WASHINGTON — For Lottie Prushinski of Southington, Connecticut her monthly Social Security check has allowed her to live with “dignity and financial independence,” said AARP Board Chair Joan Ruff, who testified Tuesday at a hearing of the House Ways and Means Social Security subcommittee.
Ruff told the panel, chaired by Representative John Larson, that protecting Social Security benefits is crucial to retirees like Prushinski because it is the “only lifetime, inflation-protected guaranteed source of retirement income for most Americans.” She noted that a recent AARP survey found strong intergenerational agreement — from Millennials to Baby Boomers — who value the importance of the program.
“AARP recognizes that your challenge lies not only to identify the most effective policies to improve the lives of Americans, but also to secure the kind of bipartisan consensus and public support long lasting solutions demand,” Ruff said. “We at AARP offer our support as you engage the public and develop that consensus, and we commit to you. We will have an open dialogue with our members on this final topic.”
Kate Farrar, executive director of the Connecticut Women’s Education and Legal Fund, also testified at the hearing saying that the long-term viability of Social Security is critical to women in her state as well as across America.
“We hear from women, every single day who struggled financially, and often rely on Social Security,” she said, pointing to “Maggie” a 63-year-old retiree from New Britain, Connecticut with chronic health conditions. She relies on Social Security income “to put food on the table” and is frightened when lawmakers talk of privatizing or doing away with Social Security.
Farrar said that Social Security benefits are particularly critical for women who disproportionately rely on Social Security benefits as their sole source of income in retirement rather than a mix of personal savings and employer-provided retirement benefits. For them, she said, the current payments aren’t adequate noting research from the Institute for Women that found basic living expenses for a single elderly woman in Hartford County is $2,046 a month while average Social Security benefits there are $1,461 — a nearly $600 gap.
Farrar said Congress needs to act and praised Larson’s proposed Social Security 2100 Act as a good start saying it includes several critical steps to address these issues including setting a new minimum benefit at 25 percent above the poverty line and improving the way cost-of-living adjustments are calculated to better reflect the spending habits of retired Americans.
Larson’s bill looks to keep the Social Security Trust Fund solvent through an increase in FICA withholdings that would amount to about 50 cents extra a week for individuals earning $50,000 annually. The Board of Trustees for the Social Security and Medicare Trust Funds last year cautioned that without congressional action the trust funds will deplete — forcing a 21-percent-across-the-board cut to beneficiaries in 2034.
Larson, who spoke at the start of the hearing, said Congress has not paid enough attention to ensuring that Social Security is actuarially sound and vowed as chairman of the subcommittee to keep the issue on the front burner.
“This should be a concern of everyone’s. Every day 10,000 baby boomers are becoming eligible for Social Security benefits. More than 62 million Americans are already receiving Social Security benefits. We have a responsibility to act to strengthen this program for them,” he said. “The choice is simple, we need to work bipartisanly and act.”
Republicans agree that Congress must act but are proposing a different solution. Rather than increasing FICA withholdings, they would increase the retirement age from 67 to 70 for those born in 1960 or later and eliminate cost-of-living adjustments for high-income earners.
New York Representative Tom Reed, the ranking Republican on the panel, agreed with Larson that action is needed in Congress to maintain the Social Security Trust fund but he does not believe withholdings should be increased.
“We can secure benefits without tax increases,” Reed said at the hearing.
Instead, he said Congress needs to encourage employment for long-term economic growth and protect benefits for the most vulnerable people.
“Republicans want to leave with you on a bipartisan basis so we can all make sure Americans can count on Social Security to be there for them, for their children and their many grandchildren to come,” he said. “We know from history, Social Security reform only has a fair chance to succeed if it is done on a bipartisan basis.”
Joseph Semprevivo, owner of Joseph’s Lite Cookies a small business in Florida, cautioned the panel against Larson’s approach saying it would impose too great a burden on the 30 million small business owners around the nation.
“Consider the impact on a business employing 50 people at an average annual salary of $50,000. This tax increases would raise the business portion of payroll tax cost by $30,000 to $185,000,” he said. “That increase amounts to the cost of hiring a new entry-level employee or giving significant wage increases to existing employees.”