You may have been reading about the current proposals to switch Social Security cost-of-living adjustments (COLAs) to be based on “chained CPI”. Perhaps you’ve read things like “oh, that’s less than a 1% cut – no big deal”.
Well, what the heck is a chained CPI?
Basically, it’s a way of measuring increases in prices that assumes that people buy less of something if it gets more expensive. Therefore, some price increases are not counted.
It’s a small change in any given year, but a big change over time due to compounding. For example, here’s how a new retiree would see their Social Security payments cut over time:
Over 30 years, their payments would be cut by almost 10%. Many millions would be thrown into poverty.
Here’s a TPM article with more info: http://tpmdc.talkingpointsmemo.com/2011/07/chart-of-the-day-the-stealth-social-security-cut-in-debt-talks.php
Elected Democrats and Republicans alike are latching on to switching Social Security to used chained CPI for COLAs, in order slash benefits in a way that’s not easy for the average person to understand: this way we won’t realize it’s a big cut. But it is a big cut. And it’s an unneeded cut: unless the economy is about to get much worse and stay that way, Social Security is fully funded as far as the eye can see.
Note that even the current formulas for calculating COLAs are already broken – there’s been no COLA adjustment for two years, but prices have obviously gone up quite a bit. Using chained CPI will squeeze Seniors even more.
If you haven’t done so already, please call your elected representatives in Washington and tell them that how you feel about cutting Social Security through the stealth chained-CPI scheme. It takes five minutes, very simple, and your voice can be a big help. Here’s how to find their phone numbers in one convenient spot:
http://www.contactingthecongress.org/
Thanks!
