In the wake of the financial crisis, we have witnessed a number of policy measures that have increased the financial fragility of workers by cutting benefits and social safety net programs. In the United States, there have been repeated calls to cut Social Security – by raising the retirement age or by adjusting benefits to the Chained CPI – legalese for cuts in entitlements that would have disastrous effects, especially for the poor.
However, at the most unlikely time, there have also been calls to expand Social Security benefits. Last year, Senator Harkin (D-IA) introduced legislation that would link benefits to the consumer price index for elderly consumers, CPI-E, that factors in additional costs faced by retirees such as higher healthcare expenses. The bill garnered the support of Senators Brown (D-OH), Begich (D-AK), Schaltz (D-HI), and Warren (D-MA). Congress Member Sanchez introduced the House version of the bill in September, which has since obtained 55 co-sponsors. While neither version has moved in Congress, this legislation seems to have emboldened other members to push for progressive reforms.
More recently, the Congressional Progressive Caucus (CPC) introduced its “Better Off Budget” for fiscal year 2015. It includes a number of fiscal policy measures that signal support for expanding Social Security. CPC Co-Chairs, Representatives Raúl M. Grijalva (D-AZ) and Keith Ellison (D-MN), issued a statement that the Better of Budget “reverses the damage [that the] austerity agenda has inflicted on hard-working families.” The budget would create 8.8 million jobs, repeal the sequestration cuts, change the tax code to create tax relief for low and middle-income working families, and expand retirement and health benefits. The budget is also estimated to reduce the federal deficit by more than $4 trillion in 10 years.
Economist Joshua Smith of the Economic Policy Institute remarked that these fiscal measures are “not outside the historic mainstream,” as this plan would not increase overall spending. However, when viewed in terms of the constant attacks on working families and the American social safety net, it seems like a remarkable achievement. In fact, Social Security benefits have not been increased since the 1967 amendment signed into law by President Johnson that increased benefits to keep up with inflation, better known as the cost of living adjustment (COLA).
Has the tide finally shifted in the austerity and retirement security debate? Or does this budget only signal that the Progressive Caucus is moving towards a more economically populist agenda? Should we feel optimistic about the future of the U.S. welfare state? Stay tuned.
Originally posted at Schwartz Center for Economic Policy Analysis, Worldly Philosopher blog: http://www.economicpolicyresearch.org/index.php/the-worldly-philosopher/1432-is-the-better-off-budget-and-end-to-austerity-as-we-know-it