CEPR - Center for Economic and Policy Research

Multimedia

En Español

Em Português

Other Languages

Home Publications Blogs Social Security Monitor
ss-monitor-logo

Letter to Representative Brooks on Social Security Print
Written by Dean Baker   
Friday, 29 July 2011 07:31

The Honorable Mo Brooks
1641 Longworth Office Building
United States House of Representatives
Washington, DC 20515

Dear Representative Brooks:

Responding to a letter campaign from a large number of your constituents asking you to stand up for and support Social Security, you recently said, "I haven't seen a proposal by anybody that hurts anyone receiving Social Security or Medicare."

Actually, one such proposal has emerged in the context of deficit reduction talks, namely, changing the inflation measure of Social Security Cost of Living Adjustments (COLAs). This would involve changing the index for calculating the cost of living to a new index, known as the “chained consumer price index” (CCPI). The CCPI typically shows a rate of inflation 0.3 percentage points less than the CPI currently used to adjust benefits.

A reduction of 0.3 percent in benefits may seem small, but this will accumulate through time. After being retired 10 years, benefits will be almost 3.0 percent lower with the CCPI. After 20 years the loss will be near 6 percent, and after 30 years the reduction in benefits will be close to 9 percent. This is a serious loss of income for seniors, the vast majority of whom rely on Social Security for most of their income.

Your constituents have made it clear that they expect their elected officials to protect their benefits. As their Congressman, I thought that you should be aware of the effects changing to the chained CPI would have on Social Security. If you would like any additional background on the program, I would be happy to assist you.

 
Letter to House Speaker Boehner on Budget Comments Print
Written by Dean Baker   
Thursday, 28 July 2011 11:00
The Honorable John Boehner
1011 Longworth Office Building
United States House of Representatives
Washington, DC 20515

Dear Speaker Boehner:

Recently, you were quoted as saying, “I believe that [Senator Reid’s budget] plan is full of gimmicks. We're not making any real changes in the spending structure of our government, and it doesn't deal with the biggest drivers of our deficit and our debt, and that would be entitlement programs." However, this statement is a misrepresentation of the issue at hand as far as entitlements, and particularly Social Security, are concerned.

Under the law, the Social Security program can only spend money that comes from its designated tax or the interest on the bonds held by its trust fund. It has no legal authority to spend one dime beyond this sum. In that sense it cannot contribute to the deficit.

The program was designed this way in part to maintain solvency. The Social Security trustees’ projections show that the program will maintain full solvency through the year 2036. Even if Congress never makes any changes to the program, Social Security will always be able to pay close to 80 percent of scheduled benefits from then on.

As the Speaker of the House, it is critical that you and your staff are aware of the fact that Social Security and other social insurance programs have no place whatsoever in the debt ceiling debate. If you would like any additional background on the program, I would be happy to assist you.

 
The NY Times is Depressed Social Security Benefits Might Not Be Cut? Print
Written by CEPR   
Tuesday, 26 July 2011 14:00
Don't take our word for it, it's right here. The article is about the failed budget compromise between Obama and House Speaker Boehner, which would have included "significant future savings from Medicare, Medicaid and Social Security." The New York Times is calling this deal a "lost opportunity" since the growth of these programs is "driving long-term projections of unsustainable debt." Dean Baker over at Beat the Press points out it's not the programs that are the problem, it's growing health care costs and misinformation over Social Security.
 
Clearing Up the Confusion Over Social Security Print
Written by CEPR   
Friday, 22 July 2011 14:15
Dean Baker has been busy over at Beat the Press, trying to clear up confusion over Social Security. Lately that means taking David Brooks to task over his comments on a potential default, criticizing Sen. Tom Coburn for suggesting we reduce the annual cost-of-living adjustment (COLA) to Social Security to make it more accurate, and questioning the Washington Post's coverage of the budget negotiations.  
 
There Was No Deficit Commission Report Print
Written by CEPR   
Wednesday, 20 July 2011 14:30
You would think someone in the media would have picked up on this by now, but Dean Baker over at Beat the Press has been correcting everyone lately. Fact: The Simpson-Bowles report never got the support from the necessary majority of the commission, which means no report was approved by the commission. So the next time you read about cuts to Social Security recommended by the Simpson-Bowles deficit commission, please remind the person who wrote that the deficit commission never approved a report. It's like a unicorn, it doesn't exist.
 
Letter to Representative Andrews on Debt Comments Print
Written by Dean Baker   
Friday, 15 July 2011 09:00

The Honorable Robert Andrews
2265 Rayburn House Office Building
Washington, DC 20515

Dear Representative Andrews,

President Obama recently proposed using the chained CPI to evaluate benefits and cut costs to Social Security while raising revenue. During an interview about this proposal, you voiced your support and said, “There is an appetite in the country among all groups to stop the practice of having our children pay our bills,” and that, “There is a realization that we can’t achieve that objective without real sacrifice by a lot of people, that there is some small group of elites that can pick up the whole tab.”

It is not clear that the chained CPI is more accurate than the current measure. The Bureau of Labor Statistics (BLS) has found that an experimental elderly index (CPI-E), that tracks the consumption patterns of people over age 62, actually shows a higher rate of inflation for the elderly than the CPI currently used for adjusting Social Security benefits.

While the CPI-E is not a full index since it does not look at the specific items bought by the elderly and the specific outlets they use for their shopping, there is no reason why BLS could not construct a full CPI-E. If the concern is having an accurate cost of living adjustment then it would seem that you should support having Congress instruct BLS to construct a full CPI-E. For my part, I don’t know whether this measure would show a higher or lower rate of inflation than the current CPI used for indexing benefits, but it would be a more accurate measure.

As it stands, switching to a chained CPI would undoubtedly mean a cut in scheduled benefits. Using this measure of the CPI would reduce benefits for retirees by 3 percent in 10 years, 6 percent in 20 years and 9 percent in 30 years. We know that the vast majority of retirees are struggling to make ends meet already. Retirees are not the people responsible for wrecking the country’s economy and they depend on Social Security far more than the small group of elites who did. Social Security benefit cuts of this magnitude seem like a major step in the wrong direction.

You should also be aware that there are no plausible projections that do not show our children being considerably wealthier on average than we are today. For example, the Social Security trustees projections imply that wages will on average be almost 40 percent higher in 30 years than they are today. Most workers may not see this gain if income continues to be redistributed upward. However, you are not addressing the pain that upward redistribution will inflict on children when you take Social Security benefits away from their parents.

I hope that you will have the time to review the indexation and generational equity issues more carefully. I would be happy to provide you additional background on the topic if it would be helpful.

 
Letter to Representative Berg on Social Security Comments Print
Written by Dean Baker   
Thursday, 14 July 2011 15:00

The Honorable Rick Berg
323 Cannon House Office Building
United States House of Representatives
Washington, DC 20515

Dear Representative Berg:

A recent article noted that you, along with other members of the Republican party, characterized Social Security as "a problem which needs to be addressed." In the article, you said, “We have a lot of attention today because I think the president has recognized this as an issue that should be talked about, should be debated.  Everybody I’ve talked to back in North Dakota is concerned about Social Security, and I think it’s been used as a political football by different people, different interests all along.”

With all due respect, Social Security is not a problem that needs to be addressed right now. The recommendations of the National Commission on Social Security Reform in 1983 led to the growth of a large surplus in Social Security. This surplus was used to buy bonds and now, Social Security holds more than $2.6 trillion in government bonds. As such, the Social Security trustees’ projections show that the program will maintain full solvency through the year 2036.

Even if Congress never makes any changes to the program, Social Security will be able to pay close to 80 percent of scheduled benefits from then on. There is little to debate about this. A program that is fully solvent for a quarter century and then is almost 80 percent funded in subsequent decades hardly seems like a major problem that needs to be addressed in an economy with 9.2 percent unemployment. As the discussion over Social Security continues, I hope you and your staff will have the opportunity to further review the design and finances of the program. If you would like any additional background on the program, I would be happy to assist you.

 
Spoiler Alert: Washington Post Predicts End to Budget Deal Print
Written by Matthew Sedlar   
Thursday, 14 July 2011 10:18
The Washington Post thinks it's spoiling the ending of the budget negotiations. According to the Post, "No matter what the outlines are for a final agreement to lift the debt ceiling, the deal will include cuts to some of the nation’s major entitlement programs: Medicare, Medicaid and Social Security." Over at Beat the Press, Dean Baker takes the Post to task for the comment as well as some of their claims about a cost-of-living adjustment.
 
Letter to Representative Walz on Chained CPI Comments Print
Written by Dean Baker   
Wednesday, 13 July 2011 11:15

The Honorable Tim Walz
1722 Longworth House Office Building
Washington, DC 20515

Dear Representative Walz:

During an interview about the proposal to use the Chained CPI to evaluate cost-of-living adjustments for Social Security benefits in the context of negotiations over the debt ceiling, you said that it is a “positive sign” that President Obama “sees it as an opportunity for a grand compromise, one that actually would do what we all want to do, bring some type of stability”. You also said that you, “would like to think that there’s a fairly large number of [House Democrats] that would be willing to look” at the idea.

It is not clear that the Chained CPI is more accurate than the current measure. The Bureau of Labor Statistics (BLS) has found that an experimental elderly index (CPI-E), that tracks the consumption patterns of people over age 62, actually shows a higher rate of inflation for the elderly than the CPI currently used for adjusting Social Security benefits.

While the CPI-E is not a full index since it does not look at the specific items bought by the elderly and the specific outlets they use for their shopping, there is no reason why BLS could not construct a full CPI-E. If the concern is having an accurate cost of living adjustment then it would seem that you should support having Congress instruct BLS to construct a full CPI-E. For my part, I don’t know whether this measure would show a higher or lower rate of inflation than the current CPI used for indexing benefits, but it would be a more accurate measure.

As it stands, switching to a Chained CPI would undoubtedly mean a cut in scheduled benefits, regardless of whether or not it involves a more accurate cost of living adjustment. Using this measure of the CPI would reduce benefits for retirees by 3 percent in 10 years, 6 percent in 20 years and 9 percent in 30 years. We know that the vast majority of retirees are struggling to make ends meet already. Retirees are not the people responsible for wrecking the country’s economy. Social Security benefit cuts of this magnitude seem like a major step in the wrong direction.

I hope that you will have the time to review the indexation issue more carefully. I would be happy to provide you additional background on the topic if it would be helpful.

 
Letter to Representative Sessions on Social Security Comments Print
Written by Dean Baker   
Wednesday, 13 July 2011 10:00

The Honorable Pete Sessions
2233 Rayburn House Office Building
United States House of Representatives
Washington, DC 20515

Dear Representative Sessions:

In a recent article, you described your new proposal allowing people to opt out of Social Security and put their payroll deductions into individual accounts as, "… an attempt to guarantee that those contributing to the program would have something to take out when it is time to retire."

Under current law, people are already guaranteed that something will be there to take out when they retire. The Social Security trustees’ projections show that Social Security will maintain full solvency through the year 2036. Even if Congress never makes any changes to the program, Social Security will be able to pay close to 80 percent of scheduled benefits from then on, which would be more than current beneficiaries receive.

On the other hand, if retirees were to put their money into private accounts, there would be no guarantee (unless the government provided it) of what they would get in retirement. Also, your proposal would likely raise the cost of administering such a program at least ten-fold since the administrative costs of private systems are far higher than for Social Security.

As a member of Congress, I hope that you will be careful to present the situation more accurately in future public statements. If you would like any additional background on the program or the Social Security projections, I would be happy to assist you.

 
<< Start < Prev 1 2 3 4 5 6 7 8 9 10 Next > End >>

Page 7 of 13

CEPR.net
Support this blog, donate
Combined Federal Campaign #79613