Social Security COLA
October 16, 2012
Social Security recipients will see only a 1.7 percent increase in monthly benefits next year. The small change is tied to a measure of inflation released Tuesday. Sen. Bernie Sanders said the announcement underscores the need to shield seniors and disabled veterans from proposals to cut benefits. "The method for calculating inflation for seniors is broken. Instead of fixing the problem, some in Washington and on Wall Street want to make a bad situation even worse by cutting benefits for senior citizens and veterans through a so-called chained CPI. It would be a shock to millions of seniors and disabled veterans to learn that some in Washington think their current COLAs are too generous," said Sanders, who founded the Defending Social Security Caucus in the Senate.
The 2013 COLA amounts to one of the smallest increases since automatic adjustments were adopted in 1975. Social Security recipients received a 3.6 percent increase in benefits this year after getting none the previous two years.
It could get worse. Today's senior citizens and disabled veterans would see their benefits go down under a plan pushed by former Sen. Alan Simpson and Erskine Bowles, the investment banker and former White House chief of staff. Among other draconian cuts, the Simpson-Bowles plan would change the formula for calculating inflation by shifting to a chained CPI or consumer price index.
"Let's be clear: for millions of senior citizens and disabled veterans living on fixed incomes, the chained CPI is not the minor ‘tweak' that some say it is. It is a significant benefit cut that will make it harder for the elderly and veterans to make ends meet."
Under the chained CPI, the average senior who retires at age 65 would see their Social Security benefits cut by about $560 a year when they reach 75 and by about $1,000 a year once they turn 85. At the beginning of 2012, the average Social Security benefit for a retired worker was $14,760 per year.
The chained CPI would also substantially cut the VA benefits of more than 3 million veterans. The largest cuts would impact young, permanently disabled veterans who were seriously wounded in combat. According to the Social Security Administration, the chained CPI would mean that permanently disabled veterans who started receiving VA disability benefits at age 30 would see their benefits cut by more than $1,300 a year at age 45; $1,800 a year at age 55; and $2,260 a year at age 65.
"The idea of balancing the budget on the backs of some of the most vulnerable people in our country - the elderly, orphans, widows and disabled veterans - is not only morally grotesque, it is extremely bad economics," Sanders said.
The senator is backing another proposal to change the way inflation is calculated for seniors. It would likely raise benefits by taking into account the greater costs for health care and prescription drugs as well as home heating and cooling, which generally outstrip inflation for other goods and services used by the population at large.