Obama Social Security Offer at Odds with Top Democrats

Obama Social Security offer at odds with top DemocratsWASHINGTON (AP) - President Barack Obama's offer to limit the growth of Social Security benefits would cost the average retiree less than $50 in the first year. But the cuts would grow over time, and that has advocates for seniors worried that Democrats in Congress will break their promise to shield the massive retirement and disability program from cuts in deficit reduction talks.

Both Senate Majority Leader Harry Reid, D-Nev., and House Minority Leader Nancy Pelosi, D-Calif., pledged not to touch Social Security as part of negotiations to avoid the year-end fiscal cliff. Reid, however, is backpedaling now that Obama and House Speaker John Boehner, R-Ohio, have agreed to a new measure of inflation that would reduce annual cost-of-living adjustments, or COLAs, for Social Security and other government programs.

Obama and Boehner continue to haggle over how much to raise taxes and cut spending but both have agreed to the new inflation measure formula, making it increasingly likely the proposal would be part of an eventual deal. Boehner proposed the change earlier this month in talks with Obama, and the president included it in a counteroffer this week.

White House Press Secretary Jay Carney called the new inflation measure a technical adjustment designed to make inflation estimates more accurate. Obama did not directly address the issue at a White House news conference Wednesday. But, he said, a deal will require difficult choices by all sides.

"What I've said is that in order to arrive at a compromise, I am prepared to do some very tough things, some things that some Democrats don't want to see and probably there are a few Republicans who don't want to see either," Obama said.

The inflation measure under consideration is called the Chained Consumer Price Index. On average, the measure shows a lower level of inflation than the more widely used Consumer Price Index because it assumes that as prices rise, consumers turn to lower-cost alternatives, reducing the amount of inflation they experience.

If adopted across the government, the change would have far-reaching effects because so many programs are adjusted each year based on year-to-year changes in consumer prices.

Taxes would slowly increase because annual adjustments to income tax brackets would be smaller, pushing more people into higher tax brackets. Over time, fewer people would be eligible for anti-poverty programs like Medicaid, Head Start, food stamps and school lunches because annual adjustments to the poverty level would be smaller, leaving fewer people under the official poverty line.

On average, annual increases in Social Security payments, government pensions and veterans' benefits would be about 0.3 percentage points smaller each year. Next year's COLA is 1.7 percent, or about $21 a month for the average Social Security retiree. If the new measure of inflation were in effect, the COLA would be about 1.4 percent, or a little more than $17 a month. That's $4 less than the current system, or about $48 less during the course of a year.

Once the change is fully phased in, yearly Social Security benefits for a typical middle-income 65-year-old would be about $136 less, according to an analysis of Social Security data. At age 75, annual benefits under the new index would be $560 less. At 85, the cut would be $984 a year.

"The Chained CPI is a stealth benefit reduction that will compound over time and cut thousands of dollars in retirement income for current beneficiaries," said Nancy LeaMond, AARP's executive vice president.

More than a dozen veterans groups gathered on Capitol Hill Wednesday to oppose the change, which would also affect retirement and disability benefits for veterans.

"It is very easy to say you support the troops," said Tom Tarantino, chief policy officer of the Iraq and Afghanistan Veterans of America. "But what many don't get is that that support for the troops doesn't stop when a shipment of guns hits the ground in Afghanistan. It is a promise you made to every man and woman who serves in the military, from the time they raise their hand to the time they die."

Sen. Bernie Sanders, a Vermont independent who organized the gathering of veterans, said, "We must do deficit reduction, but not by cutting programs for people who lost arms, legs and eyes defending our country."

If enacted for 2014, the change would reduce government borrowing by $223 billion over the next decade - $158 billion in spending cuts and $65 billion in tax increases, according to the nonpartisan Congressional Budget Office. The biggest savings - $102 billion - would come from Social Security.

Reid had been adamant that Social Security should not be included in deficit-reduction talks.

In November, Reid told reporters: "I've made it very clear. I've told anyone that will listen, including everyone in the White House, including the president, that I am not going to be part of having Social Security as part of these talks relating to this deficit.

On Tuesday, Reid sidestepped a question about it.

"This isn't going to be a situation where we're going to vote on a particular provision in the bill," Reid said. "It's going to be a framework to do something about the long-term security of this country."

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patck7gw

Medicare becomes a cash cow for Obamacare, and the Medicare “savings” from payment cuts (cost of living increases) are not put back into making Medicare solvent. Sad to think seniors who spent a lifetime putting into Social Security are smacked with cuts, they do impact Medicare benefits, as well as seniors’ access to those benefits.

December 21 2012 at 12:05 AM Report abuse rate up rate down Reply
hman570

I bet that the Congress will not cut any of the perks that they get from the people. These are the people that can well afford their own Health Care, Pensions, staffs, lucnh, dinner, and breakfast tabs, haircuts, gym pass, college tuition for their kids college and the list goes on and on. Our politicians are crooks and should be held accountable for their crimes against the people. They are self serving, party own and in the pockets of most American Corps. We need term limits so that we can put in business men not lawyers there and make fair laws for all Americans even the politicitions as they are susposed to be Americans as well, but seem to forget that when they get elected.

December 20 2012 at 7:23 AM Report abuse rate up rate down Reply
Robert & Lisa

You poor people voted for Obama and his thugs and now your standard of living continues to fall and your poverty is getting worse. Go figure.

December 20 2012 at 6:58 AM Report abuse rate up rate down Reply
gttdux

When will the revolution begin......?

December 19 2012 at 7:12 PM Report abuse rate up rate down Reply
Somey

The GOP would like to eliminate SS and medicare, to pay for huge tax cuts to the Koch Brothers and the likes of.

December 19 2012 at 6:17 PM Report abuse rate up rate down Reply
homebowman

we nead to vote all republicans JOHN BOEHNER PAY CUT IN HALF WE NEAD TO VOTE ALDEMOCRATS PAY CUT IN HALF
CUT ALL WHITE HOUSE IN HALF

December 19 2012 at 6:15 PM Report abuse +1 rate up rate down Reply
1 reply to homebowman's comment
chris1011

That is but a drop of water into the ocean. It would do nothing about our deficits or SS.

December 19 2012 at 6:38 PM Report abuse -1 rate up rate down Reply
1 reply to chris1011's comment
jockmassage26

really?? if you cut all members of congress and the senate by 85,000 a year.. that's about a 30 million dollar savings a year.. and raise their retirement age to match that of social security instead of the FULL BENEFITS THEY GET.. and multiply it by the 10 year savings they are talking about.. you're getting into the tens of BILLIONS of dollars for just the house of representatives and senate.. that still pays them 85, 000 a year which is about 45 to 50 THOUSAND above the average earnings of the american worker.. and about 60,000 more than the average person makes from social security.. ODD how the numbers start to add up.. further more.. get rid of their health care and let them partake in obamacare.. there would be billions more in savings..

December 19 2012 at 8:35 PM Report abuse +1 rate up rate down
nnorthcharleston

social security trust fund trust the government to steal all the money you have paid into it over the years
how about we STOP payments to all retired presidents senator's and congressmen util the trust fund is paid back

December 19 2012 at 6:08 PM Report abuse +1 rate up rate down Reply
1 reply to nnorthcharleston's comment
chris1011

The trust fund is still there. Nobody stole it. It is in the form of treasury bonds which pay interest to the trust fund annually. In fact there is still a surplus, but because the baby boomers are retiring at a high rate and younger people are fewer, the amount of money coming in is now lower than what is being paid out. Unless the limit is raised, the fund will be depleted in about 15 years. Until then SS is fully funded. Go look it up. Truth about SS is posted on the AARP website.

December 19 2012 at 6:37 PM Report abuse rate up rate down Reply
David

If the inflation measure was more accurate they would have to find a way to increase the percentage of measurement to be accurate. They only look at what they want to consider as the the most accurate way and it is sold with the blurb "Make more accurate". What does that mean. Their terms or real life terms.

December 19 2012 at 5:07 PM Report abuse rate up rate down Reply
poppa1hd

the whole thing is just another way to rule people, so many people have given up there lifes savings etc just to survive and now they are talking of reducing benifits, they need to start at the top and work down , those free loaders in there are getting bought off on everything,,, look at reid he is back stepping already,, they are all a bunch of crooks they need new blood in there , people who care for people not just themselves
remember jimmy the greeks words dont you,,, think about it, all this administration has done is put this country into debt i feel sorry for the children we are raising now as they have to find work whhen there is nome,, CHANGE BABY the ones that voted for him sure got there wish
Dave

December 19 2012 at 4:00 PM Report abuse rate up rate down Reply
1 reply to poppa1hd's comment
chris1011

They won't reduce benefits, they are talking about reducing the growth of benefits. You will still get the same payment each month, or more if inflation strikes. You will never get less.

December 19 2012 at 6:33 PM Report abuse -1 rate up rate down Reply
Heylance

I still want to know about that SS lock box program that Dem. John Kerry said was in place. There has never been a Social Security lock box. They've been sending SS money into the public funds for years. We have IOU'S for this money but no way to pay for it. Now we have a great policy started by the Dems, cut SS payroll taxes by 2% to stimulate the economy. Great idea, theres not enough money in the plan to pay our current retirees or future ones. Good move. Although I'm a financial conservative I believe that SS payroll taxes should never have been touched. I also believe that the taxes on SS should include all payroll earned . Remove the damn cap! That would put a huge dent in the short fall. We have no choice in paying SS and have paid it our entire working career, it's ours and we want it back.

December 19 2012 at 3:52 PM Report abuse -1 rate up rate down Reply
1 reply to Heylance's comment
theycallmeroy3

If you want to know about all these things you believe, why don't you research the topic of Social Security? Actually read professional papers written on the subject. Because if you did, you may find what you believe, is simply not sustainable, or true.

December 19 2012 at 4:49 PM Report abuse rate up rate down Reply