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Today's Top News
Obama's Deficit Proposal: Cut Social Security Benefits
Indexing Social Security benefits to chained consumer price index means a cut for all beneficiaries
"Chained CPI," a major piece of President Obama's latest proposal in the budget deficit talks, really means, as progressives point out today, a real cut in benefits.
The Center for Economic and Policy Research's Dean Baker explains that in the proposed formula "the annual cost of living adjustment for Social Security benefits would be indexed to the chained consumer price index rather than the CPI for wage and clerical workers (CPI-W) to which it is now indexed."
For all beneficiaries -- seniors, vets, children, the disabled -- Chained CPI is a benefits cut.— Rep Donna F Edwards (@repdonnaedwards) December 18, 2012
The "Chained CPI" is a flawed strategy, The Nation's Bryce Covert writes, because it uses
[...] a measure that tries to take into account human behavior in reaction to price increases—specifically, the substitution for something cheaper if the price of what you normally buy goes up. If provolone costs a fortune, perhaps I’ll switch to Swiss. Unfortunately for the elderly, they buy products that don’t behave much like provolone. As Dean Baker explains, the elderly spend more of their money on health care, which has seen costs far outpace the costs of cheese, and are also generally less likely to be able to make substitutions on what they buy.
More reactions today on Twitter from progressives:
Chained CPI explained: Old folks can sub cat food for turkey, so no need to capture turkey price inflation in the index— Ryan Grim (@ryangrim) December 18, 2012
These politicians ran on avoiding cuts to benefits for people over 55, but "chained CPI hits everyone's benefits." - Soc. Sec. Works ExDir— Ari Melber (@AriMelber) December 18, 2012
If Obama-Boehner push through chained CPI deal, progressives should demand BLS construct full elderly index to know true rate of inflation.— Dean Baker (@DeanBaker13) December 18, 2012
The Chained CPI: A Painful Cut in Social Security Benefits and a Stealth Tax Hike goo.gl/fb/dYcdY— CEPR (@ceprdc) December 13, 2012
More than 60% of elderly get 50% of their income from social security. Avg less than 1400/mo. WH thinks this $ should get cut.— Sam Seder (@SamSeder) December 18, 2012