Negotiations to avert falling off the ‘fiscal cliff’ before the end of the year have compelled President Obama to agree to cuts in Social Security payments.
Included in the spending cuts portion of the potential deal is the use of a formula called the chained consumer price index, or chained CPI, to calculate cost of living adjustments to Social Security payments.
With the chained CPI, Social Security payments would decrease over time, instead of going up with cost of living adjustments as they currently do. There are also tax increases associated with the chained CPI that hit low and modest income seniors the hardest.
Ezra Klein describes the Social Security cuts in the Washington Post:
All told, chained CPI raises average taxes by about 0.19 percent of income. So, taken all together, it’s basically a big across-the-board cut in Social Security benefits paired with a 0.19 percent income surtax. You don’t hear a lot of politicians calling for the drastic slashing of Social Security benefits and an across-the-board tax increase that disproportionately hits low earners. But that’s what they’re sneakily doing when they talk about chained CPI.
Since Social Security is funded by payroll deductions, it does not contribute to the federal deficit.
“The opponents' tactic of setting up Social Security as a false culprit in the deficit problem diverts attention away from the real causes of the deficit -- two wars not paid for, the Bush tax cuts for the wealthy, and the costs associated with the economic crisis, such as the Wall Street bailout,” according to the Huffington Post.
Attacks on Social Security by Republicans is a long-standing tradition. Since the program’s inception, the GOP has been trying to dismantle the enormously popular program to no avail. Now that they have learned to use it as a bargaining tool in budget negotiations and debt ceiling blackmail, the Social Security payments that so many seniors depend on to survive are about to be hacked.
The longer someone is on Social Security, the less money they will get each month, if the chained CPI is part of the final fiscal cliff deal.
Seniors may face further cuts to Social Security when Obama has to negotiate with Republicans in upcoming debt ceiling negotiations.
House Speaker John Boehner also is trying to get Obama and the Democrats to agree to raising the eligibility age for Medicare from 65 to 67. The move is not expected to save much money when it comes to reducing the deficit, but it will cost seniors more for health care, or force them to stay in the workforce longer for employer provided health insurance.
People who voted for Republicans in the 2012 elections should not object to smaller Social Security checks, despite the fact that Obama, a Democrat, has put them on the table. He would not have done so if Republicans had not demanded it.
Conservatives have historically been staunch opponents to entitlement spending and have stepped up their efforts to cut Social Security and privatize Medicare with vouchers since the Tea Party was swept into power in 2010. Ironically, their congressional victories were mostly attributed to their opposition to health care reform in 2009. Now they seem more determined than ever to cut off access to health care for millions by slashing Medicaid, which funds about half of all nursing home care for seniors, and raising the Medicare eligibility age to 67.
Democrats should be disappointed in President Obama’s willingness to abandon his promises to protect Social Security. Congressional and Senate candidates will surely face devastating losses in the next election if they go along with a deal that takes money out of seniors’ pockets every month, while simultaneously raising their taxes.
Obama might think that raising taxes on the rich is the Holy Grail of fiscal cliff negotiations. But there are some 40 million Americans who would likely disagree.
The average Social Security payment is about $1,230 a month. If Obama signs a deal that includes using a chained CPI to reduce payments over time, for seniors struggling to make ends meet, life is about to get harder.