[Part of this is wrong. Initial Social Security benefits are based upon wages. They aren’t set and then adjusted upward by the CPI. Sorry for this error. -FM]
I’m getting sick of having to talk about this stuff. The chained-CPI change is even worse for future retirees than it is for current retirees. According to Greg Sargent at The Plum Line, the Center on Budget and Policy Priorities is willing to go along with the chained-CPI madness “if it is offset with a small increase in Social Security benefits for longtime beneficiaries.” Remember: the CBPP is a liberal group. But does that also mean that they are brainless?
If we use chained-CPI for Social Security, it will mean that the cost of living adjustments will be at least 0.3% too low every year. For current retirees, that means that in ten years, they will see about a 3% reduction in their real (inflation adjusted) benefits. This comes to roughly $100 per month. This is important and we should not accept it. The CBPP is suggesting that we adjust very old retirees’ benefits up. There are two problems with this.
First, if we know that the chained-CPI is wrong—that it won’t allow benefits to keep up with inflation—why are we doing it? The answer, as I’ve already discussed, is that those in power in Washington want to cut benefits. But they are cowards and don’t want to be seen as doing so. So they use this convenient backdoor to gut Social Security.
The second problem is that this will affect future retirees even more. Think of the poor sucker retiring 75 years from now. His Social Security check will be worth about half what a current check is worth. There is nothing that the CBPP is proposing to fix this.
Can it be possible that Democrats don’t understand that not increasing Social Security benefits with the rate of inflation is just a long term plan to destroy the program? The Republicans have tried for years to destroy the program in other ways. They have failed. This way is sure fire, it just takes a long time. Accepting chained-CPI is like a time bomb that conservatives want to put into law.
And note: this doesn’t just affect Social Security. It affects everything. In particular, it will push people with low incomes into higher tax brackets. So it is (yet another) regressive tax increase. This is madness!