|
 |
 |
|
Senate Democrats offer formula aimed at adjusting seniors' benefits
A pair of Senate Democrats are urging passage of a bill that would reconfigure the formula used to determine cost-of-living adjustments for seniors and Social Security recipients, a plan that runs counter to a proposal under consideration by the supercommittee.
Sens. Sherrod Brown (D-Ohio) and Barbara Mikulski (D-Md.) introduced the alternative measure on Wednesday that would establish a Consumer Price Index aimed at the specific expenses of seniors instead of the current formula measures the needs of younger, employed individuals.
“Because of an outdated and flawed formula, seniors are seeing their energy, food, and prescription drugs costs rise, while their Social Security checks remain stagnant," Brown said. "With two-thirds of seniors depending on Social Security for the majority of their income, too many seniors are being forced to choose between heating their homes or filling their prescription drugs.”
The legislation would formalize a Consumer Price Index for the Elderly (CPI-E), that would take into account seniors’ specific consumption habits, including increased prescription drug and energy costs.
“Comparing retired seniors to employed clerical workers is like comparing apples to oranges,” Brown added. "We need to reduce the deficit, but not on the backs of senior citizens. Since Social Security is financed separately from the rest of the federal budget, it should be addressed separately as well.”
The bill comes amid recent proposals, including a chained CPI under consideration by the Joint Select Committee on Deficit Reduction, that could cut hundreds of dollars each year from Social Security benefits and would result in smaller checks for seniors, even beyond the current structure, the senators said. Panel members are using it as part of the equation to cut the deficit.
Current CPI assumes that when prices rise, consumers may choose a different, less expensive type of apple if one they normally buy goes up in price.
Chained CPI assumes that if apples rise in price, consumers would buy a less expensive product altogether, like bananas.
However, the senators argue, many seniors on a fixed income are already making those substitutions, and they use many products such as like prescription drugs and other healthcare costs that can’t be substituted.
“Social Security shouldn’t be in the debate about how to reduce our debt or our deficit. It didn’t cause our debt,"Mikulski said.
The senators have support from several groups that show a negative effect on seniors if a chained CPI is adopted by the deficit-reduction panel.
"Adopting a chained consumer price index to calculate Social Security cost of living adjustments (COLA) is not a small benefit change," said Barry Rand, chief exeutive of AARP in a letter to the supercommittee sent Nov. 9.
A chained CPI could take an estimated "$112 billion dollars out of the pockets of Social Security beneficiaries in the next 10 years alone and is inappropriate and unwarranted," he said.
"Rather than proposing formulas designed to cut benefits, like the chained CPI currently being considered by the supercommittee, Congress should pass a formula created specifically for the beneficiaries served."
Max Richtman, president and chief executive of the National Committee to Preserve Social Security and Medicare, also agreed that chained CPI isn't a viable approach.
"Not only is this formula less accurate for seniors than the current method it will in fact cut projected benefits for current and future retirees," he said.
"If accurate inflation protection is truly our goal, the CPI-E is the formula created specifically to address the costs facing America’s seniors and should be adopted by Congress.”
Between 1982 and 2009, the cost of living under the current formula rose at an average rate of 2.9 percent, while the cost of living for seniors, under the experimental measure for seniors under development by the Bureau of Labor Statistics — increased at a rate of 3.2 percent, according to the Congressional Research Service.
For the past two years, seniors and other Social Security recipients didn't receive a COLA, even though the price of prescription drugs, food, energy and other necessities the use continued to rise. In October, the Social Security Administration announced that seniors would an increase next year.
Most Viewed RSS Feed »
