CHART OF THE DAY: The Stealth Social Security Cut In Debt Talks (TPM)

[chill_wind]

"On the tax side, this would likely draw more revenue: Tax brackets would rise more slowly than incomes, so people would get kicked into higher brackets more quickly and, voila, more income subject to taxation.

But on the benefits side, this means money out of people's pockets, even current retirees and pensioners. Responding to a letter of concern from House Democrats' top Social Security guy the program's chief actuary explained that moving to "chained-CPI" would constitute an immediate 0.3 percent benefit cut. That may sound small, but the effects would compound, and "dditional annual COLAs thereafter would accumulate to larger total reductions in expected scheduled benefit levels of about 3.7 percent, 6.5 percent, and 9.2 percent for retirees at ages 75, 85, and 95, respectively."

More at the link.

http://tpmdc.talkingpointsmemo.com/2011/07/chart-of-the-day-the-stealth-social-security-cut-in-debt-talks.php?ref=fpb

[chill_wind]

1. In Social Security Cuts, Look for the Chained CPI

How Much Would A Social Security Deal Cost You?
Richard Eskow's picture

By Richard (RJ) Eskow

July 6, 2011 - 4:42pm ET

How much would you lose in benefits if President Obama makes a deal with the Republicans to cut Social Security? The Administration isn't denying reports that just such a deal is in the works. As the President prepares to meet with Congressional leaders tomorrow, the financial security of millions of Americans may hang in the balance.

According to the polls, so could his political future.

If the President and his party accept a proposed "chained CPI" benefit cut, they - and not their opponents - are likely to be painted as "Social Security slashers. " (Remember the GOP's Medicare strategy in 2010?) Dealmakers hope to avoid that by hiding the reduction in a lowered cost of living (COLA) adjustment, but it seems wildly optimistic to think a cut of this magnitude can be hidden from the public. It's doubly unfortunate because COLA adjustments should be increased, not reduced.

more: http://ourfuture.org/blog-entry/2011072706/how-much-would-social-security-deal-cost-you



In Social Security Cuts, Look for the Chained CPI
Daniel Marans's picture

By Daniel Marans
July 7, 2011 - 11:24am ET

http://ourfuture.org/blog-entry/2011072707/social-security-cuts-look-chained-cpi

[Doctor_J]

2. Good news. It's not stealthy any more

WH today announced cuts in SS and Medicare. It's out in the open.

[texshelters]

3. Dear Obama Apologists

Please defend this for us.

Peace,
Tex Shelters

[saras]

4. On the other hand, don't bother - we'll just take the torture defense and cut & paste

[texshelters]

12. Yep

Peace,
Tex Shelters

[1stBunny]

5. Good thing 95 year olds don't need much beer money! n/t

edited because I can't spell worth a damn!

[roxiejules]

6. Hands off Social Security Poll

What do you think? Take our new survey »

http://sanders.senate.gov/polls/index.cfm?uid=7f1106fe-a383-4473-8f0d-3ed108a86140

[chill_wind]

9. Thanks. Even Ben Nelson is sweating this one. Bloomberg:

Debt Talks Turn to Social Security Cuts
By Brian Faler and Heidi Przybyla -

(...)

Cutting Benefits

Democrats such as Representative Jan Schakowsky of Illinois say the alternative index, which she called the “chainsaw CPI,” would mean cuts in Social Security benefits. Over 10 years, using the alternative index would reduce projected Social Security spending by 1.2 percent, according to the Congressional Budget Office.

Schakowsky said the current inflation measure already understates the cost-of-living increases facing seniors because they spend more on medical care than the average American.

“Seniors get the double whammy -- higher health-care costs and deeper benefit cuts,” she said.

Even Democrats like Senator Ben Nelson of Nebraska, who’s often voted with Republicans, rejected the idea. “At some point we have to look at Social Security, but that’s not part of this process,” he said today.

A. Barry Rand, head of the AARP, the advocacy group for the elderly, said: “Reducing the COLA by even a small amount is a harmful cut for many retirees.”

[Enthusiast]

16. Done........nt

[bhikkhu]

7. That is one stupidly wrong analysis

Not that I'm in favor of adjusting the CPI (which has under-estimated inflation for many years now), but the article is just wrong.

The graph shows the cumulative changes in COLA adjustments over time, assuming the "chained CPI" formula is used. It reads, for instance, that by age 75 the net change would be -3.7%, by 95 -9.2%. That is changes in the cost of living adjustment, which is an adjustment that increases the payment. The change is that the increase in payment will be smaller - there are no cuts to the baseline payments.

How that would work - if you retire, as in an example in the article, at 65 with a benefit of $890 per month, if fairly tracking inflation at 3% a year or so, your benefit would double to $1780 or so by age 95. If the chained-CPI formula is used instead, the increases would be 9.2% less by age 95 - or about $1690 a month. In the article, it says that you will receive $500 a month by 95, which is why I say it is a stupidly wrong analysis.

Fixing the CPI to better reflect real inflation would be a good thing, but that's not what's being talked about anyway. Misinformation all around just makes for an ignorant populace, which is incapable of electing or even recognizing competence in government.

[chill_wind]

8. Women would be hardest hit.

"A woman with an initial benefit of $1,100 will have lost more than $6,300 by age 80 and more than $15,000 by age 90—the equivalent of more than a year’s worth of benefits."

National Women's Law Center

http://www.nwlc.org/press-release/new-report-shows-women-will-be-hit-hardest-changes-social-securitys-cost-living-adjust

http://www.nwlc.org/resource/cutting-social-security-cola-changing-way-inflation-calculated-would-especially-hurt-women

And the rich keep getting richer.

[bhikkhu]

10. This is a much better analysis:

http://online.wsj.com/article/SB10001424052702304793504576432240998755316.html?mod=googlenews_wsj

[chill_wind]

11. Tyler Durden (6/22/11):

America's Latest Proposal To Deal With Its Insolvency And Pursue Stealth Dollar Devaluation: Change The CPI

The proposal could lower federal spending by around $220 billion over the next decade, based on calculations by last year's White House deficit commission, which recommended the change as part of its final report." What does this mean practically? SImply said, the worst of all worlds for the US middle class: " would likely lead to both lower benefits paid to seniors and higher taxes paid by most people who pay federal income tax." We expect this last-ditch accounting gimmick will be implemented shortly, and the broader American population will not care one bit that it's purchasing power will see a step function drop yet again in the ongoing crusade to destroy the dollar.

More on this surreal idea which is actually being very seriously discussed in DC:

http://www.zerohedge.com/article/americas-latest-proposal-deal-its-insolvency-and-pursue-stealth-dollar-devaluation-change-cp

And today:

"Bottom line: now that enough stink has been raised about this stealth theft which somehow Congress thought would fly under the radar, the budget and debt ceiling debates are likely back to square minus one."

"Democrats Stunned Social Security May Be Cut Following CPI Definition Adjustment"

http://www.zerohedge.com/article/democrats-stunned-social-security-may-be-cut-following-cpi-definition-adjustment

[roxiejules]

14. The Fukishima approach to (sur)reality

"A few months ago we reported on Goldman's proposal to change the definition of GDP to make the US economy appear to be growing faster than it really is. So far, it has not caught on, as even the revised definition will soon confirm a contraction. But that proposal appears to have given Joe Biden some ideas, who now has taken the Fukushima approach to (sur)reality, whereby one merely changes the terms of data measurement when the data does not cooperate." - Tyler Durden




Thanks for the Zero Hedge link...

[chill_wind]

15. My pleasure. I was hoping someone besides me would some of that.

Certainly has me thinking about all the day's earlier Congressional/media kabuki in a whole new way. Thanks!

[keysoftheraw]

13. Debt Ceiling

The debt ceiling debate seems pretty simple to me. Either we can take a stand for some conservative ideology, wreck the economy, and give China the world super power torch. Or we can take a stand for a liberal ideology, and keep the US humming.