Even Social Security's current inflation adjustment understates the true impact of inflation on the elderly. That's because they spend 20 to 40 percent of their incomes on health care, and health-care costs have been rising faster than inflation. So why adopt a new inflation
adjustment that's even stingier than the current one?
Social Security benefits are already meager for most recipients. The median income of Americans over 65 is less than $20,000 a year. Nearly
70 percent of them depend on Social Security for more than half of this.
The average Social Security benefit is less than $15,000 a year.
Besides, Social Security isn't in serious trouble. The Social
Security trust fund is flush for at least two decades. If we want to
ensure it's there beyond that, there's an easy fix -- just lift the
ceiling on income subject to Social Security taxes, which is now
Why are Democrats even suggesting the inflation adjustment be
reduced? Republicans aren't asking for it. Not even Paul Ryan's
draconian budget includes it.
Democrats invented Social Security and have been protecting it for
almost 80 years. They shouldn't be leading the charge against it.
Some policymakers are considering accepting a grand bargain that includes the chained CPI for Social Security. This is no minor technical change – it is a benefit cut that compounds to become very large over time. The chained CPI would cut the annual benefit of the average earner (someone making $43,518) by $658 at age 75, $1,147 at age 85, and $1,622 at age 95.1 The cumulative cut for that individual would be $4,631 – more than three months of benefits – by age 75; $13,910 – nearly a year of benefits – by age 85; and $28,004 – more than a year and a half of benefits – by age 95.2