Bipartisan efforts are underway in both the U.S. House and Senate on serious plans to overhaul Social Security and Medicare. Recently, House Majority Leader Eric Cantor (VA-7) said a “prescription” on entitlement reform would be included in budget proposals expected to be released in March or early April.
In the Senate, a bipartisan group of senators is considering legislation that would set new government spending limits for Social Security, Medicare and Medicaid as well as military and civil service retirement plans. Their goal is to produce legislation that will either make the decisions that Congress has avoided for decades or to set up a process that would trigger changes automatically if lawmakers fail to act.
If the Senate’s own plan should fail, the senators are considering a back-up provision that would force an up or down vote on the plan of President Obama’s Fiscal Commission. The Fiscal Commission’s plan would eliminate the Social Security shortfall by changing the benefit formula, raising the amount of wages subject to payroll taxes, increasing the retirement age and reducing the growth in cost-of-living adjustments (COLAs).
The Congressional Quarterly reports that the senate group is considering a proposal to replace the current cost-of-living index used to calculate Social Security and other federal benefit increases with the “chained” Consumer Price Index (CPI). According to TSCL studies, that change would cut the benefits of all current retirees as well as future retirees, and the cuts would compound, growing deeper the longer an individual receives Social Security. A study for TSCL found that if the government were to have used the “chained” CPI to calculate COLAs starting in 2009, average benefits of $1,153 would be cut by $16,634 through a 21-year retirement and by almost $37,563 through 2037. By the time the retiree reaches 90, monthly benefits would be $272 lower than under current law.
TSCL members and supporters tell us that they are already finding it extremely challenging to live on Social Security benefits and cover other rising costs, with COLAs growing as slowly as they already do. With almost 70 percent of seniors relying on Social Security for more than half of their income, cutting COLAs would cause benefits to become increasingly inadequate to cover rising costs over time, especially for health care.
TSCL strongly opposes COLA cuts and plans to fight any legislative proposal that cuts the annual boost in Social Security benefits that today’s seniors have earned and paid for. We urge you to get involved! Contact your Representative in the House and your U.S. Senators to let them know your feelings about benefit cuts. For more information, visit www.SeniorsLeague.org or call toll free 1-800-333-8725.
Sources: “Cantor Sees Social Security Reform Proposals Soon,” Reuters, February 25, 2011. “Deficit Plan Details Emerge,” Jonathan Weisman, The Wall Street Journal, February 17, 2011.