whistleblower Improvement Act, which was sponsored by both Senate Finance Committee chair Ron Wyden (D-OR) and ranking member Chuck Grassley (R-IA).

“The IRS whistleblower program has been a genuine success for American taxpayers,” Grassley said as he introduced the bill. “We ought to do whatever we can to ensure its continued success, so tax dodgers and fraudsters pay what they owe. Toward this end, it’s vital that whistleblowers who come forward are protected and treated fairly.”

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