Huffpost Politics

AARP Warns Lawmakers About Potential 'Fiscal Cliff' Deal

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FISCAL CLIFF
FILE - This March 20, 2012 file photo shows House Speaker John Boehner of Ohio and President Barack Obama walk down the steps of the Capitol in Washington. The people of an intensely divided nation just created a government that looks the same way as the one before. The only hope for progress on creating jobs and everything else would be if Obama and Republicans in Congress could find some incentive to compromise. (AP Photo/Carolyn Kaster, File) | AP

With hints that party leaders may soon seek a deal on taxes and spending, AARP is warning lawmakers to stay away from a Social Security cut that has been popular on Capitol Hill.

The powerful seniors lobbying organization has long suggested openness to Social Security changes that reduce benefits, but not in the context of a "Grand Bargain" deal designed to reduce the federal budget deficit. Social Security is projected to run a shortfall in 2033, but its finances are considered separate from the federal government's budget.

"On behalf of millions of members nationwide and all Americans age 50 and older," AARP CEO A. Barry Rand wrote in a letter to lawmakers Thursday, provided to HuffPost, "AARP writes to reiterate our opposition to adopting a chained consumer price index to calculate the Social Security cost of living adjustment for the purpose of reducing the deficit."

In particular, the organization doesn't want congressional negotiators to use an alternate measure of inflation for calculating Social Security's cost of living adjustments, known as COLAs. The alternative measure, called the chained Consumer Price Index, would reduce the amount of COLAs over time. In October, the Social Security Administration announced a 1.7 percent increase in Social Security benefits -- which average $1,235 per month for seniors.

"If Congress had already adopted CCPI, the 2013 COLA would be even less, at only 1.4 percent," Rand wrote (click HERE for a PDF of the letter). "However, adopting a chained consumer price index to calculate Social Security COLAs is not a small benefit change -- it will compound benefit reductions dramatically over time, resulting in an annual benefit that is roughly $1,000 (2012 dollars) lower by the time a beneficiary reaches age 85."

House Speaker John Boehner (R-Ohio) suggested on Wednesday that Republicans may be open to "new revenue" as part of a deal to avoid the so-called "fiscal cliff" looming at the end of the year. Boehner and President Barack Obama reportedly negotiated such a deal in 2011, which included new taxes as well as chained CPI.

At the end of 2012, a host of tax cuts and spending provisions are set to expire, and defense and discretionary spending cuts are set to take effect. Some economists have called it a "fiscal cliff" that could send the U.S. economy into a recession. (Progressive economists scoff at the notion that there would be instantaneous economic consequences for not changing current law, arguing that it is more akin to a fiscal slope.)

Erskine Bowles, co-chair of a deficit commission created by President Obama during his first term, urged Congress on Wednesday to avoid the cliff with a deficit deal that includes Social Security in the near term. Bowles and deficit commission co-chair Alan Simpson previously recommended Congress adopt the chained CPI.

AARP's letter suggested the organization won't give lawmakers any breathing room to include Social Security cuts in the negotiations, even if the organization is not opposed to changing the program outside of a debt deal.

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