What Your Member Of Congress Might Try To Tell You About The COLA
Don’t be surprised if you hear your Member of Congress say that the Social Security cost–of–living adjustment (COLA) is too high — and that you are overpaid. Even though the COLA has only averaged 1% in recent years, your COLA could become a target for cuts — again.
A budget proposal to switch to a more slowly-growing alternate consumer price index for calculating the annual Social Security cost–of-living-adjustment (COLA) is a bad deal for older Americans. Switching to the chained CPI known as the Chained Consumer Price Index for Urban Consumers (C-CPI-U) would reduce benefits by roughly 7% over a 30-year retirement. According to a recent analysis, if the proposal were to take effect this year, average benefits would be about $35 per month lower by 2026, and about $92 per month lower in 20 years.
Some proponents argue that this “chained” CPI is “more accurate,” but don’t believe it! Even the Congressional Budget Office has stated that using that index has limitations. It would not be direct measurement of the growth in costs of specific goods and services, which is the way most people think of inflation. According to the Congressional Budget Office, the chained CPI measures the amount of additional resources that an individual would need to maintain the same standard of living this year as last year. That would be little help for people on fixed incomes when their prescription drug costs soar.
A COLA that reflects real cost changes is essential protection and of far greater value than a measure that reflects how people are forced to reduce their standard of living when costs rise. One gives a modest boost, the other would tend to cap the growth in Social Security benefits over time.
The proposal to switch to the chained CPI has come up numerous times during past budget negotiations. Most recently the proposal appeared in a 2016 House bill that would reform Social Security, and in a fiscal year 2017 budget proposed by the Republican Study Committee.
TSCL is fighting the proposal through national efforts from grass roots activists like you. Please help set the record straight by contacting your Members of Congress.