Rep. Raul Grijalva (D-AZ)
President Obama has endorsed a plan to cut Social Security benefits through a so-called “chained CPI.” Today, Rep. Raul Grijalva (D-AZ), the co-chair of the Congressional Progressive Caucus, issued a statement saying he would “never support” the chained CPI, which is the cornerstone of the Obama deal’s changes to Social Security. Here’s his full statement:
“Federal law has always prohibited Social Security from contributing to the deficit. Any talk of shrinking the program to ‘save money’ is flawed from the start because Social Security is not part of the national budget in the same way as military spending – it’s paid for through a dedicated payroll tax separate from general budgeting.
“Some have suggested that Social Security benefits should be based on a chained Consumer Price Index (CPI), which assumes that when the price of one item rises, people buy something else – no matter how popular or necessary that original item might be. If this change goes into effect, Social Security benefits would stop reflecting the rising prices of popular goods.
“The average Social Security recipient rakes in a whopping $13,000 a year. If we pass chained CPI, projected annual cuts for a typical retiree would be about $560 a year by age 75, $984 a year by age 85 and $1,400 a year by age 95.
“The less money our Social Security recipients – including 9 million veterans – are able to spend, the less money goes to the businesses that create jobs. Chained CPI makes life harder for millions of retirees, weakens Social Security and doesn’t reduce the deficit by a penny. It’s a Beltway fig leaf that I will never support, and I call on my colleagues to make their feelings known as soon as possible before this becomes yet another piece of conventional wisdom that makes things worse.
“Lifting the cap on high earners paying into Social Security is a real fix that would make the program solvent indefinitely. If we want to talk about solutions, let’s talk about that, not inventing reasons to take money from American retirees.”
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joe the economist says:
“Federal law has always prohibited Social Security from contributing to the deficit.”
By Federal law, the payroll tax holiday added $103 billion in 2011 of dollar for dollar deficit spending. EITC, another deficit spending subsidy, cost $60 in 2010 alone.
joe the economist says:
“Lifting the cap on high earners paying into Social Security is a real fix that would make the program solvent indefinitely. ”
According to AP, completely eliminating the cap only addresses 72% of the 75 year shortfall. The 75 year figure is roughly 12 trillion dollars away from the ‘solvent indefinitely’ figure mentioned here.