Social Security benefits are currently tied to inflation. That means if the cost of goods rises by 3% this year, then Social Security checks will be increased by that same percentage the following year. The idea is a good one, because it insures that inflation won't eat away a Social Security recipient's benefit year after year until it has significantly less buying power (thus sinking that recipient into or further into poverty).To see the effect that inflation can have on income, all you have to do is look at the minimum wage (which is not tied to inflation). The current minimum wage is $7.25 an hour, but back in the late 60's the minimum wage had the buying power of about $10.50 (in today's dollars). Because the minimum wage was not tied to inflation, it has lost about 31% of its buying power.
Now Congress is talking about doing the same thing to Social Security. They want to change the way inflation is figured to something called a "chained-CPI". It is a way of figuring inflation that makes it look like inflation is less than it actually is. That would mean the rise in Social Security payments would be less than actual inflation. This wouldn't make a huge difference in any one year, but over the period several years it would make a significant difference in the buying power of Social Security recipients. Those recipients would not be able to buy as much in the future with their check as they can currently buy (because there checks are not keeping up with actual inflation).
Senator Sanders shows what that difference could mean to someone living on Social Security in the graphic above. After 10 years of a "chained-CPI", the average Social Security recipient would be getting $650 dollars a year less than if their checks had risen the same as inflation, and after a 20 year period they would be getting about $1000 less each year. That may not seem like much to a Wall Street banker or a congressman, but if your total income is from your Social Security check then that's a lot of money to be losing!
The average Social Security benefit is only about $1000 a month. For those who depend on Social Security alone, that means they are living on $12,000 a year. That means they are barely scraping by financially, and certainly couldn't afford to lose $650 or $1000 in buying power for the year.
The Republicans will tell you that going to the "chained-CPI" would not be a benefit cut in Social Security. That is an outrageous lie! While it would not cut the current benefit, it would certainly be a cut in all future benefits -- a cut that millions of elderly people simply could not afford. The GOP knows they couldn't get away with cutting current benefits, so they are attacking future benefits in this very sneaky way.
The argument for doing this is to control the budget, and lessen the budget deficit. But Social Security has not added a single penny to that deficit (since it is paid for by a dedicated payroll tax and does not come out of discretionary budget funds -- the funds that have a deficit). They will also tell you that Social Security is going broke, and going to the "chained-CPI" will save it from bankruptcy. That's another GOP lie!
Social Security has enough money to continue paying full benefits until at least 2038, and after that it could still pay 75% to 80% of benefits to all recipients. And simply raising the cap on the amount of income subject to payroll taxes (which would not affect most workers at all, but only the highest income workers -- making them pay the same percentage as other workers) would insure that Social Security could pay full benefits far into the future.
Social Security benefits should NOT be cut at all -- not current benefits or future benefits. It is not needed and most of those receiving Social Security cannot afford it. The GOP just wants to cut them so they don't have to pay back the money they borrowed (stole?) from the Social Security Trust Fund. They want to use that money to give the rich more unneeded tax cuts instead.
