President’s Obama’s budget – expected to be released later this week – will likely include a cut to Social Security known as the Chained CPI.
The Chained CPI would change the way inflation in calculated for Social Security benefits, reducing cost of living adjustments by about 3% per decade. For the average Washingtonian who receives just $13,468 per year in Social Security benefits, that’s more than a $4,000 cut over their first decade of retirement. At age 90, the cumulative loss would be more than $25,000.
This cut would be harmful to seniors, veterans, disabled Americans, and surviving spouses and children who receive Social Security benefits, but it will also take a toll on small businesses and our local economy.
Social Security benefits are also counter-cyclical, and helped prop up our economy during the depths of the Great Recession. While 401(k)s and home equity were plummeting, Social Security never missed a payment, and those benefits were pumped directly back into small businesses and the local economy. It’s likely that many more small businesses would have shut their doors if Social Security were subject to the same volatility as Wall Street.
Small business owners understand just how important Social Security is to business success, as well as their own retirement. In fact, a February 2013 poll by Small Business Majority found that 80 percent of small business owners oppose cuts to Social Security to reduce the deficit.
Ongoing uncertainty and weakness in the private retirement system makes a strong case for increasing Social Security benefits, not cutting them.