In his role as the head of the Defending Social Security Caucus, Sen. Bernie Sanders is warning that some in Washington want to cut benefits by changing the way annual cost-of-living adjustments are calculated. It was announced this week that there will be a 1.7 percent increase next year. "The fact of the matter is that the current formulation as to how you determine a COLA is, in my view, inadequate and does not fully take into consideration the type of inflationary pressures that seniors face in terms of the high cost of prescription drugs and of health care," the senator told radio host Stephanie Miller. "There is a plan afoot right now - and this is a hugely important issue in Washington - in which virtually all of the Republicans and some Democrats are talking about reformulating how we determine a COLA, which would lower Social Security benefits for seniors and for disabled veterans."

Sanders added; "In my view, it is wrong to be talking about Social Security in the name of deficit reduction because Social Security hasn't contributed a nickel to the deficit, has a very large surplus and can pay off all benefits owed to eligible Americans for the next 21 years. So I would really like to hear in this debate the president to be much stronger in taking it to the Republicans on the issue of Social Security."

A coalition of 96 groups has echoed Sanders' concerns in a letter to congressional leaders. Here's the letter:

October 16, 2012

The Honorable Harry Reid The Honorable Mitch McConnell
Majority Leader   Republican Leader
United States Senate United States Senate
Washington, DC 20510 Washington, DC 20510

The Honorable John Boehner The Honorable Nancy Pelosi
Speaker   Democratic Leader
United States House of Representatives   United States House of Representatives
Washington, DC 20515 Washington, DC 20510

Dear Leader Reid, Leader McConnell, Speaker Boehner, and Leader Pelosi:

We write to express our strong opposition to substituting the so-called "chained CPI" as a measure for cost-of-living adjustments to Social Security and other benefits received by veterans, seniors, retirees, surviving spouses, and others.

The purpose of an inflation adjustment is to ensure that the value of Social Security and other modest but vital benefits does not erode over time. The proposal to switch to the chained CPI would, over time, slash the benefits of both current and future beneficiaries. Specifically, it would cut the basic benefit - currently averaging a modest $13,500 for all beneficiaries - and break the bipartisan promise not to cut the benefits of current seniors. 

The current index, the CPI-W, understates inflation because it does not adequately take into account health care costs, which are a larger part of the spending of seniors and people with disabilities, on average, than the rest of the population.  The so-called chained CPI is even less accurate and appropriate as an inflation measure for these populations.  The attached graph shows a comparison of current law, the even less accurate chained CPI, and the more accurate CPI-E.

One of the most problematic aspects of the chained CPI is that the cuts are larger the longer you receive benefits - meaning that the chained CPI would disproportionally hurt many women, veterans, people with disabilities, and others. For example, veterans wounded in combat and others disabled at young ages would be disproportionately hurt. Seniors, especially women, who live long lives would also be hurt disproportionately. The chained CPI would decimate the Supplemental Security Income (SSI) program, because it applies to the maximum federal benefit the program pays, and thus has a greater cumulative effect.

The cuts that Social Security beneficiaries and others would face as a result of implementing the chained CPI may seem to some like a relatively small sacrifice, but the cuts quickly snowball as they compound, growing deeper every year.  By age 85, the individual who began to receive benefits at 65 would be losing $984 in benefits that year; by age 95, the annual cut would be $1,392. Many individuals reaching this age have little to any retirement savings to rely on to make up the difference. Additionally, since elderly individuals living on modest fixed incomes spend, on average, $56 on groceries for a week, cuts of that size may mean foregoing food or needed medicine.

For some beneficiaries, the increase in the Social Security benefit will be completely consumed by the increase in the Medicare premiums, leaving current Social Security beneficiaries effectively with no COLA at all. No matter how it is presented, the use of the chained CPI as the basis of the Social Security COLA will be understood for what it is - a benefit cut.

While some view the chained CPI as an attractive choice as part of a so-called "balanced" package, the vast majority of benefit cuts - and tax revenue - that would result from implementing the chained CPI government-wide would be exacted from low- and middle-income individuals. We strongly urge you to stand up for the many individuals and families who count on Social Security and other federal benefits and reject the chained CPI.

Sincerely,

Action NC
AFGE
AFGE Council 220, AFGE National Council of SSA Field Operations Locals, AFL-CIO
AFL-CIO
AFSCME
Alliance for Retired Americans
American Association of University Women (AAUW)
American Federation of Government Employees (AFGE), Local 3937, AFL-CIO
American Federation of Teachers
Americans for Democratic Action
APWU Retirees Department
Asociacion Nacional Pro Personas Mayores
Association of Jewish Aging Services
B'nai B'rith International
Blinded Veterans Association
Brain Injury Association of America
California Alliance for Retired Americans
Campaign for America's Future
Campaign for Community Change
Champaign County Health Care Consumers
Coalition of Labor Union Women
Coalition on Human Needs
Communications Workers of America
CREDO Action
CWA Retired Members' Council
Democratic Socialists of America
Department for Professional Employees, AFL-CIO
Disability Rights Education & Defense Fund
Easter Seals
Economic Opportunity Institute
Frances Perkins Center
Granite State Organizing Project
Gray Panthers
International Brotherhood of Teamsters
International Longshore and Warehouse Union
International Union, United Automobile, Aerospace and Agricultural Implement Workers of America - UAW
Iowa Citizens for Community Improvement Action Fund
Latinos for a Secure Retirement Coalition
League of Rural Voters
Maryland NOW
MoveOn.org
NAACP
National Academy of Elder Law Attorneys
National Active and Retired Federal Employees Association
National Asian Pacific Center on Aging
National Association of Nutrition and Aging Services Programs
National Caucus and Center on Black Aged, Inc.
National Committee to Preserve Social Security and Medicare
National Council of Women's Organizations
National Council on Independent Living
National Education Association
National Gay and Lesbian Task Force
National Hispanic Council on Aging
National Indian Council on Aging
National Military Family Association
National Nurses United
National Organization for Women
National Partnership for Women & Families
National Senior Citizens Law Center
National Women's Law Center
Nebraska State Education Association-Retired
New York State Alliance for Retired Americans
North Carolina A. Philip Randolph Institute
Older Women's League, Seattle/King County
Omaha Education Association-Retired
OWES Older Women's Economic Security Task Force of the National Council of Women's Organizations
OWL-The Voice of Midlife and Older Women
Pacific Coast Pensioners Association - ILWU
Paralyzed Veterans of America
Pennsylvania State Education Association
Physicians for a National Health Program, Western Washington
Progressive Democrats of America
Puget Sound Advocates for Retirement Action
Seattle Chapter of NOW [National Organization for Women]
Seattle Community Law Center
Service Employees International Union
Services and Advocacy for GLBT Elders (SAGE)
Social Security Works
Southeast Asia Resource Action Center
Steelworkers Organization of Active Retirees
Tacoma Area Retirees Association
The Arc of the United States
UFCW 21
United Steelworkers
VetsFirst, a program of United Spinal Association
Vietnam Veterans of America
Virginia Organizing
Voices for America's Children
VoteVets.org
Washington Community Action Network
Washington State Labor Council, AFL-CIO
Wider Opportunities for Women
Working Families Win Iowa
Working Families Win New Hampshire
WV Citizen Action Group
YWCA USA