The budget resolution passed by the U.S. Senate on March 30 includes an amendment opposing the funding formula known as the “chained CPI.”
Labor, veteran, senior and progressive groups have been lining up against the benefit cut since late last year when the Obama administration floated the proposal during the negotiations to avert the country from falling off the “fiscal cliff.” The administration has continued to support the proposal as it prepares to reach a “grand bargain” over the deficit.
“We are very pleased to see the Senate firmly reject chained CPI,” said Barbara J. Easterling, president of the Alliance for Retired Americans, an AFL-CIO group. “Retirees and veterans paid into the system and they deserve their full Social Security benefits.”Currently, Social Security benefits are determined by the Consumer Price Index, the most widely The “chained CPI” would create a formula linked to how seniors alter their consumption in response to price changes. The change, though, would reduce benefit increases.
“This is a strong signal that when push comes to shove the Senate is going to oppose any effort to balance the budget on the backs of seniors, disabled veterans and their survivors,” said Sen. Bernie Sanders (I-Vt.), the amendment’s sponsor, after the vote.Typical 65-year-old retirees would lose more than $650 a year by their 75th birthday and more than $1,000 a year would be cut from their benefits once they reach 85, according to Sanders.
Supporters of Sanders’ amendment included AARP, the AFL-CIO, the National Organization for Women, the American Legion, Veterans of Foreign Wars, Disabled American Veterans, AMVETS and others.
Sanders is chairman of the Senate Committee on Veterans’ Affairs and the founder of the Defending Social Security Caucus.
The proposed change also would affect more than 3.2 million disabled veterans receiving disability compensation benefits from the Dept. of Veterans Affairs. Veterans who started receiving VA disability benefits at age 30 would have their benefits reduced by $1,425 at age 45, $2,341 at age 55 and $3,231 at age 65, according to Sanders. Benefits for more than 350,000 surviving spouses and children also would be cut.
In a meeting with Republicans on March 13, President Barack Obama discussed an offer he made to House Speaker John A. Boehner (R-Ohio) during talks in December about the $1.2 trillion spending cuts over 10 years known as the sequester. Obama’s plan would scrap those automatic cuts and implement an alternative plan that would include $700 billion in new tax revenue and an additional $400 billion in savings from Medicare and $130 billion from Social Security through the chained CPI.
The Senate vote on the amendment comes after growing opposition to the chained CPI.
In January, Richard Trumka, president of the AFL-CIO, said at a news conference that the labor federation would launch a “full mobilization” against the chained CPI that would include leafleting, workplace visits and lobbying.
More than 100 Democrats in February signed a letter opposing entitlement cuts, including the chained CPI. In March, AARP sent out a letter to its members soliciting financial support for its campaign against the change.
Fifty-six million people receive Social Security. Considering that the typical recipient gets about $15,000 a year, the $675 cut resulting from the change in the inflation formula would represent a significant hit.
The reduction would be especially hard on women. Social Security is the only income of an estimated 70 percent of retired women.