Chain of fools
Just as 55 million Social Security recipients are about to get their first benefit increase in three years, Congress is looking at reducing future raises by adopting a new measure of inflation that would increase taxes for most families — the biggest impact falling on those with low incomes.
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Despite fierce opposition from seniors groups, the proposal is gaining momentum in part because it would let policymakers gradually cut benefits and increase taxes in a way that might not be readily apparent to most Americans. Changes at first would be small — the Social Security increase would be cut by just a few dollars in the first year.But the impact, as well as savings to the government, would grow over time, generating about $200 billion in the first decade and much more after that.
The proposal to adopt a new Consumer Price Index was floated by the Obama administration during deficit reduction talks in the summer. Now, it is one of the few options supported by both Democratic and Republican members of a joint supercommittee in Congress working to reduce government borrowing.
The inflation measure under consideration is called the Chained Consumer Price Index, or chained CPI. On average, the measure shows a lower level of inflation than the more widely used CPI for All Urban Consumers.
The new measure would reduce Social Security cost-of-living adjustments, or COLAs, by an average of 0.3 percentage points each year, according to the Social Security Administration. Next year’s increase, the first since 2009, will be 3.6 percent, starting in January.
In all, adopting the chained CPI would reduce Social Security benefits by $112 billion over the next decade. Federal civilian and military pensions would be $24 billion lower, according to the nonpartisan Congressional Budget Office.
Here’s what SocialSecurityWorks says:
- It’s a benefit cut. It’s not some minor technical change to the COLA. It’s a real cut to the benefits you have earned every year into the future.
- It cuts benefits more with every passing year. After 10 years, your benefits would be cut by about $500 a year for the average retiree. After 20 years, your benefits would be cut by about $1,000 a year.
- It hits today’s Social Security beneficiaries. Politicians like to say that their cuts to Social Security will not affect those getting benefits today. Wrong! Switching to the chained-CPI would hit all current beneficiaries.
- We need a higher COLA, not a lower one. The current COLA is not large enough–it does not adequately account for large health care cost increases faced by seniors and people with disabilities.
Since women live longer than men and have less money to begin with it’s just lucky there are lots of traditionally low paying female jobs so they can supplement their incomes as waitresses or maids. They’ll need it.
