All this gnashing of teeth and tearing of garments over 14 cents less per month?

[phleshdef]

At least thats what this guy is saying and he has a pretty thorough analysis on it.

If you don't like economics, public finance or numbers, then let me not bury the lede and explain exactly what's on the table. If enacted, the average social security recipient would get 14 cents less of an increase per month, but only in a month in which the social security benefit actually went up by about $34. So the assertion being made in several diaries is that social security recipients will revolt because their average monthly benefit went up from $1,044 to $1,078.31 instead of $1,078.45. Of course someone would have to point out some highly technical macro economic measuring theory first, and then get them riled about about that monthly dime at a time when they are actually getting a net of more money. So yes, it does look like 11 dimension chess (offering the Republicans nothing of substance).

So how much will using the chained CPI affect recipients of social security?

The typical different between the current CPI and the chained CPI is about .3%-.4%.

In other words, the difference in the increase in benefit would be about 30 cents to 40 cents per $100.

But keep in mind that this is not a cut in benefits. It is a decrease in the amount of increase in the benefit.

The change from CPI to chained CPI would never result in a senior's benefit going down; only in years in which the senior receives an increase in benefit as a result of a cola, their increase would be less than would be expected under the old CPI.

So what do these numbers mean in concrete terms?

Because of deflation resulting from the recession, recent cola's and CPIs are not useful (there have actually been no increases in some recent years).

But in a typical year before the recession, let's posit an average monthly social security payment of $1,044 (this is based on a google search of payouts in 2007). That meant an annual benefit of $12,528.

The cola for 2007 was 3.3 %.

This increased the benefit by $413.42 per year, or $34.45 per month.

Remember, the difference between the old CPI and chained CPI is about 30 cents to 40 cents per $100, and you begin to get the drift here. We're talking a few dollars a year adjustment.

Let's take the higher estimate of the difference between the chained CPI and the old CPI of .4%.

Because of the chained CPI, the recipient would receive 14 cents a month less of an increase or $1.65 less per year.

But keep in mind, this is not the beneficiary's check going down by 14 cents a month; it's that it didn't go up by 14 cents more.

In other words, the beneficiary received a $34.31 increase, instead of a $34.45 increase.

http://www.dailykos.com/story/2011/07/07/992060/-A-Non-Hysterical-Progressive-Analysis-of-so-called-Social-Security-Cuts-on-the-Table

[bemildred]

1. They lit the bonfire, nobody made then start babbling about "entitlements". nt

[boxman15]

6. On this, I will agree.

Social Security should not have anything to do with debt reduction or the debt ceiling.

That being said, what is being proposed does not bring massive cuts to Social Security benefits at all. It's about ending fraud, waste, and red tape. It is not to reduce benefits. I've seen nothing t suggest otherwise.

[roxiejules]

35. Leads to higher taxes with low wagers seeing biggest increases

http://www.google.com/hostednews/ap/article/ALeqM5j7oZuOr-LwC83YRBMUzm_6vgYXYw?docId=fd1817c3ab1348c69cdc928d8e98f805


Those thresholds, or brackets, are adjusted each year to ensure that people don't get a tax increase just because their incomes increase with inflation. Adopting the Chained CPI would mean smaller adjustments to the brackets, leading to higher taxes for people at just about every income level.

Low-wage workers would eventually see the biggest increases, while high-income taxpayers would see only small changes. That's because the wealthiest taxpayers already pay taxes at the highest marginal rate, currently 35 percent.

For example, by 2021, taxpayers making between $10,000 and $20,000 would see a 14.5 percent increase in their income taxes with a Chained CPI, according to an analysis by the Joint Committee on Taxation. Taxpayers making more than $500,000 would get a tax increase of 0.3 percent, while those making more than $1 million would get a tax increase of 0.1 percent.

[shraby]

2. Here's a big BUT...how much will the medicare payment

deduction go up at the same time? My folks had times when after the medicare came out, even with a cola they had less coming in on Social Security.

[phleshdef]

8. Medicare is probably screwed without a full single payer conversion.

I don't know what they intend to do with it, but the fact of the matter is, its underfunded. Until we have healthy, younger people like myself contributing more into it across the board, I don't see how it survives more than a couple of decades.

Then again, thats probably the situation that will trigger the political will for a single payer system. I'm optimistic.

[Lugnut]

23. Exactly!

SS increases result in an increase of Medicare premiums. They put the money in one of your pockets and take it out of your other pocket.

[boxman15]

3. Oh no!

Reasonable analysis backed up by reality, facts, and stats!

I'd much rather scream about the end of Social Security as we know it! We all know Barack Obama is a spineless, corporatist, stealth Republican! :sarcasm:

[Warren Stupidity]

4. old age pension benefits cut to finance tax cuts for billionaires.

why would anyone have a problem with this?

[phleshdef]

10. This wouldn't even come close to financing those cuts.

And since social security is a separate fund from everything else, theres no way you could tie it to that. I'm not particularly sure why even bother proposing this, unless it somehow tricks the Republicans into thinking they are getting a big payload so they'll stop playing games with the debt.

[Warren Stupidity]

20. "why even bother proposing this"

So here is how small cuts in benefits TO MILLIONS OF PEOPLE end up subsidizing tax cuts to billionaires: that $0.14 per month per recipient extends the surplus phase of the trust fund, putting off into the future the point in time when SS obligations exceed FICA income and the difference has to be paid out of the "unified budget" to meet those obligations. The only other ways to meet those FICA deficit obligations (currently predicted to start kicking in around 2017) are to raise taxes or issue even more debt. Characterizing this as an insignificant change by looking at the smallest possible slice (the delta in one recipients monthly check) is massively dishonest. The aggregate numbers are huge, and it is in fact a raid on the goddamn LOCK BOX of the trust fund. Proposed by a purported Democratic President.

[phleshdef]

25. Its not massively dishonest. Quality of life for SS recipients is really all I care about.

There are plenty of valid arguments to be made on the symbolism of tinkering with a social program versus tinkering with defense spending versus tinkering with revenues from wealthier individuals, etc. My understanding is that the proposal, if accepted at all, will do all of the above. But at the end of the day, if, as an end result, I end up getting fractions of a dollar less in benefits per month because of it, I think thats going to count among the least of my worries.

I've got just as many horses in this race as anyone else. I'm dead in the middle, middle class, early 30s, I have a wife, we haven't had enough money to invest anything significant into retirement outside of our social security investments. We owe a mortgage and student loans and car payments and all that. I'm among the prime groups of people that should be concerned about social security. If its really not going to make more of a difference than that in the future benefit increases, its pretty hard for me to get that blood red upset about it.

[Warren Stupidity]

26. yes it is

See the aggregate effect over time per individual:

[phleshdef]

31. That graph doesn't seem to take into account that benefits would never be decreased from their base.

If someone starts out with 17,000 a year in benefits, his or her benefits would never be decreased due to the chained CPI being low. Their scheduled benefit increase would be based on the chained CPI, but that number would not be applied to what he or she currently gets at that moment.

[Warren Stupidity]

45. real dollar value decreases with lower 'chained' cpi.

That is the whole damn point. The proposal allows the government to inflate its way out of some of its obligations to the SS trust fund - and in doing so allows it to continue tax cuts for billionaires, insane military budgets, etc. Those who will be affected the most will be those people who have no resources besides SS - this proposal is a regressive pile of crap.

[Drale]

5. It was blown way out of proportion by the anti-Obama people

they heard cuts and all of a sudden Obama was going to completely disassemble Social Security.

[roxiejules]

37. Is Rep. Levin anti-Obama?

"A change to a chained CPI would place new burdens mainly on the backs of seniors, middle-income and low-income Americans," said Rep. Sander Levin, D-Mich., ranking Democrat on the House Ways and Means Committee.



http://www.google.com/hostednews/ap/article/ALeqM5j7oZuOr-LwC83YRBMUzm_6vgYXYw?docId=fd1817c3ab1348c69cdc928d8e98f805

[Doctor_J]

50. Obama has gained the friendship of the most reactionary member of Congress

"I want to take this moment to commend President Obama for facing the facts that in order for us to bring our fiscal house in order, we need to take necessary steps to address mandatory spending such as Medicare and Social Security. For too long individuals and special interests groups have used these programs to demagogue and scare seniors in order to gain a political advantage. President Obama says he finally realizes that to save these programs we need to make significant reforms, and I support his goals." ~Congressman Allen West (R-FL)

That should make the apologists happy

[Ozymanithrax]

7. That 14 cents is a box of Macaroni and Cheese every other month...

So for some retirees, that is six meals a year that they must give up because assholes want to cut a program that has never contributed 1 cent to the deficit.

They are asking the wrong people to sacrifice. Fuck them and the pony they dug out of that room full of shit.

It is too much and it is wrong.

[phleshdef]

9. I'm sorry, but nothing you can say will make me angry over 14 cents.

140 dollars, that would make me angry. 14 cents. Nope. Ultimately very few people are going to give a shit, on social security or not on social security.

[Ozymanithrax]

15. Clearly, neither you nor your mother or any relative is gong to lose a meal.

Social Security never contributed 1 cent to the deficit, and that 14 cents goes to subsidizing tax cuts for billion airs.

There are matters of principal involved here. I know it is difficult to understand why 14 cents might matter to millions of people living on fixed incomes, but you should try instead of defending cuts to social security.

[phleshdef]

29. I'm not defending cuts. I just think the level of outrage and the level of difference it makes...

...in people's lives should kind of match each other.

My understanding of the proposal, what little any of us know about it, is that tax increases for the top 2% would have to go in the package as well.

So I'm not sure how you can say its subsidizing those tax cuts, unless you are retroactively applying future savings to past spending/revenue losses.

But with that kind of logic, you could go around in circles all day and end up claiming that any tax on any given thing was made to pay for any given cost our nation has ever had to pay for anything in its entire history. Thats a real slippery slope.

[boxman15]

11. But, their Social Security check is going up about $34 a month regardless.

It's a shame that SS is even being brought up during this debate about the debt ceiling, but the proposed cuts do not involve the complete dismantling of Social Security as some on this site suggest. They are there to bring an end to fraud, waste, and red tape. That's all.

[Ozymanithrax]

16. Fraud, wasted and red tape are code words for let the fucking poor starve.

It is like right to work, which isn't or pro life, which is anti women.

There are matters of principle at work here. Do not support asking the elderly or the disabled to subsidize the tax cuts for billionaires. It is just wrong.

There is no amount of lipstick that will make this pig kissable.

[boxman15]

17. There are no cuts to benefits at all.

I'm with you if there are massive cuts. But, right now, none are on the table. None.

[Ozymanithrax]

21. Not massive cuts, any cuts, any at all.

Social Security has not contributed 1 cent to the deficit. Why should it be on the table at all? There are far greater savings cutting tax loopholes, such as the one for 25 people that will add 4 billion in revenue a year. The elderly and disabled have sacrificed.

[boxman15]

24. I agree with this.

SS should not be in debt negotiations. But, the cuts proposed do not affect benefits at all.

[Ozymanithrax]

27. And you know this how?

I just listened to Obama's statement after his meeting with the leaders of congress. He will not know until Monday what the bottom line of the various players might be. We were once asked to put his feet to the fire. Well, he needs to know that changes to Social Security are not acceptable.

[phleshdef]

12. Also, let me add that eating macaroni and cheese is more harmful than a 14 cent cut would ever be.

People shouldn't be eating that cholesterol, carb loaded, garbage.

[Ozymanithrax]

18. Cat food does have more protein, but people on fixed incomes eat what they can get.

What they can't get from food banks they must buy, and they prefer a full stomach to an empty stomach.

[Ineeda]

38. Really? 14 cents X 2=28 cents

You cannot buy a box of macaroni and cheese for 28 cents. Maybe over the course of seven or eight months, at least. AND the article says that 14 cents would be taken from the $34-$35 increase in SS payments. So there's a net gain of $34-$35 less 14 cents. Not even a tiny, cheap meal being lost, rather, at least one nice one being gained. Ridiculous exaggeration.

[Gregorian]

13. Half a trillion dollars per year on "defense"?

It's the principal, for me. Hell, I never expected to see social security checks. I always figured someone would steal it, or destroy it. But we work 2 hours out of every day just to support the military bullshit. And we have no health care.

It's the principal that we would touch the untouchable while feeding the bottomless pit.

[MannyGoldstein]

14. Totally misleading. Per year, it's not big but it compounds every year.

It turns into thousands of dollars over time:

http://strengthensocialsecurity.org/media/blog/2011/chained-cpi-cuts-benefits-more-with-each-passing-year-a-new-analysis

[valerief]

19. When you give an inch they take a yard. No, they take a trillion yards. nt

[DeSwiss]

22. You'll no doubt be happy to learn that President Obama and Alan West are sympatico.....

"I want to take this moment to commend President Obama for facing the facts that in order for us to bring our fiscal house in order, we need to take necessary steps to address mandatory spending such as Medicare and Social Security. For too long individuals and special interests groups have used these programs to demagogue and scare seniors in order to gain a political advantage. President Obama says he finally realizes that to save these programs we need to make significant reforms, and I support his goals." http://weblogs.sun-sentinel.com/news/politics/broward/blog/2011/07/shocker_congressman_allen_west.html">~Congressman Allen West (R-FL)

[MichiganVote]

28. Ok. So take the fucking 14 cents from the guy making 14million. Got it?

[damntexdem]

30. Not for a moment do I believe the 14-cents bullshit.

But even if true, it's the camel's nose in the tent. And if Dems go for it, I'll try gnashing my teeth on their electoral garments.

Let's hear it for teeth gnashing and garment tearing!!!

[blkmusclmachine]

32. It's theft of OUR money, any damn way you slice it.

Plain and simple.

[izquierdista]

33. First they came for 14 cents a month and I said nothing...

[roxiejules]

34. Annual reduction starts at $130 yr. and grows....

http://www.google.com/hostednews/ap/article/ALeqM5j7oZuOr-LwC83YRBMUzm_6vgYXYw?docId=fd1817c3ab1348c69cdc928d8e98f805


As the possible cuts are phased in, a typical 65-year-old who started receiving Social Security benefits at age 62 would get an annual reduction of about $130, according to an analysis of data produced by the Social Security actuaries. By the time that retiree reached 75, the annual cut would be $560. At 85, the cut would be $984 a year.

Average Social Security benefits are about $1,100 a month, or about $13,000 a year.

[Nancy Waterman]

36. Thank goodness someone is covering this!

Enough histrionics about changing the way the cost of living on Social Security is calculated. Obama is not betraying us. Get a grip people.

[Bluenorthwest]

40. Oh, she said 'histrionics' wow!

Characterizations of others are for those who have no actual point to make, yet wish to vent some gas into the room.
If they do this, they can forget any support, all of them, until each of them is gone.

[Bluenorthwest]

39. This is a wall of words without any real world context

Got to say, no matter what your opinion of the President's actions might be, this issue is of vital importance to the entire nation, particularly to our elderly and most vulnerable. Because of that, it is amoral and unacceptable to come at the discussion with a verbal game of three card Monty.
Enough of the storm of bullshit.

[Bluenorthwest]

41. Social Security has nothing to do with deficite reduction

which is the alleged point here. If the money is so insignificant, why not take it from those who make millions a month? Why the least among us? Any answer for that? Simple question. No supersonic verbiage needed.

[bhikkhu]

42. Wow - that someone would unrec an explanation of the math here...

Keeping in mind, the only people who would object to a simple explanation of how the math works on one adjustment they are talking about are the ones who want Obama out of office at all cost.

Way too much hair-on-fire here over misinformation, exaggeration and lies!

[whosinpower]

43. Math is not correct

Hamden still tries to keep his point even though it is not 14 cents, but just over 4.00 and that it compounds.

14 cents would end up being a cut of around 50? million - which is far far far below what Obama is looking for.

So - it cannot be right, and should not be used as justification to support or condemn Obama. It is just speculation.

[muriel_volestrangler]

44. Note HamdenRice's update - he got it wrong, and it's $4/month, not 14 cents

A few people have pointed out what they think is a math error on my part.

Actually, if they are right, it is a writing error on the part of the BLS website, which somewhat opaquely says that the chained CPI would cause a .38 reduction in the increase in the benefit rather than a .38 reduction in the benefit.

If the BLS website is wrong, then the monthly difference would be about $4 rather than 14 cents.

$4 in real dollar terms is significant for seniors who rely wholly or significantly on social security for basic living expenses because that could easily translate into two or three meals per month.

Yes, the difference is 0.3%-0.4% of the total amount. HR just read it wrongly. This is perfectly obvious from the BLS report; I don't know why he got it so wrong. Just look at figure 1 in this pdf, for instance: http://www.bls.gov/osmr/pdf/st050060.pdf You can see that in Jan 2001, the Regular CPI was about 3.7%, and the Chained CPI estimated at about 3.0%. The difference narrows after that, but it's close to the 0.3 to 0.4% difference.

And that $4/month becomes $8/month after 2 years, $12 after 3, and so on.

On edit: good ol' HamdenRice, eh? It's a shame the 'emo progressives' on DailyKos caught his mistake, but he couldn't face up to it without spitting at them. I don't miss his ungraciousness.

[Warren Stupidity]

46. And it is compounded over time.

Presenting the cost of this cut as a one time "slice of the pie" is incredibly dishonest.

[muriel_volestrangler]

47. The compounding effect is fairly small - estimating it as '$4/month, each year' is very close

After 20 years, it will have grown from $4/month to $83/month (1.004^20 = 1.083); so "$4 * 20 = $80" gets a fairly close figure, even after 20 years.

Someone on Kos found out HamdenRice's fundamental mistake - the BLS said "a different of 0.38 percentage points", and HR thought that meant one CPI increase figure was 1.0038 times the other, because he didn't realise that 'percentage points' always refer to the main object, ie the index. Which might not be so bad, but you'd think he'd check his understanding with someone when he came out with a radically different result to all the media and web analyses.

[boppers]

48. Still less than a pack of smokes. A month.

If you're living on ramen, going on a tenpack for a buck sales, that's 40 meals....

But it's still only $4.00 a month.

.....For shit our people (and they are our people) weren't buying to start with, which is the whole point of Chained CPI, to not cover the X-box subscriptions, regular recreational driving, text messaging fees, online dating site fees, luxury foods picked by organic virgins, designer medications and doctors, and other expenses that seniors don't typically incur.

And yes, it's compounded, for shit the elderly aren't using, or buying, or otherwise spending money on.

My favorite update really gets to the heart of the issue though, where the honest question is asked (paraphrasing): Should our senior program minimize poverty, or should we give them luxury, or something in-between?

I think I already know what the boomer answer is.

[Doctor_J]

49. Ah, yes. "It's really LITTLE cuts"

Couldn't see that coming could we?

Really pathetic.