Last Week, Chained CPI—This Week, Raising the Retirement Age and More
It’s August in Washington, DC and Congress is out of town—but the House Ways and Means Committee wants to know what you think about additional ways to cut Social Security benefits.
Through last week, Ways and Means Committee Chairman Dave Camp (R-MI) invited comments on adopting the chained CPI: a proposal that would reduce annual cost-of-living adjustments for Social Security and cut the value of benefits more and more every year. Seven thousand of you joined us to tell the Committee that the chained CPI is especially harmful to women. Now the Committee is asking for comments by August 29 on other proposed benefit cuts, including raising the retirement age and changing the benefit formula to reduce benefits.
Raising the retirement age is really just another way to cut benefits. It reduces benefits no matter when an individual claims benefits. Increasing the retirement age from 67 (the current retirement age for people born in 1960 or later) to 69 would reduce benefits by about 13 percent, whether an individual claims benefits at 65, 67, 69—or even 70.
The Ways and Means Committee is also looking at other proposals by Erskine Bowles and Alan Simpson, co-chairs of the Fiscal Commission appointed by President Obama, in their 2010 report. Specifically, Bowles-Simpson proposed a change in the benefit formula that would reduce benefits for everyone with lifetime earnings above the median ($37,000 a year in 2010).
With pensions continuing to disappear, the secure lifetime income that Social Security provides is more important than ever. Benefits should be expanded—not cut.
The Committee does mention one potential benefit improvement: an increase in Social Security’s minimum benefit. By itself, this change would be especially helpful to women and other workers with low earnings. But the Ways and Means Committee, like Bowles-Simpson, is only considering this improvement as part of a package that includes far larger benefit cuts. An analysis of the full Bowles-Simpson plan, including both its cuts and its enhancements to benefits, found that it would reduce benefits for 92 percent of seniors overall; and, despite claims that the plan would protect those most in need, would reduce benefits for 81 percent of seniors in the lowest 20 percent of the income spectrum.
In sharp contrast, the Social Security Enhancement and Protection Act introduced by Rep. Gwen Moore (D-WI) would improve Social Security’s minimum benefit, increase benefits for long-term beneficiaries, restore the student benefit, and strengthen the financing of the Social Security system for decades — without cutting benefits.
You can tell the Committee what you think of their latest ideas for cutting Social Security benefits here.
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