Social Security COLA Cut: A Benefit Cut Affecting Everyone

[t0dd]

Some politicians in Washington are preparing to cut your Social Security COLA for good – even after two years without getting a cost of living adjustment. This COLA cut has an obscure name– the chained-CPI – but it would do real damage by changing the formula used to calculate the COLA. The important thing to know is that this change would cut the benefits of all beneficiaries, including current retirees, disabled workers, and others – even after politicians promised repeatedly that any changes to Social Security would not affect current beneficiaries. The COLA cut is a real threat to the financial security of every American who does currently or will rely on Social Security

The Congressional Budget Office (CBO) estimates that switching to the chained-CPI could save the government $208 billion over ten years by reducing Social Security, veterans and other benefits, and by increasing revenues. More than half of this amount – $112 billion – would come from Social Security alone.

These earned benefits would be taken directly from beneficiaries, as the chart above shows.
The average earner retiring at age 65 would get a $560 cut each year at age 75, and an almost
$1,000 cut by age 85. By age 95, when Social Security benefits are probably needed the most,
that person faces a staggering 9.2 percent cut. The chained-CPI will cut $1.6 trillion over Social
Security’s 75-year valuation period – mainly from the oldest of the old, primarily women and
disproportionately poor.



http://strengthensocialsecurity.org/sites/default/files/CPI%20fact%20sheet%20with%20graphs%207-1-11%20FINAL.pdf

...
But speaking at a press conference shortly after the meeting with her caucus broke up, Pelosi didn't rule out changing the way the CPI is measured. She did say that any savings that were generated for the federal government as a result would have to be reinvested in the Social Security program. Pelosi also said it's possible that the move could be phased in over time, accompanied by protection for the poorest Americans.

"It would have to be something that would be put on the table ... that would address Social Security," Pelosi said. Not all lawmakers view it as a benefit cut, she said.
http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201107081505dowjonesdjonline000464&title=pelosi-reassures-house-democrats-inflation-measure-switch-not-likely

[DJ13]

1. Are the politicians in DC going to make their own COLA's based on the chained CPI?

I didnt think so.

[Xipe Totec]

2. Now renamed Social Security Kool-Aid nt

[leveymg]

3. The Chained-CPI assumes the availability of cheaper substitutes for all goods in all areas, and

bases its calculation of price inflation on the cheapest substitute that is available anywhere.

Chained-CPI -- Chained Consumer Price Index for All Urban Consumers (C-CPI-U) -- is like double-plus-good CPI that assumes that all consumers in all markets can immediately substitute the cheapest possible goods in all categories. This assumes a lot, such as the availability of cheaper substitutes. Not very realistic.

The present CPI measures the prices for each of the 8,018 item-area combinations (211 item categories X 38 geographic areas) are averaged together to form 8,018 basic indexes. It lags price changes for all substitutes by two years to account for delays in availability and adoption of the cheapest substitute.

[ChrisBorg]

5. A change from top shelf gin to bottom shelf gin would show no chained CPI

Until bottom shelf gin cost as much as top shelf gin.

Great.

[leveymg]

6. Bartender, set my friend up. He'll have the bathtub gin as he's past the point where he'll

notice the difference.

:party: :spray: :beer:

[Warren Stupidity]

4. no we've been told that the cut isn't a cut or it is only a $0.14 cut

or maybe that was $4.00 and that it is just a fake out to fool the republicants to buy into The Great Big Deal or some other such bullshit.

[On the Road]

7. But SS Taxes are Collected Based on Wages

and Social Security tax increase at the rate that wages increase.

If payouts are reduced, what happens to the extra taxes? The fund already has $2.6 trillion. Is it just going to sit there? Because if any politician tries to monkey with that fund based on the theory "oh, that money has already been spent," all they're doing is stealing the pension fund.