Social Security is entirely self-funded and has nothing to do with the annual budget. So why, then, in the middle of its debates on an annual budget plan, is Congress trying to change the way Social Security payments are calculated?
Some congressional budget proposals include a “Chained CPI,” which would let annual increases to Social Security benefits be computed at rates that are below annual inflation.
Hoping to put a stop to this idea, on Tuesday, July 2, current and future retirees will have a demonstration at North Charleston City Hall (2500 City Hall Ave.). From 12:15 p.m. to 12:45 p.m., the Alliance for Retired Americans will conduct a “Human Chain Against Chained CPI” that will send a message to Sen. Tim Scott, who has an office in the building.
ARA members in Horry County will be doing the same from 12 noon to 1 p.m. at the local Social Security office in Conway (1316 3rd Ave.). Others in Greenville and Sumter are still in the planning stages.
Anyone interested in attending the North Charleston gathering can RSVP through this link (use this one for the Conway event).
The state AFL-CIO and Charleston’s Central Labor Council are helping organize the demonstrations, too.
So what is “chained CPI,” exactly, and how will it affect Social Security payments? Social Security benefits are adjusted annually based on changes to a standard consumer price index (“CPI”), which is supposed to let recipients maintain consistent standards of living despite inflation.
Recent budget proposals would change that, though, using a “chained CPI” calculation that overlooks cost increases of many things, including medical care. This results in a smaller cost-of-living adjustment (“COLA”), which would notably reduce the amount of annual increases.
Even worse, a Congressional Budget Office review says that average monthly benefits could even be reduced beginning next year. Because annual increases would continue to be lower than COLA every year, then chained CPI could cost recent retirees as much as $6,000 over 15 years.
How would chained CPI affect Social Security recipients? Terribly – especially when it comes to medical care.
“The chained CPI assumes that a lower COLA is acceptable because consumers substitute cheaper products when prices go up,” says Donna Dewitt, president of South Carolina’s ARA. “Health care costs, however…cannot simply be substituted with a cheaper version. A senior cannot just substitute triple bypass surgery with a double because it’s cheaper.”
Medical care costs increased at an average annual rate of roughly 17 percent over the last 35 years. As a result, the amount retirees co-pay for medical bills covered by Medicare continues to grow, too. Even a normal adjustment rate to Social Security (which averages only 3.7 percent) isn’t enough to help, especially since seniors usually need medical care more often than other folks.
Why is it being proposed for the annual budget? Good question, but not one that can be answered, unfortunately. Social Security is not derived from personal or corporate income tax, so it has nothing to do with the annual budget that uses that money.
SS is entirely self-funded by us ourselves (see your own contribution in the “Social Security wages” box on your paystub and annual W-2). With its trust fund holding over $2.7 trillion in assets at the moment, it’s not in any jeopardy, either.
How many people would be affected by chained CPI? If approved by Congress, the impact would hurt almost 63 million Americans who receive Social Security and its related programs – that’s more than 20 percent of the national population.
In South Carolina, it would affect the 621,000 residents over 65 years of age who receive Social Security retirement benefits; when Supplemental Security Income and Disability Income are included, the number of Palmetto State recipients rises to almost 1 million.
Is anyone doing anything against this? Well, there are bills seeking to protect Social Security from chained CPI in both the House and Senate, which even call for increases to the current COLA rates.
But instead of just waiting on Congress, you can do something about it, too – such as joining the July 2 “Human Chain.”
Let Sen. Scott and everyone know that you don’t approve of such limiting, reducing alterations – especially since Social Security has nothing to do with the budget to begin with.