In 2009, a Chicagoan by the name of David Voigt lost his job. He applied for job after job. He even tried finding work in different fields and new careers — but, like so many others at the peak of the recession, he just couldn’t find work with the economy doing as poorly as it was.
After five years of struggling to get by and make ends meet, Mr. Voigt was on the brink of homelessness when he was able to officially retire and apply for Social Security at the age of 62. His Social Security checks were small, but they were big enough that he could keep his home and put food on his table.
His story isn’t unique. Americans from around the country have similar stories.
Since 1975, seniors, workers with disabilities, children and veterans who rely on Social Security payments to get by have been able to count on regular “cost of living adjustments,” or COLAs, to help the value of their modest benefits keep pace with rising costs for things like housing, food, insurance and medication.
But this year, for just the third time since 1975, Social Security beneficiaries didn’t get a COLA at all. Not a single penny. Their payments stayed exactly the same as they were last year — even though the cost of core goods and services is rising. Historically, COLAs — tied to an inadequate measure of the rate of inflation — are modest. In 2015, the average increase was just $22 per month more. But that extra money can be essential for people living on fixed incomes.
While that small sum of money may not sound like much, because the majority of Social Security beneficiaries depend on Social Security for most of their income, it can make a world of difference for some of our most vulnerable, financially stretched families, friends and neighbors. In Illinois alone, that includes 2.4 million residents – about 18 percent of our state. That includes 158,000 children, 876,000 women over the age of sixty-five, 292,000 disabled workers and 97,000 thousand veterans and their families’ members who could be forced into painful choices, such as forgoing gas to get to work or medication they need to live.
Mr. Voight’s health insurance premiums skyrocketed this year, and he’s struggling to pay all of his bills. He knows better than most how hard it is to get by without a COLA. It’s a tough year for him, but not for CEOs at the biggest companies in the country. Instead of an unexpected increase in health insurance cost, the average CEO at one of the top 350 American companies saw their $16 million salary grow by more than $600,000.
That huge salary bump is subsidized by taxpayers like us, like Mr. Voigt, and like you. And that’s a result of Congress’ choices. Current law lets corporations skirt the taxes they should pay — and that could be used to give our most vulnerable a modest COLA — by taking unlimited corporate deductions through a tax loophole for executive “performance pay.”
That loophole is in a law that was once described by a former Republican Chairman of the Senate Finance Committee Chairman as having “more holes than Swiss cheese,” and today it costs taxpayers about $5 billion dollars every year.
But we can change that law — and we can put the tax dollars saved to work helping Mr. Voigt and millions around the country like him. By eliminating the performance pay tax loophole, we could pay for a 3.9 percent or about $580, one-time benefit boost — the same percentage top CEOs saw their salaries grow in 2014 — for those who have been denied their COLA this year. Our SAVE Benefits Act would do just that. It would give 70 million Americans — seniors, veterans, children and more — a desperately-needed boost to their finances, and it wouldn’t cost taxpayers a single penny. Closing this loophole even leaves enough revenue left over to help extend the life of the Social Security trust fund.
Statewide, Illinois veterans, workers with disabilities, children and seniors would have an extra $1.4 billion to spend in their local communities on necessities like groceries, heating, and medical care. For roughly one million Americans, the SAVE Benefits Act would mean moving above the poverty line.
Corporations should be free to pay their CEOs whatever they choose, but taxpayers shouldn’t be forced to subsidize those salaries — especially not when it gets in the way of our most vulnerable citizens leading more secure lives. We hope our colleagues in Congress work with us to pass this fully-paid-for bill to finally close this tax loophole and help almost 70 million Americans living on fixed incomes.
Sen. Elizabeth Warren is a Democrat from Massachusetts. Rep. Tammy Duckworth, a Democrat, represents Illinois 8th Congressional District.
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