Budget

Senate proposal to adjust COLA for seniors gains momentum

Groups supporting the Senate bill said the supercommittee’s chained CPI plan would cut hundreds of dollars each year from Social Security benefits and would result in smaller checks for seniors, even beyond the current structure. Panel members are using it as part of the equation to cut the deficit. 

“Chained CPI should be buried and not thought of again,” said Nancy Altman, co-director of Social Security Works,  during a conference call with reporters on Friday. 
Mikulski said if the supercommittee adopted the chained CPI proposal it would kick in next month, sooner than realized. 

A poll released Friday shows broad opposition to a change the cost-of-living index specifically for deficit reduction, as has been suggested by the congressional supercommittee. The panel is still deep in negotiations about a proposal that would cut at least $1.2 trillion from the deficit over 10 years. 

All told, 72 percent of respondents oppose changing the formula for deficit reduction, including 74 percent of Democrats, 73 percent of independents and 70 percent of Republicans, according to a poll released by National Committee to Preserve Social Security and Medicare Foundation and Social Security Works. 

No surprise, seniors are particularly opposed to changing the formula with 79 percent of people over age 65 opposing the supercommittee proposal, including 73 percent who ‘strongly oppose.’

Sen. Bernie Sanders (I-Vt.), another bill supporter, said “my guess is that the issue of the chained CPI is out there but I’m not sure” if the deficit-reduction panel is still considering the proposal, during the call. 

Sanders said he thinks the formula proposed in the Senate bill could be implemented immediately because it has been in the experimental stage since 1981 at the Labor Department. 

During his tenure in the House, Sanders said he offered up the idea of a CPI aimed at seniors, which attracted 200 co-sponsors. 

“So the idea is coming back.” 

The Senate 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, which is different thant the current formula. 

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.

While Mikulski agreed that Social Security needs to be reviewed it “shouldn’t be in the debate about how to reduce our debt or our deficit. It didn’t cause our debt.”

Max Richtman, president and chief executive of the National Committee to Preserve Social Security and Medicare, said the formula proposal for seniors would have meant on average of 3/10ths of a percent more each year, a significant amount for seniors living on fixed incomes with Social Security benefits averaging $13,000 a year.  

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, advocates of the new formula said. 

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. 

“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.” 

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. 

Tags Bernie Sanders
See all Hill.TV See all Video

Most Popular

Load more

Video

See all Video