Chain of Fools
Or Debt Deal Trojan Horse, as Campaign for America’s Future called it today. What we’re referring to is the spectre of cutting Social Security benefits by adjusting the formula used to calculate the cost-of-living-adjustment (COLA) cost of living formula, a proposal called “Chained-CPI.” Like “blended rates” for Medicaid, this is another entitlement spending cut proposal the Obama administration has launched to reach a debt ceiling agreement that remains way below the public radar. And that’s where they’d like it to stay.
This cut would represent a betrayal to tens of millions of Social Security beneficiaries—seniors, people with disabilities and their families, children who have lost parents, and everyone who relies on these modest benefits for basic economic security.
The Congressional Budget Office estimates adoption of the so-called “Chained-CPI” to determine Social Security’s annual COLA would cut benefits by $112 billion over 10 years. The Social Security Administration Chief Actuary estimates the effects of this change would be that beneficiaries who retire at age 65 and receive average benefits would get $560 less a year at age 75 than they would under current law and get $1,000 less a year at age 85 – a 3.7 percent cut and a 6.5 percent cut, respectively. [See analysis here] The proposal will cut $1.6 trillion over Social Security’s 75 year valuation period – mainly from the oldest of the old, primarily women and disproportionately poor.
Two reports were released that analyzed the harmful effects from the proposed Social Security COLA cut. One found that the cuts would be especially painful to women who have longer life expectancies, rely more on Social Security income and are already more economically vulnerable, and to lower-income beneficiaries. About one-third of beneficiaries depend on Social Security for more than 90 percent of their income. Another found that Social Security’s current COLA formula already is too low because it does not take account of the higher health care costs that seniors and people with disabilities face.
“The Social Security COLA cut is a betrayal by politicians in Washington of today’s 55 million Social Security beneficiaries. Indeed, it is a betrayal of the 165 million workers and their families who are earning those benefits every work day,” said Nancy Altman, co-chair of the Strengthen Social Security Campaign. “These cuts would occur soon and they would affect everyone. Social Security does not add a penny to the deficit. Those who pledged that Social Security would not be cut as part of a deficit deal are breaking their promise if they support this proposal. So are those who have pledged that they will not cut the benefits of current beneficiaries. They will vote for this at their electoral peril.”
“This proposal is a stealth attack that will especially hurt the economic security of older women,” said Joan Entmacher, Vice President, Family Economic Security, National Women’s Law Center, and the co-author of Cutting the Social Security COLA by Changing the Way Inflation Is Calculated Would Especially Hurt Women. “The cuts may not sound like a lot to some Members of Congress, but for an 80-year old woman who depends on her Social Security check to get by, they mean the loss of a week’s worth of food each month. And the cuts just get deeper as women get older.”
The three reports and more information are available here.