April 11, 2013


The Liberal Civil War Over Social Security Cuts : President Obama wants to adopt a new measure of inflation that would cut Social Security benefits--and debate over the proposal has split his base. (Erika Eichelberger, Apr. 11, 2013, Mother Jones)

Obama's budget would squeeze old age benefits by changing the way inflation is calculated so that increases in future monthly Social Security payments grow more slowly. Right now, benefit increases are tied to the Consumer Price Index, which tracks the prices of a bunch of consumer products. First Republicans, and now Obama, have proposed changing that to something called chained CPI, a different calculation that ends up producing a lower rate of inflation by accounting for consumers switching to cheaper substitutes when a product's price jumps. The president's proposal includes exemptions for the oldest and poorest beneficiaries, but it would cost all other retirees hundreds of dollars in lost benefits every year. The White House estimates the measure will save $230 billion over 10 years.

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Posted by at April 11, 2013 6:56 PM

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