President Obama Calls for Cutting Social Security by 3 Percent, Raising Normal Retirement Age in Acceptance Speech

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Friday, 07 September 2012 05:15

The media and "fact checkers" seem to have missed it, but President Obama implicitly called for cutting Social Security by 3 percent and phasing in an increase in the normal retirement age to 69 when he again endorsed the deficit reduction plan put forward by Erskine Bowles and Alan Simpson, the co-chairs of his deficit commission.

The reduction in benefits is the result of their proposal to reduce the size of the annual cost of living adjustment by 0.3 percentage points by using a different price index. After 10 years this would imply a reduction in benefits of 3 percent, after 20 years the reduction would be 6 percent, and after 30 years the reduction would be 9 percent. If the average beneficiary lives long enough to collect benefits for 20 years, the average reduction in benefits would be approximately 3 percent.

Since Social Security is enormously important to retirees and near retirees, the media should have called attention to this part of President Obama's speech. It is likely that many of those listening did not realize that his deficit reduction plan called for these cuts.