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AARP's Position on Social Security

[NOTE FROM RONNI: A new poll of 2056 adults from Harris Interactive shows that only 12 percent of Americans favor cutting Social Security. When broken down by political party, it doesn't change much: 9 percent of Democrats favor cuts and 13 percent of Republicans.

Below is a letter sent to AARP CEO A. Barry Rand from TGB reader Jim Newman objecting to Rand's support of “strengthening” Social Security by adopting the Chained-CPI method of calculating cost-of-living. As Jim explains, this calculation would dramatically reduce COLA increases to Social Security especially for those most in need.

Undoubtedly, in this year's budget debates, Republicans will try to cut Social Security one way or another and AARP has a lot of clout in Congress.

Jim, who will be 66 on Thursday, is a retired engineer living in Colorado where he is politically active serving on various boards and commissions. His passion is road biking and in winter, he says, he skis and “moves snow.”

Please read Jim's excellent letter. It behooves all of us to understand who is making the maneuvers to cut Social Security and how they are doing it.


Dear Mr. Rand:

I read your op-ed piece, "Social Security: We're Listening" in The January-February 2012 issue of the AARP Bulletin and am shaking my head over your recommendations to "strengthen" our Social Security system.

You are echoing the recommendations of The National Commission on Fiscal Responsibility and Reform, the "blue-ribbon" panel of 18 that President Obama established last year to come up with recommendations for reducing the deficit. As you know, this panel of experts could not gain agreement among themselves on their own recommendations.

Although I feel that some of the recommendations made by the Commission may have merit, others are very troublesome - particularly the one for shifting from the present method of calculating Social Security cost-of-living adjustments to a new and improved method termed the Chained-CPI. This is the one advocated by you - but not described in any detail - in your article.

Shifting to the Chained-CPI has been justified by some on the grounds that it is merely a technical change - a more accurate way of measuring changes in the cost of living. However, when examined in detail the Chained-CPI fails miserably in its claim to be a more accurate way of measuring changes in the cost of living for Social Security beneficiaries.

What it succeeds admirably in doing is lowering Social Security benefits for all current and future beneficiaries with the added kicker of producing deeper cuts the longer an individual receives benefits.

Rather than focusing on the elderly to pay the price for deficit reduction through reduced cost-of-living benefits, we should be advocating for a hands-off approach on this issue, if not an increase in these benefits.

There is strong evidence that the current method for determining cost-of-living adjustments understates rather than overstates the effects of cost-of-living changes on older individuals because it does not account for older individuals' greater health care spending compared to consumers overall.

This is generally attributable to the fact that health care costs are rising more quickly for older Americans than those of other items in the typical American’s budget.

For people 65 to 75, their share of health care spending is estimated to be twice as large as for consumers generally. For those 75 and older, health care expenditures are a whopping two-and-one-half times greater than the typical consumer.

It also has to be pointed out that these health care expenditures do not include health costs paid by employers or by federal government programs. Therefore, even with Medicare, out-of-pocket health care expenses are a greater burden on the budgets of older households than on consumers generally.

(See Brian W. Cashell, Congressional Research Service, A Separate Consumer Price Index for the Elderly? [pdf] and the Congressional Budget Office, Different Measure of Inflation [pdf].)

Furthermore, because the impacts of the Chained-CPI are multiplied each year, the cumulative effects on individuals who rely on Social Security as their major or sole means of existence can become unbearable in a very short time.

For example, a benefit cut of $56 per month or $672 per year (the cut at age 80 from the reduced cost-of-living benefit for an individual with an initial monthly benefit of $1,100), is equivalent to more than a week’s worth of food each month or 13 weeks of food annually.

Each additional year you are fortunate enough to live will result in a consequent reduction in ability to feed yourself due to the multiplier effect. If you are one of the now unlucky millions of individuals who must depend on Social Security payments to feed yourself in the future, get ready to go hungry.

(Information is based on national data from the Elder Economic Security Standard Index developed by Wider Opportunities for Women and the University of Massachusetts, Boston.)

A change to the Chained-CPI is not a position that you as CEO of our nation’s largest and most influential senior’s organization should be advocating. Let’s call it what is and what it is not.

It is not a simple technical change that some of our Congressional leaders would have us believe. It is a fundamental and substantial cut in Social Security benefits, one that will reel with negative impacts to the millions of Americans who rely on it just to make ends meet.

In conclusion, you should be using your influence and leadership to question not only the proposed change to the CPI but also the greater issue of why some of our elected leaders are using Social Security benefits as part of a package to reduce the federal deficit.

Social Security is not an entitlement program as many elected officials propagandize.

It is a social insurance program.

It is financed by workers and their employers.

It has not contributed one single dime to the federal deficit, and quite to the contrary has allowed the ”balancing” of our federal books in years past by the lending of a substantial portion of its $2.6 trillion reserves to the Congress to cover its spending binges.

I expect more from you than what you have so far given to us in your article.


At The Elder Storytelling Place today, Ronni Bennett: An Important Message For All Blog Subscribers


Comments

As an insurance broker, I work with people on Medicare and Social Security, and I am amazed at how many people have very little or no savings to use during their retirement years.

Many of these people are women who worked at low-paying jobs while they raised a family. They are certainly not rewarded by the "family values crowd" as their Social Security benefits are generally below $1,100 per month.

Many of these women are divorced and can't claim their ex-husband's Social Security until he dies. So they live on the edge and hope they can afford the co-pays for doctor visits, tests, and, heaven forbid, a stay in the hospital. Then there are co-pays for prescriptions, the rent, electricity...and food.

I don't know how they do it. Living in a single-wide trailer here in Arizona, they might get by on $1,100 per month - as long as they don't get sick.

Thanks for sharing with us Jim's hard-hitting, fact based, logical, comprehensive narrative.

The Republicans just won't rest until they destroy the best program ever initiated in the United States. One way or another, they will chip away at it until it's no longer viable.

Thank you, Denise, for alerting me to another pitfall for my daughter. She was a stay-at-home mom for 16 years and, as such, does not have a large base for S. S. income and, as a divorcee, she will not be able to file a claim on her husband's very large income. What a lousy rule. She contributed to his income during those years she stayed home to raise their daughters and she wrote all of his reports making it possible for him to achieve the high status that made him successful. Just another example of a way women are screwed.

To me it sounds like it will be a very difficult way to figure out cost of living as what do you do about people who don't have one of those eat-anything stomachs. It makes it harder to figure out if they are fudging the data. frankly I think their current cost of living thinking is rigged to hide the true inflation rate with the intention of keeping down wages as well as SS.

Perhaps I misread the above comments, but it was my understanding a divorced woman (provided the marriage lasted for ten years or more) could claim her ex-husband's Social Security. But, yes, the GOP won't rest until they abolish it. I wonder sometimes if a lot of folks realize just what they're hoping for when they yell for an end to government spending.

I should have re-read the comments above, realized too late it was referring to younger women, I was thinking of women who were eligible for Social Security able to collect on ex-husband's record. Hope it didn't confuse the issue.

"I expect more from you than what you have so far given to us in your article." ---

Anyone who shares this expectation is deluding themselves: AARP is a racket.

All you can expect is for them is to look after their own interests, just like any other racket.

Steve and others...
Whatever you think of AARP, the organization is a powerful force in Washington with a lot of clout in Congress.

We ignore what lobbying they do at our peril. We need to counter what we disagree with and support what makes sense from them.

Thanks Jim for catching this about the Chained-CPI method supported by AARP. I too read this article and was unaware of the details about it that you have pointed out here.

It's good that people like you are on top of this and able to share it with those of us who read Ronni's blog.

Just one more good reason to keep tuned in each day with TGB.

I'm one of those who has trouble following the math in situations like this. What I have no trouble following is there is no legal or moral basis for cutting Social Security benefits to anyone. We and our employers paid into SS for decades as part of a contract with the government. One doesn't renege on contracts, particularly when it involves people who haven't the means or years to make up the deficit.

Savings can be realized by means testing (cutting out benefits to the very wealthy); gradually raising the retirement age for those, say, more than 10 years from retirement; and not "borrowing" SS funds for other government spending.

@marge

A divorced woman may be eligible for 1/2 of her former husband's benefits if they were married at least 10 yrs. I claimed my 1/2 when I turned 65 and continued working until my benefits exceeded my share of his. And, FYI, what the ex-wife receives is not deducted from the amount he receives. He continues to draw full benefits. The ex-wife is entitled to receive full benefits when the ex-spouse dies. I assume you have to have been married at 10 years.

And this is why I get so depressed when I think of the 2012 election. The chained cpi is one of Obama's "fixes" for SS along with raising the eligibility age for both (I think) medicare and social security. The eligibility age doesn't affect me of course, but it will affect my children and in any case it's a really rotten idea, as you and others have pointed out. So whether it's Romney or Obama, seniors are going to get the shaft.

I can't foresee circumstances under which I would vote for a republican ever again, but at least the republicans listen to their constituents. I am convinced Obama will institute the simpson/bowles recommendations regardless of anything we can say or do.

Things like this are why we need to be concerned about electing genuine liberal/progressive legislators. People like Bernie Sanders and Elizabeth Warren will be alert to things like this and fight for the ordinary people. It matters to get Obama because in a second term, he can fight for many things he didn't the first go round because of the need to be re-elected; but without a Senate and House on the side of the people, he can't do much. Democrats in name only won't cut it. We need the real deal-- and in the Senate, 60 of them! Pay attention in the primaries for who might be running against an entrenched politician who is in the Occupy movement. It's how the Tea Party go their people and did all the damage they could in the last two years.

That was poorly phrased-- look for those who have been in the Occupy movement and if they sound reasonable, support them. They will work for the people's interests-- and if they don't once they get in, try again in two years for the House.

...And some of those that Denise sees can't afford their meds or food. Why, I ask as do thousands of others, are they picking on SS. Politics.

Thanks for the article. I especially agree with Larry's post above.

Thank You for this valuable information.

AARP's clout does matter. Keep in mind they sell insurance. They made a mistake once before endorsing Medicare "D" which was a real give-away to HMOs.

Excellent letter. Glad you reprinted it here.

We would all be wise to let AARP and everyone else responsible for causing this change hear our protest. Also, need lots of additional continuous publicity exposing these facts in every possible way.

When, Oh when, will there begin to be seen the simplest solution imaginable to future funding for S.S.? Eliminate the cap on S.S. withholdings! Why is it rational in any way for S.S. withholdings to stop at $107,00 per year? If the poorer folks have to have all their income subject to S.S., shouldn't ALL of everybody's income be taxed?

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