A piece on NPR’s All Things Considered that aired Monday did little to enlighten listeners about a major change to Social Security rolling rapidly down the pike, an issue that may ultimately find its way into next year’s congressional races.
As those who follow this stuff has know for a while, the president’s budget, released Wednesday, calls for a big change in the way cost of living benefits will be calculated for Social Security recipients (as well as those who receive other government benefits, such as the Earned Income Tax Credit, aimed at low income Americans). It’s nickname: Chained CPI, for Consumer Price Index.
To review: The Chained CPI is a way to cut spending and raise revenue. It has been pushed hard by fiscal conservatives and the co-chairs of the president’s deficit commission, former Wyoming Sen. Allen Simpson and former Clinton chief of staff Erskine Bowles, as well as a small group of influential liberals who fear programs like Social Security could eventually crowd out spending on such things as poverty programs or infrastructure investment. Under Chained CPI, Social Security benefits would increase 0.3 percentage points less per year, on average, than under the current formula.
The problem? The slower increase in benefits compounds year after year, so that as a person gets older, the effect is greater. After 10 years, the cut amounts to three percent, and it continues to grow over time. That means the oldest of the old, who sometimes have used up most of their assets, will get the biggest hit. The advocacy group Social Security Works has estimated that the change could mean that an 85-year-old would have $1,139 a year less to live on—not an insignificant sum for people who may hav little money left at this stage of life. Here is a chart showing the loss of income the Chained CPI would bring (click to enlarge):
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The change, on the other side of the ledger, saves the government gobs of money. The Congressional Budget Office estimates that the new calculation method could produce $217 billion in savings over 10 years, with about $145 billion coming from cuts to Social Security and other benefits.
Until recently, the media have pretty much ignored the Chained CPI, and when they have done stories about it, they’ve mostly taken the view that it’s a “technical adjustment”—a characterization NPR’s Scott Horsley allowed the White House spokesman, Jay Carney, to make, without adequately explaining that it is, in fact, more than that. Overall, NPR’s effort on this big development provided the classic “he said-she said” treatment—a framing that is ineffective for a story of this importance and complexity.
Horsley did note that Carney said the president would seek special protections for the oldest seniors. It would have been good for Horsley to tell his listeners exactly what that means. It’s a “modest lump sum,” as The Washington Post described it—Obama’s proposal calls for a universal bump in benefits to the oldest beneficiaries. Still, Social Security advocates believe that you can only soften the blow so much, and that the new CPI would nonetheless hurt many low- and moderate-income people.
To some extent, NPR flirted with the “greedy geezer” meme about seniors and social benefits. Right after annoucing the president’s new budget, the story reported that “there are already protests about it from seniors and others who oppose reductions in spending for Medicare and Social Security.” That seemed to convey the notion the greedy geezers weren’t about to give up anything. After noting the change would result in smaller Social Security adjustments, Horsley moved on to the critics—both pro-Chained CPI and anti-Chained CPI—who Horsley said “are giving lawmakers an earful.”
On one side was Marc Goldwein, identified as from the Committee for a Responsible Federal Budget, a group that operates with money from the Peter G. Peterson Foundation. Peterson is a long-time critic of Social Security. Goldwein, who is often quoted on these matters, tried to make the wonk case for changing the CPI calculation, noting that the current calculation formula overstates the price increases that consumers actually pay, and “doesn’t have the ability to measure the difference between an apple and an orange or a tangerine.”
Aren't you missing some context? The proper question is whether CPI measure currently used is a more or less accurate measurement of inflation than the chained CPI. I don't claim to know the answer, but it should be answerable. If I've followed the debate correctly, the Democratic left argues that Chained CPI may be more accurate (as the Republicans and, now, Obama argue, but that the existing index more accurately reflects costs experienced by seniors.
#1 Posted by Jerry, CJR on Thu 11 Apr 2013 at 04:08 PM
Jerry,
Thanks for the question. I think Trudy does deal with it, in the last few paragraphs of the piece. She notes that the idea behind the Chained CPI is to better reflect how people substitute cheaper goods and services when prices rise. But that the problem for old people is that healthcare is such a huge part of their spending and they cannot substitute so freely in that realm. If you need a heart bypass, you can't say 'I'll take a hernia operation instead.' And the compounding effect of Chained CPI hits hardest on these oldest Americans. She argues that this ought to be more thoroughly covered and discussed.
#2 Posted by Mike Hoyt, CJR on Thu 11 Apr 2013 at 05:41 PM
Some questions that need answering from those in charge:
http://digbysblog.blogspot.com/2013/04/a-few-simple-questions.html
"No one outside of MSNBC and the progressive blogs have even bothered to ask these questions. Why not?"
#3 Posted by Thimbles, CJR on Fri 12 Apr 2013 at 01:40 PM
You mention the cost of healthcare for the elderly but no one seems to mention the rent needed to be paid by many seniors. Many of them never bought a home or had to sell the one they had and rent a small apartment which takes at least another 1/3 of that $1150+. That doesn't leave much for food, transportation, necessary purchases above food that would decimate that allowance. As was mentioned in Editorial in NY Times today, the SS amount needs to be raised, not lowered for seniors. Since when is $27,000 a rich man's income to make him or her so "greedy"? No politician should be telling the seniors that they need to lean on their children and grandchildren. Some don't have any; some are worse off than their parents or grandparents; others live 1000 miles or more away from each other, etc. etc. These factors should not require the seniors to live on less but to have the politicians raise the cap of $106,500 closer to $200,000 or better. Those making that or more will never miss it. Most never look at their pay tab anyway to see the amounts taken out. It goes straight to the bank. Finally, why should the seniors and poor be repaying the debt that the financiers and mortgage companies brought upon themselves. The seniors didn't bring them down. The greedy financiers did it to themselves. Make them pay the taxes to help bring it down.
#4 Posted by Trish, CJR on Fri 12 Apr 2013 at 05:52 PM
U know I get really sick and tired of hearing our government's politicians and almost all of the media refer to Social Security as some sort of benefit or handout, if U will, similar to what is called welfare. Everyone seems to forget originally SSA was each person's individual savings account, so to speak, for when that person attained retirement age. The Federal Government is the ONE THAT MESSED WITH IT, who put all accounts into a GENERAL FUND and then they used much of that fund up for whatever they wanted to use it on. One other thing is almost all who talk about SSA seem to forget that every working person who paid into it along with their monies also went money paid into those individual accounts (now general fund) by those person's EMPLOYERS. Les lescot@sbcglobal.net
#5 Posted by Les, CJR on Fri 12 Apr 2013 at 06:09 PM
Grocery line chat about Obama started when the checker told me I’d found some really good bargains (half off on some items near expiration date) — I said, "It’s my start on dealing with the Chained CPI. It’s substituting something cheaper for what you can’t afford any longer, and these are good but I can’t buy them at full price.”
I sort of –for me– briefly explained what Obama was proposing and that the effect would be small but compounded cuts to SocSec every year, building to larger amounts as we got older. Everyone who was in the 2-3 checkout lines to either side was listening intently. The checker said she is so angry, then under her breath said “This is from Obama?” I said absolutely; the Repubs have wanted to make cuts ever since FDR proposed SocSec, but Dems always fought them off. Until now, when this Dem prez is DOING IT. I said I want SocSec to be there for all our young people.
I added that ever since the mid-80′s everyone one who is eligible for SocSec has been paying extra in to cover the Baby Boomer bulge, but that money was used for tax cuts for the wealthiest and for wars, among other things. First time we’ve ever gone to war without paying for it.
Then one woman said, well, we needed to go after Saddam after what he did to the Twin Towers.
I said we went after the wrong guy: Saddam and the people of Iraq had no WMD and had absolutely nothing to do with 9/11…the 9/11 attackers came mostly from Saudia Arabia and Yemen. Bin Laden was in Afghanistan.
The checker looked at me and said “I don’t know what to believe.”
Obama is destroying the belief of the basic Dem voters in the very meaning of the party.
#6 Posted by jawbone, CJR on Fri 12 Apr 2013 at 07:13 PM