Social Security Benefits Are Being Eroded Under Joe Biden

Social Security benefits are being eroded under President Joe Biden, with advocates saying that the annual cost-of-living adjustment, or COLA, needs to be higher to make up for high prices.

With government data indicating that inflation is moderating, the Social Security Administration's COLA for 2024 could be 3.1 percent, according to a new estimate from The Senior Citizens League.

The COLA, calculated by using the average inflation in a year's third quarter based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, works to preserve the purchasing power of Social Security benefits.

A 3.1 percent increase next year would be far lower than the 8.7 increase to benefits in 2023, the biggest COLA since 1981 due to inflation reaching a 40-year high.

"When inflation goes down, so goes the COLA. That is what we are seeing now," Mary Johnson, a Social Security and Medicare policy analyst at The Senior Citizens League, told Newsweek.

"However, our 3.1 percent estimate is still higher than the 1.3 percent COLA people received in 2021 and really, the highest since the 3.6 percent COLA payable in 2012. Our estimate will change with new data as it comes in and it could go lower or higher."

But cooling inflation does not mean prices have come down.

The nonpartisan group released a report this month examining how Social Security benefits have kept up with rising costs and found the oldest adults have lost more than a third of their buying power in the past two decades.

Biden has pledged to protect Social Security, saying in his State of the Union speech in February that Republicans want to make cuts to the program.

But during his administration, soaring inflation has "deeply weakened" the buying power of Social Security benefits, particularly for the oldest and disabled adults, the report said.

Newsweek reached out to the White House via email for comment.

Older adults who retired before 2000 have lost 36 percent of their buying power, according to the group's calculations. For every $100 a retired household spent on goods and services in 2000, they can only buy about $64 worth today.

Moderating inflation points to a lower COLA for 2024, according to the report, but prices on key items remain "stubbornly high."

Eggs were the fastest-growing cost for older Americans, according to the group's analysis of Bureau of Labor Statistics data through February this year. The price rose from an average of 98 cents for a dozen eggs in January 2000 to $4.21 in February 2023, a 332 percent increase.

Other items in the top five include prescription drugs, heating oil, dental services and Medicare Part B premiums.

Social Security recipients would need $516.70 per month, or $6,200 more per year, than they are currently receiving to maintain the same level of buying power as in 2000, the report said.

Johnson noted that the Biden administration took some steps last year to fight inflation, including lifting the federal gasoline tax. "Gasoline prices have come down since then," she said.

She added that the "inflation we are seeing now is not necessarily inflation that can be changed by policy."

"For example the price of flour and bread are still high. That's caused in part by the war in Ukraine which is the world's largest wheat producer. The war has caused higher demand for alternate wheat sources driving up the price of flour, bread and pasta around the world," she said.

Wages have been growing, Johnson said, which also makes the cost of products higher.

"The job market has been strong, but that may be changing," she said. "A recession, however, is not something anyone wants to see. It would threaten Social Security benefits, because fewer payroll taxes would be collected and program solvency might erode faster than forecast.

"We had the highest rate of inflation in 40 years. It may take awhile to get back down into a more normal range. The 3.1 percent is the high side of 'normal.'"

The Senior Citizens League said it supports legislation that would calculate COLAs based on a consumer price index that better reflects the spending patterns of retirees, provide a modest boost in monthly benefits for retirees to make up for the erosion in buying power and guarantee a minimum COLA of 3 percent for further adjustments.