President Obama has endorsed a plan to cut Social Security benefits through a so-called “chained CPI.” Today, several major progressive organizations denounced this proposed deal and announced their strong opposition to it.
The Progressive Change Campaign Committee:
“This proposed deal will cut Social Security benefits. Any deal that cuts Social Security, Medicare, or Medicaid benefits is unacceptable — and progressive organizations join with the overwhelming majority of Americans who oppose it.” – Stephanie Taylor, Co-Founder, PCCC
“MoveOn members overwhelmingly oppose cuts to Social Security, Medicare, and Medicaid benefits, and they’ve made clear that they would see any fiscal agreement that cuts such benefits as a betrayal that sells out working and middle class families — whether the cuts come via a chained CPI, increased Medicare eligibility age, or in some other form. If such a deal were proposed by the President and Speaker, MoveOn members would expect every Senate and House Democrat to do everything in their power to block it. Senate Majority Leader Reid would play a crucial role, as MoveOn members would count on him and other senators to remain true to their repeated promises to keep Social Security benefits off the table.” — MoveOn.org Executive Director Justin Ruben
Social Security Works:
“Almost every elected official just spent an entire election season saying they wouldn’t cut the benefits of those 55 and older. The truth is the chained CPI hits everyone’s benefits on day one. It hits the oldest of the old and disabled veterans the hardest. If it wasn’t being bandied about as being ‘on the table,’ I would guess that it was created as an office joke to see who could create the most noxious and offensive policy possible.” — Social Security Works Executive Director Alex Lawson
“It would be a massive betrayal if the White House went back on its promise to both protect Social Security benefits and end the Bush tax cuts for the wealthiest two percent of Americans. President Obama will have even more leverage in January when progressive champions like Elizabeth Warren and Tammy Baldwin arrive on Capitol Hill, so no deal is better than a bad deal that throws seniors under the bus and makes permanent Bush’s tax cuts for the richest Americans.
“When it comes to the fight necessary to make his campaign promises a political reality, the president has said it’s up to us to ‘make him do it. We’re putting the president on notice that we will fight to stop any deal — including the one on the table right now — that goes back on his promise to oppose cuts to Social Security benefits and to end the Bush tax cuts for people making over $250,000 a year.” — Credo Action Executive Director Becky Bond
Leadership Conference on Civil and Human Rights:
On behalf of The Leadership Conference on Civil and Human Rights, a coalition of more than 210 national civil and human rights organizations, we urge you to strongly resist any proposal in the year-end budget negotiations that would cut benefits to Social Security, Medicare, or Medicaid. These programs are a cornerstone of our nation’s health care and retirement systems, and a promise made to future generations that must be preserved.
We are particularly troubled by reports that President Obama and Speaker Boehner are considering the adoption of a chained consumer price index (“chained CPI”) to calculate the cost-of-living adjustment (COLA) for Social Security benefits.
According to the Center for Economic and Policy Research, using the chained CPI would cause benefits to decline over current rates by 3 percent after 10 years, about 6 percent after 20 years, and close to 9 percent after 30 years.
While the chained CPI may be a more accurate tool for measuring inflation among some populations, because it accounts for substitute goods that consumers may use in
the place of goods that have become more expensive, this is not the case with respect to retirees. As the Bureau of Labor Statistics and other economists have shown, seniors spend a significantly greater amount of their money on housing and health care than the rest of the population, expenses that increase faster than other costs and that are more difficult to substitute with cheaper alternatives.
Because the adoption of the chained CPI to Social Security would have a disproportionate impact on the oldest and poorest retirees, the Bowles-Simpson Fiscal Commission and others have called for increasing benefits after a period of 15
to 20 years. This so-called “bump-up,” however, would provide little meaningful relief. The National Women’s Law Center estimates that for the typical single elderly woman, the bump-up would only restore benefits to current-law levels for two years. Prior to and following this bump-up, benefits would continue to lag behind the pace of inflation. We are also greatly concerned that negotiators have yet to explicitly rule out any proposal that would increase the age of eligibility for Medicare. This would be a remarkably harmful and counterproductive approach. While it would result in a net federal savings, those savings would be greatly outweighed by cost increases borne by individuals (who would have to seek coverage from other sources), their employers (if they are still working), and state governments (which would incur additional Medicaid costs). The Kaiser Foundation has estimated that if this proposal were in effect in 2014, it would generate $5.7 billion in net federal savings – but it would result in $11.4 billion in higher health care costs overall.
For these reasons, we urge you to oppose any budget deal that includes a chained CPI or an increase in the Medicare eligibility age. — Wade Henderson, President & CEO and Nancy Zirkin, Executive Vice Preident
“Adopting the chained consumer price index for Social Security benefits will take $112 billion out of the pockets of current Social Security beneficiaries in the next 10 years alone, and is neither fair nor warranted.
“Social Security is currently the principal source of income for nearly two-thirds of older American households, and roughly one third of those households depend on Social Security for nearly all of their income. Half of those 65 and older have annual incomes below $18,500. Every dollar of the average Social Security retirement benefit of about $14,800 is absolutely critical to the typical beneficiary.
“The Chained CPI is a stealth benefit reduction that will compound over time and cut thousands of dollars in retirement income for current beneficiaries. A typical 80-year-old woman will lose the equivalent of 3 months worth of food annually. The greatest impact of Chained CPI would fall on the oldest, eventually resulting in a cut of one full month’s benefit annually. This dramatic benefit cut would push thousands more into poverty and result in increased economic hardship for those trying desperately to keep up with rising prices.” — AARP Executive Vice President Nancy LeaMond
The National Organization of Women:
As President Obama reportedly is poised to bow to outrageous Republican demands to balance the federal budget on the backs of middle-class and lower-income families, NOW urges Congress to reject this unjust path.
The president is reported to be willing to support cruel cuts in Social Security benefits in the form of a “Chained CPI,” a more stingy formula for calculating cost-of-living increases in Social Security benefits (the COLA), in order to avoid going over the so-called “fiscal cliff.”
Using the Chained CPI to calculate the Social Security COLA would reduce the value of benefits by about 0.3 percent each year. That doesn’t look like a lot, but it really adds up over time. According to the National Women’s Law Center, by the time a woman reaches 80, the cut in the value of her benefits would be equivalent to the cost of a week’s worth of groceries each month. By 95, it’s about two weeks.
Adding insult to injury, the Chained CPI is a less accurate measure of the actual inflation faced by retirees because it ignores their higher health care expenses.
The Chained CPI particularly hurts women because they live longer than men on average and, after a lifetime of unequal pay, have less savings for retirement and rely more heavily on Social Security to make ends meet.
The hope that conceding to extremists on the Chained CPI will somehow protect against demands for cuts in Medicare and Medicaid is dangerously unwise. Even though Republicans are threatening to use the debt ceiling to get their way, we know from experience that giving in to hostage takers doesn’t make us safer or better off — it just emboldens them for the next round.
The Chained CPI is a bad deal for women. NOW calls on all in Congress who campaigned on promises of protecting Social Security, Medicare and Medicaid to honor your promise and reject this deal. – President Terry O’Neill
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