At last comes a story in a major news outlet that explains in people terms what exactly the Chained CPI will or won’t do for the family budget. The New York Times deserves a CJR laurel for its Saturday “Your Money” piece by Tara Siegel Bernard who showed how the alternative method of calculating cost-of-living adjustments for Social Security benefits will impact the monthly payments for those who receive them.
As we’ve noted, until now the saga of the Chained CPI has been a tale told–mostly by bloggers and the Beltway elite press corps–as a necessary feature of some grand bargain the president and the Republicans may strike. The president’s budget calls for a switch to the Chained CPI in 2015 that will result in smaller monthly benefit adjustments that will eventually compound over time, hurting the oldest of the old at a time when their savings and assets are often depleted. The advocacy group Social Security Works estimates that this change could mean an 85-year-old would have $1,139 less a year to live on. This–the people story–has, as I’ve written before, been missing in coverage.
Bernard’s piece is different–maybe because it’s billed as a column and not a news story. For one thing, it’s framed from the point of view of those who are hardly big supporters of the change; in other words, not the Fix the Debt crowd, the investment community, or organizations with ties to Social Security foe Peter G. Peterson, whose voices have been heard loudly over the past year. For another, there’s little “he said-she said,” which always makes for a more informative piece.
The result: Bernard provides readers a comprehensive picture of how the Chained CPI will affect ordinary folks, and links some important dots. Joan Entmacher, vice president for family economic security at the National Women’s Law Center, connected one of them this way:
With people facing an increasingly insecure retirement, this is no time to say, ‘Let’s cut Social Security.’ It’s even more disturbing to be having a discussion about how much to cut benefits for people who already struggle to make ends meet.
Alicia Munnell, who directs the Retirement Research Center in Boston, connected another dot, telling Bernard: “When you look at the retirement system, people don’t have anything else. And to have the only statement about Social Security’s solvency being a suggestion that what we need to do is reduce the indexing is not a useful conversation.” Bernard showed why it is not a useful conversation in dollars and cents terms, and made a point often missing in stories about the Chained CPI–the reason for the COLA adjustment in the first place. Noting “the Obama administration proposes to water down one of Social Security’s strongest features,” she reports the inflation adjustment has enabled retirees to maintain their purchasing power over long periods of time. Before Congress authorized the COLA adjustments in 1972, media stories of that era showed the elderly often had trouble getting enough food to eat. Given the importance of COLA adjustments, it’s easy to understand why polls show people are not wild about changing it. Bernard cites a recent ABC News/Washington Post poll showing that 51 percent of respondents opposed the change while 37 percent supported it.
While Social Security itself has kept millions of seniors from falling into poverty, pockets of poverty–especially among older women–still exist. Bernard’s journalistic contribution to the Chained CPI discussion is showing how the president’s fix to soften the blow from the monthly cuts for the oldest seniors may actually be of little help. Using figures from the National Women’s Law Center, Bernard shows a woman at age 76 would be eligible for her first benefit “bump” called for by the president’s plan. It would give her an extra $6.70 a month to start with. After 10 years she would get the full amount of the extra benefit–$67 a month or $800 a year.
By the time she reached age 85, the Center’s calculations show that even with the extra bump, her cumulative benefit loss (resulting from the calculation change) would be about $6,000 in today’s dollars. At age 94, her loss would be more than $8,300. If she lived until age 95, she’d get an additional bump. Only at age 104 would she really do well–her monthly payment would climb back up to what it would have been had the Chained CPI not be adopted. By then, Bernard reports, she would have lost more than $10,000 in benefits. That’s money that would have accrued to the government in savings.
Bernard’s piece should provide inspiration for other personal finance writers and other reporters interested in telling a fuller story about the Chained CPI.
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Related content:
Social Security in perspective, Part II
Chained CPI: A broken link at NPR
Can people afford to lose their Social Security COLA?
Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for CJR's Covering the Health Care Fight. She also blogs for Health News Review and the Center for Health Journalism. Follow her on Twitter @Trudy_Lieberman.