Chained CPI: An economic, moral disaster

By:  Sen. Bernie Sanders (I-Vt.)

How many candidates for Congress last year won on the following platform?

1. That Social Security cost-of-living adjustments are too generous. Social Security should be cut over the next two decades by more than $1,000 a year for 85-year-old widows living on $1,200 a month. 

2. That benefits earned by disabled veterans as a result of losing their arms, legs or eyesight in Iraq and Afghanistan are too generous. Disabled veterans’ benefits should be cut over the next 15 years by more than $1,400 a year.

3. That working families and the middle class don’t pay enough in taxes. We need to enact an across-the-board tax increase that disproportionately hurts workers making between $30,000 and $40,000 a year.

Answer: None.

And yet all of these things will happen if Congress changes the way inflation is calculated by switching to a consumer price index (CPI) designed to lower cost-of-living adjustments. 

The so-called “chained CPI” is Washington shorthand for one of the most-talked-about cuts favored by Republicans and some Democrats. 

Unfortunately, few outside the Beltway understand its consequences. It is a devious and underhanded way to wage class warfare against working families. 

Wall Street billionaires and other supporters claim that changing the consumer price index is a “minor tweak.” Tell that to the millions of senior citizens trying to survive on just $14,000 a year whose Social Security benefits would be cut overall by $112 billion during the next decade. 

Average 65-year-olds would get $650 a year less in benefits when they turn 75 and see a $1,000 a year cut when they turn 85.

The truth is that the formula for calculating Social Security cost-of-living adjustments does not accurately reflect the spending patterns of senior citizens. It short-changes them because seniors by and large aren’t spending their money on big-screen televisions, laptop computers or iPads. 

Instead, a disproportionate amount of their income goes to pay highly inflated prices for healthcare and prescription drugs. A superlative measure of inflation for seniors would increase benefits, not cut them.

A chained CPI would do more than cut Social Security. It also would cut the benefits of more than 3.2 million disabled veterans in this country.

Permanently disabled veterans who started receiving disability benefits from the Veterans Administration at age 30 would see their benefits cut by more than $1,400 a year at age 45, $2,300 a year at age 55 and $3,200 a year at age 65. 

I challenge anyone who supports a chained CPI to go to Walter Reed. Visit with the men and women who have lost their legs, lost their arms or lost their eyesight as a result of their service in Afghanistan or Iraq. We made a promise to these veterans. Cutting their cost-of-living adjustments would be reneging on those promises. 

Adding insult to injury, the chained CPI also would amount to an across-the-board tax increase on working families. 

According to the Joint Committee on Taxation, switching to a chained CPI would increase taxes by more than $59 billion over the next decade. 

More than three-quarters of the new revenue raised by the year 2021 would come from Americans making less than $200,000 a year. Those making between $30,000 and $40,000 would be hit the hardest, while those making more than $1 million would see virtually no change. What about President Obama’s promise that there would be no income tax increases for people making less than $250,000 a year?

Deficit reduction is important, but we must not balance the budget on the backs of the elderly, the veterans, the children, the sick and the most vulnerable people in America. There are fair ways to reduce the deficit. Instead of cutting cost-of-living adjustments for senior citizens and disabled veterans, let’s stop offshore tax haven abuses that allow the wealthy and large corporations to avoid paying $100 billion a year in U.S. income taxes. Instead of raising taxes on struggling working families, let’s demand that the one 1 of 4 profitable corporations in America that pay nothing in federal income taxes start paying their fair share. 

There is a reason why every major organization representing senior citizens, working families, veterans and women is strongly opposed to the chained CPI. They understand, as do the vast majority of Americans, that working families have suffered enough during this recession, and that it is time for the large corporations and the wealthy to play a significant role in reducing the deficit. 

Sanders is chairman of the Senate Veterans Affairs Committee, and also serves on the Senate Health, Education, Labor and Pensions Committee and the Senate Budget Committee.