Chained CPI for Social Security means forcing seniors, veterans onto food stamps

March 5th, 2013 | Alex Stone

If you follow this blog, you already know the Chained CPI – a proposed change to Social Security’s annual cost-of-living adjustment (COLA) – is really just backdoor attempt to cut Social Security benefits. A retiree who lived to age 85 would see a cumulative benefit cut of nearly $14,000.

The Congressional Budget Office estimates that such a cut would net the federal government $127 billion over the next ten years. That’s equivalent to 2% of the U.S. national defense budget¬†over the last ten years. But cutting earned¬†benefits will also mean higher costs. The CBO estimate also includes an increase in SNAP benefits (food stamps) of $2.8 billion over the same time frame:

Because SNAP benefits are calculated based on a formula that considers income, a decrease in income will increase SNAP benefits.

Since 2 in 5 seniors rely on Social Security for nearly all their income, it’s no surprise that cutting Social Security benefits by hundreds of dollars per year will mean they struggle to afford groceries.

income sources of seniors, 2010

2 in 5 seniors have an annual income at or below $20,000 – and 80% of that income comes from Social Security.

Switching to the Chained CPI will hurt millions of American retirees and veterans – the very people who have earned their benefits over a lifetime of hard work and/or military service.

So let’s call the Chained CPI what it really is: the “force seniors on food stamps” program – since that’s exactly what will happen if it’s implemented.

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Posted in Retirement Security, Social Security

Comments

  1. Winslow P. Kelpfroth says:

    In my shop, if the work flow slows down, a few of us have to go home for the day. When the woods dry out loggers have to find something else for a few weeks. When my grandfather farmed, a bad crop meant belt tightening until the next harvest. Everyone knows that reducing a benefit can be painful, but why should the social security beneficiaries not be subject to the same fluctuations in income as the rest of us?

    • The Chained CPI is a straight-out cut – and a permanent one, not a temporary “fluctuation”. But the larger point is simply this: It doesn’t have to be this way. Social Security is solvent for at least the next 20+ years, and longer, if we just “scrap the cap”.

      You mentioned what happens to people when work slows down. These days, when work slows down (or stops entirely) people have unemployment insurance. It’s funded by everyone paying in a little with each paycheck. Then, if you lose work, you can draw on that insurance fund to tide yourself over until you find another job. Social Security is an insurance program too. It’s designed for people to use after a lifetime of hard work and paying premiums, so they can have a somewhat dignified retirement. It also provides benefits to families (with children under 18) who have lost a spouse/parent, and people who have become disabled and can no longer work.

      Aside from the simple fact that there’s no need to cut Social Security benefits, there are also good reasons why cutting benefits is a bad idea. For one thing, it doesn’t actually help the nation’s fiscal outlook. Social Security hasn’t added a dime to the nation’s debt. Here’s another: millions of Americans aren’t in poverty because of Social Security – so cutting benefits means making more people poorer.

      That’s why cutting Social Security benefits makes no sense, and why the vast majority of Americans across the political spectrum don’t want to see benefits cut.

  2. Carol says:

    Chain CPI will cut benefits deeper than they want us to believe and is tied to payroll withholding so taxes will increase. Our president realizes chain cpi will hurt older seniors and is calling for a bump. They project only $127 billion in 10 years but it will be closer to $500 or $600 billion. Anytime congress and the president say it’s not a benefit cut or we are protecting social security they are preparing to raid the program. The money will sit on the shelf with the $2.7 trillion bonds. They are working in broad daylight so this may be a donation to the deficit. They have a problem understanding the concept, don’t spend it. Why is social security getting hands on when employees outside the program are not paying more? I believe $2.7 trillion is more than enough to contribute to the cause. Baby boomers partially prefunded their retirement but it is gone. They are paying around 11.54 percent withholding tax, will receive lower benefits and the taxes will increase. Wow!

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