TPM Media reports that a change to the chained CPI method of computing the Cost of Living Adjustment (COLA) for Social Security is being proposed by Democrats is the budget negotiations that are ongoing. This method would also be used in adjusting tax brackets which would also result in higher revenues but there would be twice as much in the way of benefit cuts as in tax increases. The Social Security COLA change would apply to current Social Security recipients.
If your eyes are glazing over at the thought of trying to understand the chained CPI method, look at the chart below (click on it to see it full size)and think about the fact that Social Security disability benefits recipients will be affected far more than retirees since they stay on benefits so much longer. There is an excellent chance this will become law in the next month.
3 comments:
seems reasonable...as incoming revenue to SS diminishes, so should outgoing benefit payments.
Inflation for seniors is higher than the currently used CPI, so Social Security isn't keeping up with inflation for recipients now. This will just make it worse. Evidently we can't let taxes for millionaires go back up a few percent to its previous level, but it's OK to effectively tax Social Security recipients an even larger amount.
Start that graph at the average age of a disability claimant and the 9.2% hits around the age of 70 or 75. Then you're looking at double digits from there on out. (10.6%, 12.0%, 13.4%, 14.8% at around 90 or 95) With the average life expectency growing, it won't be unheard of, even for those that are disabled, to live long enough to see those double digit decreases due to chained CPI.
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