Republicans claiming that President Barack Obama does not have a deficit reduction plan need to visit the White House's website. It’s there. And it includes Obama’s plan to cut Social Security payments by $130 billion.
The president’s plan, calling for $4 trillion of deficit reduction, never uses the words “Social Security.” Instead, $130 billion in benefit cuts are called “spending savings from superlative CPI with protections for vulnerable.”
There are no details about what alleged “protections” actually mean, but based on the national average for Social Security payments, which is about $1,100 a month, just about everyone is “vulnerable.”
What the chained Consumer Price Index (CPI) does is use a different formula to calculate cost-of-living adjustments. Instead of raising payments, as the current formula does, chained CPI substitutes cheaper commonly purchased items to create a distorted cost-of-living index. The result is Social Security payments that get smaller each year. The payment cuts grow larger over time as the chained CPI compounds.
Using an average annual benefit of $14,800 for someone 65 years old, after 10 years under the chained CPI their Social Security payment would be reduced by $2,354.81. After 20 years, that cut increases to $8,904.58.
AARP has a calculator for anyone who wants to know just how much chained CPI will take out of their Social Security payments.
Obama’s plan to cut Social Security will do nothing to reduce the deficit, because Social Security is not part of the deficit. The program is funded strictly through payroll deductions and has a separate trust fund that is solvent for the next 23 years, according to the annual Trustees Report on SSA.gov.
In fact, the Social Security Trust Fund has had so much surplus money in it, Congress has been known to borrow from it through bond sales to fund other government spending.
There can only be one reason for the president to sell out seniors and mislead the public into thinking that Social Security adds to the deficit. Obama wants a “grand bargain” with Republicans, and Republicans are more interested in eliminating the social safety net than they are in reducing the deficit.
As it stands now, only people earning less than $113,700 a year pay into Social Security. Above the cap, the wealthy get a free ride. If there were a genuine desire or need to shore up Social Security, simply removing the cap for high-income earners would solve the problem.
So what Obama is actually accomplishing by putting his offer to cut Social Security in writing on the White House's website is a public promise to break his promise to protect working-class Americans.
In addition to being the first president—Democrat or Republican—to promote Social Security cuts, he is handing Republicans a powerful weapon to use again all Democrats in the next election. A majority of Americans like Social Security just the way it is.
If Obama manages to get Republicans to accept his offer to increase financial hardship on seniors, he will go down in history as the president who destroyed what is arguably the most successful government program ever created.
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Sources and more info:
The Hill: Chained CPI: An economic, moral disaster
AARP: 5 Reasons Chained CPI Is Bad For Social Security
National Journal: What Is Chained CPI?
Washington Post: Everything you need to know about chained CPI in one post