The "chained" CPI cost-of-living formula—which would result in a painful cut in benefits for Social Security recipients—was touted as good policy by White House National Economic Council Director Gene Sperling in an "Ask Me Anything" Reddit chat yesterday.
Calling it "reform" (let's be clear, this is a cut), Sperling claims "chained" CPI is a more accurate formula to calculate cost-of-living adjustments (COLAs). No, no.
As blogger Digby points out:
You know, I have never understood the logic that says changing to this new cost of living formula more accurately reflects the real cost of living, but don’t worry we will fix the part where it hurts the poor, veterans and really old people. The “real” cost of living should be the real cost of living, no? If it isn’t a cut, why would these people be hurt?
The fact is that Social Security is already inadequate for millions and millions of people, and not just the poorest of the poor and veterans. And the losses of the past decade have taken their toll on many more millions who are about to go into the system. For reasons that I cannot completely understand, they want to make it worse. There’s just no other way to think about this.
The current formula used to calculate Social Security COLAs is already inadequate as seniors spend a disproportionate amount of their modest fixed incomes from Social Security on health care.
AFL-CIO Director of Policy and Special Counsel Damon Silvers responded to Sperling on Reddit:
“Chained" CPI is a Social Security benefit cut, plain and simple. One of the key things that makes Social Security a real provider of economic security is that it has a Cost of Living Adjustment (COLA) that protects the value of benefits as time passes. Chained CPI is a Washington trick to cut the COLA by changing the way inflation is calculated.
Chained CPI is also a cut aimed at the most vulnerable people in the country—people with disabilities who get long-term Social Security benefits and those who live the longest and receive Social Security benefits the longest.
America elected President Obama to protect us from bad Washington ideas like Chained CPI, not to advocate for them.
The Center for Economic and Policy Research (CEPR) points out "chained" CPI is not only a benefit cut on already modest Social Security benefits, but also a stealth tax increase on working people, especially middle- and lower-income families.
In fact, in just 11 years, a "chained" CPI would wipe out the 2012 COLA.
As we've written before, 55% of voters oppose the "chained" CPI. A recent poll, Strengthening Social Security: What Do Americans Want? from the National Academy of Social Insurance (NASI), highlights a large majority, 64%, thought the COLA should be increased to better protect seniors and other beneficiaries from inflation and rising prices of food, utilities and other necessities.
There is no "cover" for elected officials, conservative or liberal, who want to cut Social Security benefits. Voters across the political spectrum hold intense beliefs, as evidenced by numerous polls, that lifelines like Social Security and Medicare are promises that should not be broken.
Working families are calling on Congress to protect Social Security, Medicare and Medicaid from benefit cuts (i.e., raising the retirement age and the "chained" CPI), repeal the sequester and close tax loopholes for corporations and the wealthiest 2%.