New proposals would restore some benefits for older retirees, but still represent an overall cut. (AP Photo/Matt Rourke).
The Chained-CPI provisions in President Obama’s budget proposal come with an ostensible sweetener: extra protections for the very elderly and poor, along with veterans.
As we touched on last week, these protections fall short in several ways. Obama proposes exempting Supplemental Security Income (SSI) from readjustment by Chained-CPI, but there are 9.4 million poor or near-poor on Social Security who are not on SSI, and another 2.8 million “dual eligibles” who draw from both.
All means-tested veterans’ pensions, as well as any Montgomery GI Bill or post-9/11 GI Bill, are also exempt from Chained CPI, which is good, but one in every five Social Security recipients is a veteran—so they’re still going to get squeezed some. (Incidentally, if Chained-CPI is truly a “more accurate” measure of inflation—that is, just taking away an existing windfall, as proponents argue—why do veterans need protecting?)
Another way the administration proposes to help seniors hurt by Chained-CPI is to provide a bump in benefits at age 76, or after 15 years of disability payments. The Simpson-Bowles plan and several others that include Chained-CPI have had similar provisions with some variations—each restore some of the lost benefits, but still amount to a net benefit cut.
Alas, the same is true with Obama’s proposal. The folks at Social Security Works have crunched the specific numbers the White House has proposed and kindly shared them with The Nation. As you can see, seniors still have their benefits cut rather dramatically under Chained-CPI:
As the table below shows, seniors from 65 to 75 have the same benefit cut, and at age 85, there’s a cumulative cut of $9,521 instead of $13,921:
A cumulative benefit cut of nearly $10,000 is still extremely significant, given that the median income of today’s elderly is only $19,939. (The administration provides another bump at 95, but SSW didn't include that in its analysis given how few seniors live past that age.)
As Social Security works notes: “With protracted high unemployment and wage stagnation, and other sources of retirement security dwindling, there is no reason to expect coming generations of retirees to fare much better in retirement. In this environment, policymakers should be strengthening, not cutting Social Security.”
In case you missed it: George Zornick debunks five common myths about Chained-CPI.