- Posted July 21, 2011 by
Watertown, New York
This iReport is part of an assignment:
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No Social Security COLA for 2012, 2013, or...If Government "Figures It Right"
Figures COLA right for whom- for Seniors or for Congress?
Cutting our deficit on the backs of Senior citizens seems to be the direction that our "progressive" Democratic President and the mean-spirited Congress seems poised to go.
Maybe it's easier to attack seniors than those wealthy hedge fund managers that fund both party's campaigns.
American senior citizens haven't seen a Cost Of Living Adjustment in some time. If Congress and Obama get their way, they may not see an increase in COLA ever again.
Everyone knows there's been no inflation in our economy. Right? And if there is, just remove that item from the list, and "Presto!"- no inflation.
There will be even less inflation if our government figures it RIGHT.
The Consumer Price Index is used for these calculations.
Question is: Chained or unchained?
There's a new formula Congress can use to determine that there's no inflation in our country.
This formula may be similar to the one government uses to determine our level of unemployment.
Instead of allowing the Bush Tax Cuts to expire, Obama and Congress think seniors won't mind if they get no increase to their Social Security checks. Isn't this the time for all to share the sacrifice?
As Grover Norquist has said,"American people would feel the effect of allowing the tax cuts on the rich to expire."
Yes. America's middle class would would feel the difference when the wealthy paid more and sacrificed more.
The effects would be positive. Seniors would be able to buy Oranges when the price went up rather than switching to apples which were cheaper.
How will our government balance their budget so they can continue to afford all their wars?
Here's the formula:
As Congress struggles with ways to reduce the federal deficit, one of the approaches that appears to be among the most likely to be adopted is a revision in the way the Consumer Price Index is calculated.
The CPI measures how much the cost of the things people buy is affected by inflation.
The chained CPI, which the Bureau of Labor Statistics has calculated in addition to the classic CPI over the last few years, takes into account the lifestyle changes we make when the price of something rises.
For instance, if the cost of oranges goes up, a lot of us switch to buying something cheaper, like apples.
The chained CPI acknowledges that and factors it into the calculation, producing a lower cost-of-living adjustment, or COLA.
The classic CPI is used to measure the cost-of-living adjustments for Social Security recipients.
If Social Security is required to adopt the chained CPI instead, cost-of-living increases to Social Security will be lower, a factor for anyone doing retirement planning.
The Senior Citizens League, a nonpartisan advocacy group, is among those already lobbying against this proposal.
The Senior Citizens League contends that the chained CPI doesn't take into account costs that affect people living in retirement.
For instance, when the cost of medicine goes up, most older people can't switch to a cheaper brand. It just doesn't work that way.
Switching to the chained CPI would reduce Social Security COLAs by about 0.3 of a percentage point each year, the Congressional Budget Office estimates, saving the federal government more than $200 billion over the next 10 years.
Most of the savings would come from lower Social Security benefits and lower retirement benefits for federal employees, whose increases also are tied to the CPI
The Senior Citizens League calculates that such a change would reduce Social Security benefits by an estimated 7 percent over a 25-year retirement.
For a senior who retires in 2011 and receives the average Social Security benefit -- about $1,100 per month -- this would reduce benefits over 25 years by $18,634.
The cuts would be very small in the beginning but escalate as recipients age.
Supporters of the "chained" CPI plan propose it also would increase the Social Security minimum benefit so the poorest Social Security recipients wouldn't be as affected.
Nevertheless, it's clear that people who are living on nothing besides Social Security -- about 25 percent of recipients -- would feel the pinch.
Read more: Cut Social Security COLAs? www.Bankrate.com
Passing a portion of the deficit hot potato is the easiest way to avoid an obligation at hand.
Just pawn that obligation off onto whomever is unfortunate enough to have no power or influence with politicians who are in decision-making roles.
The Social Security COLA should not be calculated from the consumer price index (CPI), since the CPI is based on the purchases of young urban workers and does not reflect the actual expenses of senior citizens.
Even when CPI-based inflation is very low, the expenses that form the backbone of senior citizens’ budgets – medical insurance, prescription drugs, fuel – continue to rise alarmingly.
The federal government itself recognizes the inequity of a CPI-based COLA by calculating a senior-specific CPI formula, which it never uses, that shows our cost of living rises faster than that of most young people."
While it seems apparent that seniors and retirees are targets to be adversely impacted in the name of shared sacrifice, the question remains, where is the sacrifice of Wall Street and in the banking community delineated in these negotiations?
The very same institutions which played a lead role in causing this deficit crisis are realizing unprecedented profits in these times but are left untouched in these negotiations.
Thinking of the trite truism to be forewarned is to be forearmed, the question is will we as progressives remain silent as this outrage is perpetrated?"