There’s No Bump Up From The Chained CPI If You Are Already Dead
In my last post about the chained CPI an expert described how 9.4 million retired low-income workers will not be protected from the corrosive slow-motion cuts of the chained CPI. Half of those affected retired workers will receive a Social Security benefit of less than 1275.03 per month. (The chained cpi will not affect low income retirees on SSI, who will not be tapped twice for being old and poor.) But 9.4 million low-income retirees will get zapped by the chained cpi. And so will those who are ‘unprotected.’
I. There’s no bump-up payment for you if you are dead
The Obama surrogates’ answer is somewhere between, the ‘cuts are not so bad,’ to ‘look we protect everyone with a birthday bump at 76’. The Bump does not protect the 28% of retired workers* whose benefits are cut through the chained cpi and who do not live long enough to collect a small, insignificant Bump payment at age 76. Even those who survive beyond age 76 will not regain what they have lost through the cumulative effects of the chained cpi. Low income people don’t live as long as their affluent peers. A person cannot enjoy a Bump Up payment at age 76, if they do not live long enough to cash the check. Thanks to Dean Baker for this catch. Here is a part of his statement on this,
“Just to drive home this point, I checked our friendly mortality tables this morning [http://www.cdc.gov/nchs/data/dvs/MortFinal2007_Worktable23r.pdf]
and found that we can expect more than 28 percent of the people who hit age 62 to be dead before they reach age 76, the first year
when the bump up can alleviate any of the cuts. The percentage of people who are dead before 76 will be higher for men than
women and much higher for poor people and especially African Americans. For these people the bump up does them no good whatsoever.”
In total, the average retired worker will lose 2% of their income due to the Social Security cuts. Compare that to the fraction of a per cent in income which the top earners will have to pay in taxes due to the fiscal cliff changes in revenue for those earning of 500,000 dollars a year.
The more this continues to percolate, the more I am convinced that the chained cpi is just another stealthy tax for being old and poor. The elites are harvesting our Social Security fund to use our money for their own greedy purposes. If it was not a cut they would not be talking about having to “protect the vulnerable” to sell it to the politicians. No matter how many experts like Orszag and Sperling they throw at it, the chained cpi still stinks. No matter how much the deficit drama queens like Bowles and Simpson wail about the debt, the public knows that Social Security does not contribute to the Federal deficit. This is theft of earnings and earned benefits, pure and simple.
*citing Dean Baker’s description of life expectancy figures.
II. My bias is that I am fighting for all who would be hurt
The situation is one where those who are going to receive almost nothing in benefits (200-300 dollars a month) and those who are going to get almost something in benefits (1000 to 1200 a month) are going to be hurt by these cuts. Our low-income earners, shorter-lived minorites, women, the disadvantaged, the long-term older-unemployed and our unlucky ones. However, the truth is that every group will have its ox gored by the chained cpi. Why? First, it is a cut. Second, it opens the door to more cuts, to means testing healthcare and to other devious cuts to the social insurance programs. No one escapes unharmed. The CBPP chart below shows three benefit types (low,average, & high wage earners): note that all of the lines point downward until age 76. The chart only accounts for one year’s worth of benefits.
(Note how using the measure of only one year’s benefits makes the amount cut appear less significant.) To figure out the loss in benefits over the cost of a long retirement, I refer you to the Director of Social Security Works and his estimate. About 15K due to the chained cpi.