There is a full-fledged drive to cut social security benefits by lowering the annual cost of living adjustment for people already receiving benefits. The plan involves changing the index for calculating the cost of living. The new index, which is known as the "chained consumer price index" (CCPI), typically shows a rate of inflation 0.3 percentage points less than the CPI currently used to adjust benefits.
A reduction of 0.3 percentage points in benefits may seem small, but this will accumulate through time. After being retired ten years, benefits will be almost 3% lower with the CCPI. After 20 years, the loss will be near 6%, and after 30 years, the reduction in benefits will be close to 9%. This is a serious loss of income for seniors, the vast majority of whom rely on social security for most of their income.
The justification for the change in the benefit formula is that the CCPI takes account of the substitutions that consumers make in response to changing prices. The classic story is that if the price of beef rises and the price of chicken doesn't, people will buy more chicken and less beef. The CCPI takes this switching from beef to chicken into account in calculating inflation. The current CPI does not.
While there is an argument for taking account of this sort of substitution in the index, there are two important issues that arise when evaluating the cost of living of seniors. First, their consumption patterns differ substantially from the rest of the population. They consume more healthcare and fewer computers.
The Bureau of Labour Statistics (BLS) has constructed an experimental index that tracks the consumption patterns of the elderly. This index actually has shown a somewhat higher rate of inflation than the CPI currently used to adjust benefits. In other words, it implies that the current cost of living adjustment is too low, not too high.
The other problem is that it is not clear that the elderly would be as likely to make consumer substitutions in response to price changes as the rest of the population. There are three reasons for this. First, many of the items consumed by the elderly don't lend themselves well to substitution. If the price of heart surgery goes up, people are unlikely to substitute other medical care. Healthcare and shelter together account for almost half of the consumption basket in the elderly index. Second, they tend to be a less mobile population. This means that if responding to a change in prices means travelling further to shop, the elderly might be less capable of doing this than the rest of the population. Finally, older people may just be more set in their ways. If they have been eating beef twice a week for 40 years, they may continue to eat beef, even if the price does rise.
At this point, we don't know what a full elderly index that included substitution would show about the cost of living for the elderly. However, if the point of changing the indexation formula for social security is to make the indexation more accurate, then it would seem that we would want to find out. In other words, if the people who claim to want a more accurate cost of living adjustment are being honest, then they should be calling for the BLS to construct a full elderly index. This index would then be used for adjusting social security benefits. At this point, we don't know if this index will show a higher or lower rate of inflation. We just know that it will be more accurate.
In the push to cut benefits, many have claimed that "all economists agree" that we should switch to the social security adjustment to the CCPI and thereby lower benefits. While the claim is not true, it is also worth pointing out that "all economists" have a very bad track record.
"All economists" missed the $8tn housing bubble that wrecked the U.S. economy, as well as the bubbles whose collapse did similar damage to the European economies. "All economists" thought that the stock bubble of the '90s would just keep inflating indefinitely. In fact, those wanting to invest social security money in the stock market effectively assumed that price to earnings ratios would rise into the hundreds in the decades ahead.
"All economists" even have a very bad track record on this exact issue. Back in the '90s, there was an effort to reduce the annual cost of living adjustment for social security by 1.1 percentage points, based on the report of a commission chaired by Michael Boskin, the chief economist for the first President Bush. At that time, "all economists" lined up behind the report, agreeing with the Boskin commission that the CPI overstated inflation by 1.1 percentage points.
This effort was defeated in Congress. Remarkably, all the economists who accepted the Boskin commission's claim that the CPI overstated inflation by 1.1 percentage points then continued to use it as though it was an accurate measure of inflation. (According to estimates from the Boskin commission, changes in the CPI reduced the overstatement by about 0.3 percentage points.) In other words, when there was a political reason to claim the CPI was overstated, "all economists" were willing to rise to the occasion. But when that reason disappeared, they ignored what they had previously asserted.
Based on this track record, the public should view "all economists" as people who are either not very good at their work, or not very honest, or perhaps both. They should not be looking to them for guidance in policy debates.
(reprinted from the Guardian)
After a month or more in the hospital most were sent home to live with the damage to their bodies.
The Company filed a Pre Emptive Bankruptcy and went out of Business only to reopen 2 weeks later under a new name.
Lawyers told 3 of the women I know there is not money for their injuries they can only go on Social Security Disability. This was Lawyers they hired to repersent them not Company Lawyers.
Since the did not know any better that is what they did. 2 of them can not lift their arms from the damage to thier necks being hit with falling steel pipes. 1 has had 9 back operations and procedures.
Things like this have been happening all around the USA for years and years. Is this not Corporate Welfare for the Lawyer to push these good hard working people off on disability without even bringing suit for damages and medical ?
Social Security Disablilty and Medicare paying when some Insurance Company gets a pass ????
Maybe Mayo is a Meat ?
Mustard a cheese ?
mmmmm mayo, ketsup and mutard sandwiches
Sure beats the Beans 6 days a week and the meat and potatos meal on Sunday that my family lived on for many years after an accident at work crippled my dad .
For Those of You who believe that Not Taxing the Rich will Generate Jobs, You are deluding yourselves, as the only jobs that have been created during GOP Presidencies have been shipping US Jobs overseas.
Why do the Republicans and Super Rich not care about Social Security and Medicare? Because they are wealthy enough to pay for retirement and medical for them and their entire family.
The Voting Majority had better drop party lines and stop giving the Republicans and the Super Rich everything they need to destroy the middle class. All You have to do is look at the pure statistical facts to see this. If You are not liquid to at lease $1 Million and you vote for Republicans, You will get what You deserve in the end.
People would be wrong to assume this was just the Republicans with Obama, naturally, opposing the agenda.
Dems are expected to be grateful to Obama because his proposal is less threatening than the GOP's . What they refuse to see is that he started the conversation with his stacked Deficit Commision , knowing the GOP would take the bait , run it rightward, leaving him looking like the sane one.
Its still robbery whether done with an iron hand or a velvet glove
"A reduction of 0.3 percentage points in benefits may seem small, but this will accumulate through time. After being retired ten years, benefits will be almost 3% lower with the CCPI.'
Baker is disingenous when he makes this statement. The baseline benefit amount will not change. The only change would be in cost of living raises. Hence a benefit increase might not happen. A more correct statement would be the increase would be 3% lower over ten years. And it sounds good to extrapolate the numbers out for thirty years so they look dramatic but what percentage of people live to 95 years old?
they can compare protiens in beef, chicken, and other meats
Ketsup is a Veggie .... Reagan --- eat up
And no one ever plans to have Social Security as their only income when they retire. Sometimes, life just happens to you. Look at all those people whose pensions Congress allowed corporations to steal under certain conditions. They worked hard for that money, and now all they have left is Social Security. And all those people whose 401k plans and other investments were trashed when the housing bubble collapsed. You might have seen them working the check out counter at your local supermarket, or bagging groceries because that's all the work they could get at 70. And up until recently, you rarely saw someone of retirement age working those kinds of jobs. I'm glad you're planning for the future, but please stop assuming that no one else ever thought of the idea.
http://twitpic.com/5rs9fu/full
It is TIME to make the Super Rich Pay Equal Share in the stake of this country!
For the Record a German Citizen has paid medical benefits from the cradle to the grave an when a German Citizen loses their job they receive unemployment until a new job is secured. How is this? The Super Rich in Germany pay equal share in the tax burden.
There is supposed to be a shortfall of less than 20% in 2037. We can deal with that farther down the road. Things will be so different in 25 or so years.
I have read that one third of the boomers don't want to retire and another third can't afford to retire. It may be only one third of the boomers will retire and there will be lots of money for the future retirees. Some of each group will die before we draw benefits, too.
Once they reach full retirement age the boomers can work and draw Social Security benefits. Right now the full retirement age is around 66 headed toward 67.
This stealth attack on SS is a appalling assault on the weakest economic class in our society, people who are or become unemployable. As it is, SS provides only a subsistence level of income. The chained CPI will be like a vise, squeezing the elderly more and more toward the end of life. It will be very much like pushing granny toward the edge of the cliff, and then dumping her off. The cuts to Medicare will cause further economic squeeze.
The corporate hot-shots have decided to move the good jobs offshore, leaving Americans with an extremely poor jobs market, which trends toward non-existent for older workers. Try applying for a job if you are 50 or older.
The R's have allowed Wall Street to gamble away much of our wealth in the form of housing values and and 401k accounts. We have spent what was left of the 401k's on living expenses while unemployed.
It will be an an old age of increasingly desperate existence for retirees if this chained CPI is implemented.
BTW, Fox watchers are not being informed about this, they think the R's want to protect their SS.
The government will have to help these people so why not leave them alone? The savings won't be much but the degrading of the elderly will be too high.
The massive spending on wars and more wars under Obama is a tax on the future of the American people, particularly middle and lower income citizens because these expenditures come with great opportunity costs and raise state and local taxes, including tuition at public university, many of which are being partially privatized.
Obama is to the right of all republican presidents including Bush II.
He is a disaster for this country and if re-elected will pretty much doom this country to another four years of lies, and predatory and unaccountable business practices, and insure the election of a republican in name as well as action in 2016. Obama is the worst president this country has ever had, and he has seized this title from W in only 2.5 years. Incredible.
What we need to keep in mind is the republican leaders hate taxes and love profits. The middle class and poor won't save a dime, but the republican leaders will turn our taxes into profits for them and their rich base. They plan to privatize Fannie and Freddie and privatize public schools.
SS has been taking in Billions more than it pays out for several years . It does not need fixing . SS was invented to be an economy stimulator in Germany (1889) during a long depression . We copied Germany's SS during a depression . (1934) As did many other nations during recessions/depressions .
Those that have wrecked our economy know this and since wrecking is what they do , they are focused on wrecking the lone standing economic stimulus . It retires seniors to open employment for the emerging youth . Recycles jobs .
Killing the cost of living raise effectively reduces the stimulus a SS program gives to an economy .
That is why the French youth were rioting . It was their jobs that raising the retirement age was damaging .
The Social Security office handles much more than benefits. Besides the other things I mentioned, it also handles disability claims. That, btw, doesn't mean the people applying for disability will ever get any. You are free to apply though.
So, taking all that into account, you often see apparently working age people in the SS office. Doesn't mean anything, so please stop worrying.
As far as people in the SS office to apply for a new card, this may interest you. http://www.judicialwatch.org/blog/2009/jul/illegal-aliens-get-monthly-welfare-checks-0 and http://articles.latimes.com/2010/sep/05/local/la-me-illegal-welfare-20100906.