Writing in the Chicago Sun Times Sen Elizabeth Warren makes her case for a special Social Security COLA funded by executive pay. She writes in part:
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.
Once again those who profess to demand fairness cannot be fair in making their case for anything. The “loophole” she talks about refers to a tax provision that limits a corporations tax deduction for executive compensation unless the compensation is performance based and therefore at risk.
First, that $16 million salary she talks about is not salary, but total compensation which includes bonuses, deferred compensation, stock awards and the future value of any pension and that compensation can vary greatly from year to year. By the way that huge salary bump is 3.75%, far less in terms of actual salary.
She says the loophole she wants to close costs taxpayers $5 billion a year. She then says closing the loophole will pay a 3.9% boost in Social Security or about $580. According to the latest Social Security Trustees report, the system paid $706.8 billion in benefits in 2014. 3.9% of that is over $27 billion; a far cry from $5 billion, so Sen. Warren is either very bad at math or hasn’t given us all the details, like giving the one time boost in Social Security costs over five years of future loophole savings which as I said are not guaranteed, but variable. She doesn’t say where the $27 billion comes from during those five years.
What she also doesn’t say is that the 3.9% is a lump sum payment, but rather describes it as a one time “benefit boost.” In fact, it is not a benefit boost, it is a “one-time emergency payment.”
Her logic of a benefit increase not costing taxpayers a single penny is typical. If closing the so-called loophole is valid, so is using the additional revenue to reduce the debt, interest on which is costing taxpayers quite a few pennies.
Never mind looking at the economic big picture, long-term consequences; just ignore strategic thinking. None of that matters when you are a liberal ideologue.
If the current COLA is not accurate or fair, then instead of playing games with the tax code, fix the COLA formula and find a way to permanently pay for a change, but you see that requires more work than finding a new scapegoat.
P.S. There are probably a lot of other Americans who could use a 3.9% raise too. I happen to think young families deserve as much consideration as seniors, veterans and the disabled. I’m old, I’m a veteran; why does that make me special? Politicians throw around hot button buzz words that appeal to the masses, but are counterproductive for society as a whole.