CEOs Got a Pay Increase Last Year But No COLA for Social Security Recipients
By John Lawrence
The Social Security Administration announced that senior citizens would get no increase in their monthly checks because there wasn’t any inflation last year as measured by the increase in paychecks for urban and clerical workers. Yes, those workers didn’t make any more money, but CEOs certainly did. Why don’t they gear their index to the increase in paychecks for CEOs? That was a whopping 3.9%. Senators Bernie Sanders and Elizabeth Warren (the only Senators who stand up for We the People) are introducing legislation that would give seniors the same increase that CEOs got last year. It has a snowball’s chance in Hell of passing, but they get A for effort.
It would provide an emergency payment of about $580—that’s equal to 3.9% of the average annual Social Security benefit—which could help some 70 million seniors, veterans, people with disabilities, and others meet critical needs. The average CEO compensation for the 350 largest firms was $16.3 million in 2014. While CEO pay is skyrocketing, they are also enjoying a savory loophole which gives them even further gains. That’s right, CEO paychecks are subsidized by you, the American taxpayer. As long as the CEO pay is considered “performance-based,” anything over a million dollars can be deducted from taxes by corporations. If these companies paid the statutory 35 percent corporate income tax rate, their use of the performance-based compensation loophole for just the 20 highest paid CEOs cost American taxpayers $235 million.
CEOs and their corporate lawyers are becoming increasingly savvy about rigging the system to their advantage. And they also have the benefits and the services of lobbyists who write the laws that favor the already rich. “Especially during a long-term recession giving rise to major cuts in public services, and after American taxpayers bailed out Wall Street to the tune of trillions of dollars, it’s unconscionable that we continue to subsidize CEOs’ exorbitant salaries,” said Lisa Gilbert, director of Public Citizen’s Congress Watch division.
The government has all kinds of rules which nitpick social security checks down and practically force social security recipients into privatized Medicare Advantage programs. If this trend continues, Medicare will be eliminated by the fait accompli caused by transitioning to Medicare Advantage. For example, I started traditional Medicare in 2006. I wanted to stay away from Medicare Advantage on principle. I had no “secondary insurance” or Medicare Part D which is drug coverage. The Advantage programs give you all of the above for the same price as traditional Medicare (for now).
The way I look at it, I saved the government tons of money by virtue of the fact that I didn’t take any drugs at all for 9 years after starting Medicare. But this year I had to go on blood pressure medicine. Even though it’s so cheap I could pay out of pocket, I figure at this point in my life I need drug coverage and the lack of secondary insurance, which would cost a fortune if I needed to use the medical system at all, forces me onto a Medicare Advantage program. How you might ask does this relate to Social Security? They take $104.90 out of my social security check each month for Medicare Part B. They’ll take out the same amount for Medicare Advantage. However, next year they will be taking even more because I have to pay a Medicare Part D penalty for all the years I didn’t have Medicare Part D and didn’t need or use prescription drugs.
I Will Pay a Penalty for Staying Healthy
So even though I didn’t take any prescription drugs for the last 9 years and the drug I’m on now with co-pay will cost the government practically nothing, if I want drug coverage now, I have to pay a penalty of 1% of the “national base beneficiary premium” ($33.13 in 2015, $34.10 in 2016) times the number of full, uncovered months I didn’t have Part D or creditable coverage. That comes to almost $40 a month that will come right off the top of my social security check.
But I digress. Two thirds of seniors rely on Social Security for the majority of their income. The Republican controlled Congress sets the rules which deliberately advantage their corporate overlords at the expense of average American seniors. The amounts paid out are completely arbitrary. There is no linkage between the amount paid into social security with FICA taxes and the amount ultimately received in the form of social security. While CEOs and billionaires are advantaged by the tax code that Congress sets, when they retire, they also receive social security checks each month taking money away from people who actually need it.
Progressives usually support everyone getting a social security check on the grounds that it is an entitlement, and as such won’t be eliminated by Congress the way a “needs based” payout would. Well, guess again. No matter whether you call it an entitlement or a welfare program, conservatives are bound and determined to get rid of it and Congress can do just that at their discretion. There are no individual accounts, and you are not entitled to receive any amount of money regardless of what you paid in. It’s all up to Congress and at their discretion.
The only people standing up for senior social security recipients in Congress are Bernie Sanders and Elizabeth Warren. In fact Bernie and Elizabeth want to expand social security benefits which they should be if they don’t want seniors eating their cat’s food. The Social Security Administration nickels and dimes recipients to death. In addition to the Part D penalty, I actually pay into social security each year a significant percentage of what I receive in benefits because I’m still working.
Ronald Reagan Screwed the Self-Employed
Since I’m self-employed, Ronald Reagan and Alan Greenspan (the Ayn Rand acolyte) came up with a nifty plan which involved making self-employed citizens pay both the employee’s part and the employer’s part of FICA tax which will be 12.4% for 2016. For example, if I earn $10,000 in 2016 through actual work, I will pay $1240 in FICA (social security) taxes in addition to income tax. But even though I keep paying in, I get only a couple of dollar increase in my social security check each month. The total increase of my social security check each year due to continually paying in to social security amounts to a minuscule percentage of what I actually pay into social security each year.
This year in fact, despite having paid over $1000. into social security in 2014, I received a $1. increase in my monthly social security check. I received a letter detailing these benefits. It says in part: “We increased your benefit amount to give you credit for your 2014 earnings.” Hoorayy! The letter goes on to say that they will pay me $10.00 representing the dollar a month increase from January to October. Then from November going forward, I will receive a one dollar addition to my monthly check. Whoopee!! A whole dollar a month extra. That won’t even buy a can of food for my cat!
You know what? They could just stop charging me FICA taxes since I’m already receiving social security and then they could do away with the monthly increases for the rest of my life. That would be fine with me. Make sense?
Meanwhile, the fatcat CEOs who made an average of $16.3 million last year only pay FICA taxes on the first $118,500 of that, and they only pay 6.2% not 12.4% like me. Thanks Alan Greenspan and Ronald Reagan who never tired of thinking of ways to bilk the poor while giving advantages to the rich.
Republicans never tire of saying that the Social Security trust fund is running out of money. It would never run out of money and benefits could be greatly expanded if the cap ($118, 500) was lifted and CEOs making an average of $16.3 million paid their 6.2% FICA tax on their entire income. That would amount to approximately a million dollars as opposed to the $7347 they pay now which is simply a rounding error of .045% on the amount of money they make.
“If we do nothing, on January 1st, more than 70 million seniors, veterans, and other Americans won’t get an extra dime in much-needed Social Security and other benefits. And while Congress sits on its hands and pretends that there’s nothing we can do, taxpayers will keep right on subsidizing billions of dollars’ worth of bonuses for highly paid CEOs,” Warren stated. “Giving seniors a little help with their Social Security and stitching up corporate tax write-offs isn’t just about economics; it’s about our values.”
Sanders Calls the Lack of a COLA “Unacceptable.”
“At a time when senior poverty is going up and more than two-thirds of the elderly population rely on Social Security for more than half of their income, our job must be to expand, not cut, Social Security,” Sanders said in a press statement. “At the very least, we must do everything we can to make sure that every senior citizen and disabled veteran in this country receives a fair cost-of-living adjustment to keep up with the skyrocketing cost of prescription drugs and health care.”