What’s wrong with a measure that would reduce federal spending by about $300 billion over 10 years? The answer, of course, depends on whom you ask.

The current push by conservatives to reduce the national debt and the budget deficit by cutting spending is largely focused on two of the three largest items in the federal budget: Medicare/Medicaid and Social Security. (The third is defense.) One of the proposals under consideration would reduce Social Security payments by estimating smaller increases in the cost of living.

Currently, the Consumer Price Index (CPI-W) determines the annual Cost Of Living Adjustment (COLA), which usually increases the Social Security benefit to keep pace with inflation. The CPI-W represents changes in the prices of all goods and services purchased by urban households for their consumption. If the price of a commonly used item increases, the CPI-W reflects that increase.

The Chained-CPI proposed by the reformers of Social Security differs in that it takes into account the availability of a lower-priced substitute. If, for example, you love apples, and are used to buying some every week, what do you do when their price spikes because a drought has greatly reduced the crop? Do you keep buying apples regardless of cost, or do you switch to pears and bananas until the price of apples comes back down? Since most people, and especially seniors on fixed incomes, would eschew the pricey apples and buy cheaper fruit instead, the C-CPI allows for that and calculates a lower increase in the COLA.

Source: National Women's Law Center

That sounds reasonable until you realize that seniors and people with disabilities have spending patterns that differ from those of other segments of the population. They spend substantially more on health care, a sector of the economy whose cost continues to rise and which offers very few lower-priced alternatives. According to the Bureau of Labor Statistics, the cost of health care has risen an average of 5.5 percent per year since the 1970s, while non-medical costs have grown by an average of 3.1 percent. The CPI-W understates this inflationary effect on seniors, but the effect of the C-CPI would be considerably worse: it would slow the rate of increase of Social Security payments such that beneficiaries would collectively receive an estimated $108 billion less over 10 years than they would with the CPI-W.

Any reduction in Social Security payments would affect women more severely than men. In the first place, there are more women in the program. Fifty-seven percent of all Social Security beneficiaries age 62 and older are women, and because they live longer, they represent approximately 69 percent of all beneficiaries at age 85 and older. Second, women earn less than men, so they receive smaller benefits. (In 2008, the average annual Social Security income received by women 65 years and older was $11,377, compared with $14,822 for men.) Elderly women are also less likely than men to have significant income from other sources. In 2008, Social Security comprised 50 percent of the total income of unmarried women age 65 and older, but only 38 percent of the income of unmarried elderly men. The Social Security benefits received by 46 percent of all unmarried women represented 90 percent or more of their income.

Anita Black is in her 80s, and she depends on Social Security. Referring to the benefit cuts being offered in exchange for votes to raise the debt ceiling, she said, “There is nobody [in favor of the cuts] who is willing to even acknowledge that they’re not looking at the impact that’s going to occur.” She knows that “the Social Security fund is still collecting money. As fast as the fund collects the money, the government comes along and takes the money out and gives us in return Treasury bonds. Which are paying no interest. So don’t tell us that we’re taking the money out, that we’re costing the budget money. We didn’t cause the debt,” she said. “You’re screwing us.” Black was recently notified that her housing cost has been raised by 10 percent. “Where am I supposed to get the extra income to deal with the decrease in benefits while my cost of living is increasing?” she asked.

The C-CPI in particular would adversely affect women. Its effect is compounded, so that the decrease in the annual benefit would accelerate over time. Since women live longer, they would experience deeper cuts in their benefits. The Social Security payment is a larger proportion of their income, so a smaller benefit would be more significant.

“This proposal is a stealth attack on the economic security of older women,” said Joan Entmacher, vice president for family economic security at the National Women’s Law Center. “That is a shameful way to solve our nation’s deficit problem.”

A. Barry Rand, chief executive of AARP, also assailed the C-CPI. “Let me be clear,” he said, “AARP will not accept any cuts of any kind to Social Security as part of a deal to pay the nation’s bills, and specific proposals such as the chained CPI should not be considered as part of the debt ceiling or deficit reduction negotiations.”

Why not find the money elsewhere? Why not pare the considerable bloat from the defense budget? Ah, but then corporate America would be the loser. Seniors and the disabled don’t have millions to contribute to election campaigns or lobbyists to represent their interests.

Not all economists agree that the national debt and the annual budget deficit are nearly so scary as conservatives make them out to be. The federal debt, Paul Krugman points out, is a substantially smaller percentage of Gross Domestic Product than it was at the end of World War II. Like other economists, Krugman also believes that “running big deficits in the face of the worst economic slump since the 1930s is actually the right thing to do. If anything, deficits should be bigger than they are because the government should be doing more than it is to create jobs.” And deficit spending and increases in the debt limit were regularly approved by the Republican majority over the last decade.

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  • idrar yolları enfeksiyonu September 5, 2011 at 3:34 am

    This would not even be under discussion…IF they had not taken the money for OTHER things.
    Now they want to take more!!
    Throw the weak,infirm and old under the bus…I know you want us to DIE

    Reply
  • Helen Ehrhardt July 18, 2011 at 5:30 pm

    My husband and I are both on social security and my husband has lung cancer. I am a diabetic and have c.o.p.d. We are both scared. If they take away our social security what are we going to do. It is not fair we worked all our adult lives and payed into SS. so when we needed it it would be there and now they want to take it away. ITS NOT FAIR

    Reply
  • gdloops July 13, 2011 at 12:35 pm

    Disgraceful to put our senior citizens under the bus. For what? Bought politicians catering to the wealthy thru lobbyists for maintaining greedy gov’t. contracts under the Dept. of Defense and other covert depts. for the cover of supporting our war efforts. Instead of going for SS & Medicare, look to the big 3rd (Defense). Its name is misleading the public. It is major waste and criminal.

    Reply
  • Anita July 13, 2011 at 12:16 pm

    I am about 18 years from the SS full-benefit age, so I’m no spring fowl (or even a summer fowl). Having said this, this generation of elders will be the first one that says collectively, “ME FIRST!” In my history readings, parents typically sought to leave his/her children better off, but this generation will leave their childrens’ generations much worse off, all the way beyond their great-grandchildren. The reality is this: Too many people fed at the trough for far too long. Elders today may say, “I paid into it! I deserve it!” But at the 1-2% that you paid into it back 30-40 years ago from wages that were much lower — well, those forced-savings into SS cannot, in any way, create the cash flow necessary to facilitate the modest means you now obtain from SS. In short, you’re getting more out of SS than you paid into it. It’s a Ponzi scheme, and the elders today are unwittingly aiding and abetting the political class by militantly screwing up their faces like children and threatening, “Not MY social security, else I’ll vote you out!” Someone, somewhere, sometime, must take a stance to pare down this boondoggle called entitlement spending (no matter its source — even SS); our political class has been delaying the day of reckoning for 30 years, and today’s elders (as well as yesterday’s elders) let them by throwing elder-tantrums whenever changes were proposed. The 80-year old in this article may indeed be strapped by a proposed reduction in her social security; would she prefer to be strapped, or to have her children be completely denied because the funds JUST ARE NOT THERE! Face up to that! No matter what the politicians of yesterday promised you, they are not the ones who have to execute policy today. (And, in fact, that’s part of the problem: Yesterday’s politicians could promise everything to get your vote, knowing he/she did not have to execute on the promise. As proof, no president — not even this one — has abided by the 10-year budget put forth by the prior president in the year the current president was elected.) If today’s politicians are attempting to do something about this truly mind-numbing mess, then LET THEM. Finally, go back and read the historical records when this program was implemented. The average life expectancy was mid-60s; it was intended to be a supplement to private savings; it was intended for those who worked, not those who were (for example) disabled. Today, life expectancy is 75-80; very few of the recipients who screm the loudest have much in the way of private savings; and we give SS to the disabled, to the children of the deceased, to immigrants. Politicians may have created this mess, but we (as voters) helped by always voting for ourselves more goodies today for someone else to pay for tomorrow.

    Reply
  • David July 13, 2011 at 9:40 am

    Social security recipients have already been hit hard by the government. First,years ago, congress STOLE funds.. billions.. . “Borrowed” money but never repaid it. They also raised the age on most boomers retirements. No doubt you should be getting a COLA this year based on food and fuel increases. but they eliminated them from the formula. Don’t take cuts…vote em out! They had over sixty years to plan for the boomers …but just spent like drunken sailors on many stupid things.

    Reply
  • James Collins July 12, 2011 at 7:17 pm

    if you wish to moderate “sons of beaches”… how about “sons of unmarried women,” ????

    Reply
  • James Collins July 12, 2011 at 7:10 pm

    Social Security recipients like myself tend to vote…often…regularly. If the sons of beaches in Congress and this adminstration do not understand that, they will be in for a big surprise in 2012…some of us (not me) are well enough off to survive without SS and legitimate COLAs…so, how about a “Means Test” to deduct SS payments to those (even tho they have paid for the benefits) who fail by a long shot from falling below the poverty line? That’s just an afterthought from a former liberal/progressive turned conservative, turned SS recipient.

    Reply
  • Nancy Goodwin July 12, 2011 at 2:35 pm

    It is OUTRAGEOUS, that they would even consider touching Social Security or Medicare, when there are so many other ways to get monies by stopping giving FREEBIES to the ILLEGALS, stop giving to FOREIGN COUNTRIES that hate us, like MEXICO, EGYPT, LIBYA PAKISTAN, ETC. ETC. STOP OUR SPENDING RIGHT NOW OF OVER $2 BILLION PER DAY, FLYING OUR PLANES OVER LIBYA ETC. STOP THE PORK WASTES, THE GOVERNMENT PAY RAISES THAT OBAMA JUST GAVE, STOP OBAMA’S SPENDING ETC. ETC. I am sick & tired of this crap of always taking from the SENIORS. Yes, were back again to just LETTING THEM DIE EARLY.

    Reply
  • Rosemarie July 12, 2011 at 11:52 am

    As a woman in my mid-fifties, I feel the pain of those women who rely on social security as their sole income. Someday, that number will probably include me, however, changes need to be made now. I fully realize that the layoffs of the previous years are resonsible for many people retiring at 62. If you are laid-off and 60 your chances of being hired at any job, much less a comparable job to the only they lost, are slim and none. Social Security is probably your only option.

    However, if you are lucky enough to keep your job, i would have to wait until age 67 and 9 months to collect full benifits. Why not pospone my eligiblity for Medicare until that time? That alone would save millions. Also, since Reagan changed how old I have to be to get full benefits, why is early retirement still 62? And if we get rid of Obamacare, we can save Trillions.

    On other things that could go, do we really need Fannie Mae and Freddie Mac? You can either afford to buy a house or you can’t, but we can’t afford to keep bailing out Banks that keep doing the same dumb things. And why are we giving 84 million dollar grants to educate undocumented farm labor at the same time we are cutting education spending to our schools and colleges.

    Bottom line, each and everyone of us, has to live on a budget.
    We have to decide what we can afford and what to give up. The time has come for the government to do the same thing, the government needs to live within its means and raising taxes is just not going to do it.

    Reply
  • maylane22 July 12, 2011 at 11:17 am

    This would not even be under discussion…IF they had not taken the money for OTHER things.
    Now they want to take more!!
    Throw the weak,infirm and old under the bus…I know you want us to DIE

    Reply
  • glenn July 12, 2011 at 7:51 am

    what is wrong with removing the cap from social security, and in a couple of years it will be solvent. then let the baby boomers retire at 62 or when ever at no reduced benifits which in turn will create many jobs for the younger generation.

    Reply