Letter the House Ways and Means Subcommittee on Social Security
May 23, 2013
On behalf of the more than 3 million members of the National Education Association (NEA), we offer our views on protecting earned retirement benefits and Social Security in regards to the May 23 hearing, “ThePresident’s and Bipartisan Entitlement Reform Proposals” in the House Ways and Means Social Security Subcommittee.
Over the past two years, drastic and austere deficit reduction has marred our economic landscape. Students, teachers, working families and seniors – the most vulnerable of our society - have all paid an extraordinary price due to these cuts. Meanwhile, some in Congress have shown they are serious about finding a balanced approach to moving the country forward and restoring our economic strength by putting students ahead of political ideology while demanding corporations and the rich pay their fair share in taxes. Social Security has not contributed to the debt issues we face and its beneficiaries should not be erroneously harmed under the auspices of deficit reduction. Further, the cost difference of any changes made should be invested directly back into the program rather than general deficit reduction.
A measured and balanced approach to our fiscal issues should be utilized in all arenas – especially when considering changes to retirement programs. One proposal, which appeared in the President’s FY2014 budget, calls for cutting $100 billion in Social Security benefits by recalculating the cost of living for beneficiaries by using the Chained CPI or Chained Consumer Price Index. These painful cuts to Social Security benefits by using the Chained CPI would represent an unfair burden on those that can least afford and least deserve it – seniors, people with disabilities, and veterans.
One of the most problematic aspects of Chained CPI is that cuts are larger the longer one receives benefits. By age 85, the individual who began to receive benefits at 65 would be losing $984 in benefits that year; by age 95, the annual cut would be $1,392. For some beneficiaries, the reduced cost-of-living adjustment in Social Security benefits will be completely consumed by the increase in Medicare premiums, which Chained CPI does not account for, effectively leaving current beneficiaries with no cost of living adjustment at all. This proposed adjustment won’t result in seniors choosing to purchase cheaper items at the grocery store; it will cause them to choose between spending money on food or on health care.
No matter how it is presented, the use of the Chained CPI is a benefit cut. Social Security belongs to the people who have worked hard all their lives, contributed to the program, and relied on the promise that they and their family will be able to collect benefits that accurately reflect the cost of living when they retire.
Two other significant benefit cuts are already in place, the Government Pension Offset (GPO) and Windfall Elimination Provision (WEP), which unfairly reduce the retirement benefits of public employees who have dedicated their lives to serving their communities and their country. GPO reduces or eliminates the Social Security survivor benefits of over 568,000 beneficiaries. Of these individuals, 43 percent are widows/widowers and about 80 percent are women. Approximately one million beneficiaries are currently affected by the WEP; as a result these public employees lose a significant amount of their earned Social Security benefits. Some 300,000 individuals lose an average of $3,600 a year due to the GPO — an amount that can make the difference between self-sufficiency and poverty. NEA strongly supports the repeal of both provisions and has been a vocal proponent of the Social Security Fairness Act of 2013 (H.R. 1795) which would repeal GPO and WEP.
Some Social Security reform proponents have suggested requiring Social Security participation for all public employees as a means of strengthening the system. NEA strongly opposes mandating Social Security coverage for currently non-covered public employees because it would cost taxpayers significantly, would raise the cost of maintaining benefits, and would destabilize well-funded public pension plans.
Mandatory coverage would result in separate plans or tiers for new hires. Existing pension plans would experience a reduction in employer and employee contributions, lower investment earnings, and increased funding concerns. Benefits for new hires, current members, and retirees in every state would be significantly harmed, as plans would have no choice but to reduce benefits to make up for lost contributions.
Social Security is the cornerstone of economic security for nearly 54 million Americans. It belongs to the people who have worked hard all their lives, contributed to the program, and relied on the promise that they and their family will be able to collect benefits when they retire, experience a severe disability, or die. Even though the benefits are modest – averaging $14,000 a year – they represent more than half the income for six out of ten recipients.
Nearly 1.2 million NEA members will be eligible for full retirement within the next 10 years. These people are educators that have devoted their lives to students. We urge you to think of them and the many working families across this country as you consider the path forward.
Director, Government Relations