Cantwell to President: "Preserve Social Security's Original Mission"
Senator announces legislation to increase Social Security payments to help seniors deal with health care inflation
SEATTLE, WA - Today Senator Maria Cantwell (D-WA) called on President Bush to ensure that Social Security's original mission of acting as a financial safety net for senior citizens is not compromised. Cantwell also announced her support for a bill to increase the cost of living adjustment (COLA) for Social Security payments, claiming that current checks to our seniors don't keep up with the astounding rate of inflation for healthcare costs.
Cantwell voiced objection to the plan Bush proposed earlier this week that could cost taxpayers two trillion dollars while letting part of the Social Security trust fund ride on the stock market.
"I believe strongly in our Social Security system, and want to make sure that the U.S. Government keeps its promise to retirees across the nation," Cantwell said.
"The elderly actually face a higher inflation rate because they tend to spend a large share of their household budget on goods and services - prescription drugs and health care for example - whose prices have been rising faster than average," she added.
This year American seniors received a COLA of 2.7 percent - determined by the Bureau of Labor Statistics' Consumer Price Index. Cantwell's legislation proposes an "elderly index" that takes into account that seniors spend a large share of their income on healthcare, which has a much higher rate of inflation than other goods. This year the elderly index would have prescribed an increase of 3.2 percent.
In real dollars, the change to the elderly index means a small but substantial difference to seniors' budgets. The average American retired worker will receive $955 per month this year, an increase of $25 per month over last year's payments using the Consumer Price Index. Had the elderly index been used, the average benefit would be $960 per month - an additional increase of $5 more per month, or $60 more per year.
Cantwell introduced her "The Consumer Price Index for Elderly Consumers Act of 2005" (S. 275) yesterday in the Senate.
Cantwell pointed out that Social Security has proven to be an extremely important and effective means of fighting poverty for senior citizens. Without Social Security, Cantwell wrote in her letter to Bush, 15 million more Americans would be living in poverty today.
Letter to President Bush follows below:
February 3, 2005
The Honorable George W. Bush
The White House
Washington, DC 20500
Dear Mr. President:
I have been reading with interest your comments regarding the need to privatize Social Security. I am fully committed to working with you to strengthen and preserve this vital program. I listened with interest during your State of the Union address on Wednesday evening. We share an interest in the idea of collective investment. However, I believe such investment must preserve Social Security's original mission, assuring all Americans of the fundamental protections it has always provided.
I have grave concerns, however, with your proposal to divert up to one-third of current payroll taxes into private accounts - a fundamental shift in mission that would transform Social Security from society ' s safety net against poverty into a kind of uninsured, government-sponsored 401(k) plan. This could leave millions of people without Social Security benefits when they need them most.
Social Security is a pay-as-you-go system, with today ' s workers supporting today ' s beneficiaries. According to most estimates, setting aside four percent of the 12.4 percent Social Security payroll tax - nearly one-third of Social Security's revenues - would require the government to borrow close to $2 trillion over the next 10 years in order to pay scheduled benefits to current and near-retirees.
I am concerned that if a portion of today ' s money is diverted into investment accounts to generate future returns, we will not be able to replace that money for people who currently receive benefits or unexpectedly find themselves in need due to the early death of a spouse or parent, or their own sudden disability. Social Security was created as a safety net against poverty - and it works. Without Social Security, according to the Leadership Council of Aging Organizations, 15 million more Americans would be living in poverty today.
We need to make some changes to Social Security so that it can continue to provide benefits for hard-working Americans and their families. The cost of living allowances provided by Social Security already fail to keep pace with the consumer price indices on which health care and pharmaceutical cost increases are based and that Social Security recipients must contend with when paying for housing, food, electricity and health care. I believe that the federal government can, and should, provide workers with more options to save for retirement -- and we can provide more creative choices for young workers -- without eliminating Social Security's traditional role as a safety net.
United States Senator