The American Citizen’s Dividend allows us to expand Social Security’s cash-benefits programs—retirement, survivors, and disability insurance—with stronger benefits and greater coverage at extremely low cost.
The Disability Gap
Many Americans of age 50-65 have no coverage when they become incapable of working in their careers. Many workers of lower income and with little savings remain capable of working, but not in the physically-demanding careers in which they’re experienced. Retraining often fails to transition these workers to new careers for the decade of their remaining working life.
Minor physical injury and musculoskeletal disorders can impact workers ranging from automechanics and construction to restaurant service and retail. Simply standing for several hours at a time can be too much, yet these workers do not qualify for disability because they could work an office job.
Covering ten million workers at the $17,000/year elderly poverty guide would cost $170 billion, roughly a sixth of the full Social Security program cost. With the American Citizen’s Dividend, a two-adult household already receives over $12,000. Program expansion to provide full disability to these workers would cost a mere $50 billion.
Indexing to Elderly Inflation
Today, Social Security retirement benefits index to CPI-U, the consumer price index for urban workers. The CPI-E, for elderly, has heavier weight on categories like housing and medical care, and tends to grow faster than CPI-U.
Indexing to CPI-E will grow faster for the moment; however, the heavier weight on medical care may change that. Eliminating Medicare premiums and copays will reduce CPI-E medical care costs to near zero, effectively removing the category from the CPI-E.
A universal healthcare system would have the same impact in the CPI-U and CPI-W, leaving the CPI-E to differ only slightly with a primary focus on additional housing costs.
Indexing to CPI-E may provide a more-representative cost-of-living adjustments (COLA) for retirement benefits; the relationship between CPI-E and CPI-U will change with the introduction of universal healthcare and the elimination of Medicare costs.
The American Citizen’s Dividend steadily unloads Social Security as our productivity gains are mathematically guaranteed to exceed any CPI measurement. This requires adjustments to the program over time.
Periodic adjustments are an arbitration between raising the benefit beyond COLA and reducing the OASDI FICA. It makes sense to reduce the FICA partially and roll the remaining productivity-driven adjustment into a stronger, larger retirement and disability benefit.