Remember just last year—an election year—when political leaders in Washington and on the campaign trail told us they would not cut Social Security benefits for people currently in the program? Now, President Obama is pushing a budget deal that includes a proposal called “chained CPI,” a fancy Washington term that really means cutting Social Security and veterans’ benefits, and increasing taxes for most taxpayers. The chained CPI would cut the cost-of-living adjustment for Social Security and veterans’ benefits by $146 billion in the first 10 years alone, while also raising taxes by $124 billion.
This is a wrongheaded proposal and the public knows it. Surveys show that 87% of voters 50+ believe it’s very important that benefits are not reduced for today’s seniors. Furthermore, 84% of voters 50+ believe that the future of Social Security should be considered separately from the budget deficit discussions. This rejection of chained CPI is not limited to one party either .
Chained CPI represents a shattered promise—at a high cost—to seniors, to people with disabilities, and to veterans. That cost would grow higher year by year, making it increasingly harder to pay for groceries or heat or medicine.
For the average 65+ retiree, the cumulative benefit cut would be more than $5,000 by age 80 and more than $14,000 by age 90. With people living longer, it is easy to see how harmful this proposal is.
Older veterans would be hurt twice by chained CPI because it would cut both Social Security and veterans’ benefits. A 62-year-old veteran would lose $32,000 in total benefits by age 90. Is that really the way we want to treat the men and women who have sacrificed so much for all of us?
Chained CPI would take a heavy toll on people with disabilities. Today 40 percent of people with disabilities are kept out of poverty by Social Security.
Women, who on average live longer than men, would have to absorb a disproportionate share of this cut. Among Social Security recipients 85 and older—a group that would pay a heavy price for chained CPI—68 percent are women.
Proponents of chained CPI portray it as a more accurate indicator of the cost-of-living. It is based on the notion that when the cost of an item goes up, you simply switch to a cheaper alternative. It is time for the supporters of this idea to get acquainted with the real lives of people receiving Social Security.
A typical senior has an annual income of only $20,000 a year and spends much of his or her money on necessities like prescription drugs and health care that do not have lower-cost substitutes. For someone 85 and older, out-of-pocket health care spending is two and a half times what it is for a person under 65.
Chained CPI is not only harmful and illogical; it is also out-of-place in the discussion of deficit reduction. As a self-financed program providing earned benefits, Social Security has not caused the deficit—and it should not be turned into an ATM for politicians trying to address it. We deserve a separate national conversation about how to protect Social Security for today’s seniors and responsibly strengthen it for our children and grandchildren.
For anyone who needs further evidence of the Grand Canyon between elected officials in Washington, DC, and the rest of us, this proposal ought to be Exhibit A. It is not enough for the President and Members of Congress to profess their support for seniors and their undying gratitude to veterans. Let’s send an unmistakable message to President Obama and the politicians, of both parties, that taking benefits out of the pockets of older Vermonters is the wrong way to go.
Greg Marchildon, AARP Vermont State Director