Thursday, October 31, 2013

The Chained-CPI Would Be A Cut In Benefits

In most years, those receiving Social Security (and Veterans) benefits get a small cost-of-living-adjustment (COLA). This small raise is determined by the Consumer Price Index (CPI) that is determined by the Labor Department.

The Republicans have proposed changing the way this raise is determined. They want to stop using the CPI (which represents the inflation rate in the U.S.) and go to a figure called the Chained-CPI (in which the government makes various adjustments to the inflation figures). They claim the Chained-CPI is a more accurate figure. That is debatable. But what is not debatable is that using the Chained-CPI instead of the CPI would result in a lower COLA raise for recipients of Social Security (and Veterans) benefits.

I made the chart above using Labor Department figures for the last 11 years. It shows the CPI and the Chained-CPI figures for each of those years. Note that in 10 out of those 11 years the CPI has been slightly higher than the Chained-CPI.

The Republicans say this difference is insignificant. I disagree. The average Social Security check is only slightly above $1000 a month -- and if you are living on that (or even less), then every single dollar counts. But it gets worse. Over a period of several years this difference between the CPI and the Chained-CPI will amount to quite a bit as it adds up year after year -- and will result in recipients of Social Security (and Veterans) benefits receiving significantly less in their checks than the current COLA would have given them. To be blunt, those Living on Social Security (and Veterans) benefits would no longer be able to keep up with the real rate of inflation -- and they would become a little poorer with each passing year.

The Republicans claim this would not be a benefit cut. That is a lie. That's exactly what it would be -- a benefit cut. And over an extended period of time, it would represent a huge cut in benefits.

Sadly, the president and some blue dog Democrats have indicated a willingness to consider moving from the CPI to the Chained-CPI. This is unthinkable, and we need to let them know we will not tolerate their cutting Social Security (and Veterans) benefits -- just to appease the Republicans (who want to keep the rich from having to pay their fair share of taxes).


  1. COLA = having meat once a day.
    COLA chained to CPI = having meat once a week

  2. This change must not happen simply because it has an adverse effect on an elder's income whose health care costs are not reflected in the chained CPI


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