As part of the “fiscal cliff” negotiations, it’s been proposed that Social Security benefits be “cut.” At least, that’s the word being used by Social Security supporters such as the AARP. But what’s being debated is a reduction in the rate of growth of benefits.
So, nothing is being cut, the benefits just won’t go up as quickly because the government would be calculating inflation differently. And even the “cut” in the rate of growth of benefits is pretty tiny, amounting to about $2/month for most beneficiaries:
The average retired worker on Social Security received $1,240 a month in 2012. The scheduled 1.7% COLA for 2013 will increase this average monthly benefit to $1,261, or a $21 increase per month. If the COLA was instead based on the chained CPI , the 1.5 % increase would bring the average monthly benefit up to $1,259, a $19 increase in monthly benefits and only $2 less per month than based on the current CPI.
Meanwhile, according to the AARP, this cut “is neither fair nor warranted.”
The nation is over $16 trillion, closing in on $17 trillion, and running an annual budget deficit of over $1 trillion annually. And Social Security is adding to that deficit. The program is in deficit, obligated to pay more in benefits than it receives in revenue, and when since the program’s trust fund was replaced long ago by US Treasury Bonds, every time Social Security dips into that fund to pay benefits the Treasury must make good on the bonds. Which, in turn, adds to the national debt.
But the AARP won’t even accept a reform to the program that amounts to a less than $2/month reduction in the rate of growth of benefits.
Maybe it’s time to stop listening to the AARP on these issues.