Posted by StreetWise in Magazine Articles
Chicago demonstrators outside a fundraiser for U.S. Sen. Dick Durbin (D-IL) at a River North steakhouse don’t want to eat bologna because of his negotiations around Social Security.
Durbin has supported a “chained consumer price index” in calculating cost of living adjustments (COLAs) to Social Security. This will mean lower overall lifetime benefits, said Lori Clark, executive director of Jane Addams Senior Caucus. The consumer price index (CPI) is “chained” when it reflects substitutions shoppers would make when faced with lower income.
“It won’t be based on how seniors spend their money, it will be based on ‘if seniors can’t buy steak, they will buy chicken,’ ” Clark said. “The cuts will get worse and eventually they won’t buy meat. We will go from bologna to Spam.”
If a person collected Social Security for 30 years, a chained CPI could mean thousands of dollars less in benefits, Clark said.
Members of the Jane Addams Senior Caucus, along with advocates from ONE Northside, SOUL (Southsiders Organized for Unity and Liberation), Northside Power and IIRON demonstrated on November 25 outside Mastro’s Steakhouse at 520 N. Dearborn St., where Durbin was having a fundraiser attended by Vice President Joe Biden. The advocates also leafleted people headed to the fundraiser; the sheets asked that the chained CPI and raised retirement age be taken off the table.
“What we need is: Revenue NOT cuts,” the leaflets said. “If you are having lunch with Senator Durbin and the Vice President please tell them. If you can’t afford the lunch call Senator Durbin 312-353-4952.”
The leaflets instead suggested a “Robin Hood tax” of one-half of one percent on Wall Street transactions as a means of raising revenue for Social Security.
Clark said revenue could also be raised by “scrapping the cap” on Social Security payroll taxes. Right now, the cap is at $113,700, which means someone earning $500,000 would be taxed at the same rate.
“They are trying to reform this program on the backs of seniors who are already struggling to make ends meet, many of whom rely on Social Security for 100 percent of their retirement,” Clark said.
Durbin told the Wall Street Journal on March 20 that the chained CPI would reduce benefits on a three percent cost of living increase by .25 percent. That’s $3.50 a month for an average Social Security recipient’s $12,000 a year.
Over a year, the chained CPI would have reduced their $360 cost of living adjustment by $42, Durbin said. The outcome, he said, would be 50 more years of solvency in the Social Security fund.
Durbin said he also favored raising the age limit for Social Security retirement to 68 and continuing to raise it nine days a year for the next 40 years. “So next year, it’s 67 years and nine days you qualify for Social Security. And the following year, 18 days.” Durbin said he was willing to “walk into this thicket” because the Illinois pension fund was ignored for 40 years and now cannot meet its obligations.
According to the website for AARP, chained CPI would compound COLAs annually. The $3.75 this year would be $7.61 next year. Virginia Reno of the National Academy of Social Insurance said that the lifetime loss to a woman with the average monthly benefit of $1,100 would be $15,000 by age 90.
On April 10, Sean Sullivan in WashingtonPost.com said that President Obama put chained CPI in his budget as a “compromise and challenge.”
Sullivan wrote, “Obama is trying to show Republicans that he is serious about trying to strike a big deficit reduction deal – serious enough to find some middle ground with them, even if it means enraging part of his base by embracing ideas like chained CPI.
“But it’s also an effort to challenge Republicans to embrace new tax revenue as part of the deal – something they have been mostly
unwilling to do since the tax increases they signed off on in the deal to avert the ‘fiscal cliff.’ ”