[NOTE FROM RONNI: A new poll of 2056 adults from Harris Interactive shows that only 12 percent of Americans favor cutting Social Security. When broken down by political party, it doesn’t change much: 9 percent of Democrats favor cuts and 13 percent of Republicans.
Below is a letter sent to AARP CEO A. Barry Rand from TGB reader Jim Newman objecting to Rand’s support of “strengthening” Social Security by adopting the Chained-CPI method of calculating cost-of-living. As Jim explains, this calculation would dramatically reduce COLA increases to Social Security especially for those most in need.
Undoubtedly, in this year’s budget debates, Republicans will try to cut Social Security one way or another and AARP has a lot of clout in Congress.
Jim, who will be 66 on Thursday, is a retired engineer living in Colorado where he is politically active serving on various boards and commissions. His passion is road biking and in winter, he says, he skis and “moves snow.”
Please read Jim’s excellent letter. It behooves all of us to understand who is making the maneuvers to cut Social Security and how they are doing it.
Dear Mr. Rand:
I read your op-ed piece, “Social Security: We’re Listening” in The January-February 2012 issue of the AARP Bulletin and am shaking my
head over your recommendations to “strengthen” our Social Security system.
You are echoing the recommendations of The National Commission on Fiscal Responsibility and Reform, the “blue-ribbon” panel of 18 that President Obama established last year to come up with recommendations for reducing the deficit. As you know, this panel of experts could not gain agreement among themselves on their own recommendations.
Although I feel that some of the recommendations made by the Commission may have merit, others are very troublesome – particularly the one for shifting from the present method of calculating Social Security cost-of-living adjustments to a new and improved method termed the Chained-CPI. This is the one advocated by you – but not described in any detail – in your article.
Shifting to the Chained-CPI has been justified by some on the grounds that it is merely a technical change – a more accurate way of measuring changes in the cost of living. However, when examined in detail the Chained-CPI fails miserably in its claim to be a more accurate way of measuring changes in the cost of living for Social Security beneficiaries.
What it succeeds admirably in doing is lowering Social Security benefits for all current and future beneficiaries with the added kicker of producing deeper cuts the longer an individual receives benefits.
Rather than focusing on the elderly to pay the price for deficit reduction through reduced cost-of-living benefits, we should be advocating for a hands-off approach on this issue, if not an increase in these benefits.
There is strong evidence that the current method for determining cost-of-living adjustments understates rather than overstates the effects of cost-of-living changes on older individuals because it does not account for older individuals’ greater health care spending compared to consumers overall.
This is generally attributable to the fact that health care costs are rising more quickly for older Americans than those of other items in the typical American’s budget.
For people 65 to 75, their share of health care spending is estimated to be twice as large as for consumers generally. For those 75 and older, health care expenditures are a whopping two-and-one-half times greater than the typical consumer.
It also has to be pointed out that these health care expenditures do not include health costs paid by employers or by federal government programs. Therefore, even with Medicare, out-of-pocket health care expenses are a greater burden on the budgets of older households than on consumers generally.
(See Brian W. Cashell, Congressional Research Service, A Separate Consumer Price Index for the Elderly? [pdf] and the Congressional Budget Office, Different Measure of Inflation [pdf].)
Furthermore, because the impacts of the Chained-CPI are multiplied each year, the cumulative effects on individuals who rely on Social Security as their major or sole means of existence can become unbearable in a very short time.
For example, a benefit cut of $56 per month or $672 per year (the cut at age 80 from the reduced cost-of-living benefit for an individual with an initial monthly benefit of $1,100), is equivalent to more than a week’s worth of food each month or 13 weeks of food annually.
Each additional year you are fortunate enough to live will result in a consequent reduction in ability to feed yourself due to the multiplier effect. If you are one of the now unlucky millions of individuals who must depend on Social Security payments to feed yourself in the future, get ready to go hungry.
(Information is based on national data from the Elder Economic Security Standard Index developed by Wider Opportunities for Women and the University of Massachusetts, Boston.)
A change to the Chained-CPI is not a position that you as CEO of our nation’s largest and most influential senior’s organization should be advocating. Let’s call it what is and what it is not.
It is not a simple technical change that some of our Congressional leaders would have us believe. It is a fundamental and substantial cut in Social Security benefits, one that will reel with negative impacts to the millions of Americans who rely on it just to make ends meet.
In conclusion, you should be using your influence and leadership to question not only the proposed change to the CPI but also the greater issue of why some of our elected leaders are using Social Security benefits as part of a package to reduce the federal deficit.
Social Security is not an entitlement program as many elected officials propagandize.
It is a social insurance program.
It is financed by workers and their employers.
It has not contributed one single dime to the federal deficit, and quite to the contrary has allowed the ”balancing” of our federal books in years past by the lending of a substantial portion of its $2.6 trillion reserves to the Congress to cover its spending binges.
I expect more from you than what you have so far given to us in your article.
At The Elder Storytelling Place today, Ronni Bennett: An Important Message For All Blog Subscribers