“Chaining” Social Security Would Harm Women

On July 11th President Obama urged congressional Democrats to make cuts to cost-of-living social security adjustments in return for Republican support for a tax raise. In the words of Maria Freese, Director of Government Relations of the Washington-based National Committee to Protect Social Security and Medicare in an interview with WeNews, “Proposing cuts in a self-financed program paid for by Americans throughout their working lives to get Republicans to close tax loopholes and end tax breaks for the wealthy few is not shared sacrifice.” While this cut in social security would be unfair to everyone, Richard Eskow points out that it would be particularly detrimental to minorities, lower-income people, and women.

Republicans want to replace current cost-of-living allowances (COLA) for social security with a “chained” cost of living index. This formula takes into account that when prices of goods go up, consumers substitute cheaper items for those that have become more costly. Eskow points out how dangerous this reasoning can be:

As a government agency explains, “Pork and beef are two separate CPI item categories. If the price of pork increases while the price of beef does not, consumers might shift away from pork to beef.” So if people can no longer afford pork, they’re spending less. Under a chained-CPI approach cost of living adjustments (COLAs) would then go down….

That’s not a sound way to calculate the overall cost of living. If I can’t afford cable TV and stop watching it, Time Warner’s prices don’t go down. But under this plan, my misfortune also becomes my little contribution to next year’s benefit cut.

How would this work for Social Security? Let’s see: If old people stop buying pork their “chained CPI” benefit will go down. If that forces them to live on catfood, their benefit goes down again…It’s a death spiral. Soon we’ll be calculating the cost of survival, not the cost of living. It’s a process that leads nowhere but down, until even survival is factored out of the equation.

If COLA were “chained,” a woman who received a $1,100 benefit at 65 would receive $56 dollars less per month by age 75. Joan Entmacher, Vice President for Family Economic Security at the National Women’s Law Center told WeNews that by ” 90 that would mean $87 per month [decrease from the benefits received at age 65], an equivalent of 20 weeks of food a year.”

The negative effects of chaining the cost of living adjustments would be particularly detrimental to women “who receive less in benefits on average than men and can least afford the cuts. They live longer than men, too, so they’re more likely to see their benefits dwindle with every year that passes.” Some supporters of chaining COLA argue for a “birthday bump” that would entail small benefit increases after an individual has been retired for twenty years. However, this “bump” would not off-set all of the cuts individuals would have faced before then and would only benefit those who live long enough to receive the increased benefits. Since minorities and low-income people have lower life expectancies than their wealthier, white counterparts this plan would be particularly unfair to these communities.

Social security has not contributed to the national debt and its benefits have not been raised due to COLA in two years. However, some politicians are willing to reduce everyone’s benefits and risk increasing the number of women in poverty by “chaining” social security. We will keep you updated on this issue.

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The Women's Law Project creates a more just and equitable society by advancing the rights and status of all women throughout their lives. To this end, we engage in high-impact litigation, advocacy, and education.
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