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Obama drops chained CPI plan

By Jennie L. Phipps · Bankrate.com
Thursday, February 20, 2014
Posted: 5 pm ET

The Obama administration took its highly unpopular chained CPI proposal off the table Thursday, causing a host of Democrats and other progressives to give a collective shout of approval.

"This is a huge progressive victory -- and greatly increases Democratic chances of taking back the House and keeping the Senate. Now, the White House should join Elizabeth Warren and others in pushing to expand Social Security benefits to keep up with the rising cost of living," said Stephanie Taylor, cofounder of the Progressive Change Campaign Committee, an organization dedicated to electing progressive politicians.

Adopting this lowered way of calculating cost-of-living adjustments, or COLAs, for Social Security and other benefits would have lowered the shortfall in Social Security funding by about 20 percent. That's according to Voice of the People, a nonpartisan organization working to give Americans a voice in the policymaking process.

A lowered COLA would not cut Social Security, but its effect would compound over time by slowing the increase in benefits. Voice of the People calculates that after 10 years, the average monthly benefit would be $35 less than it would have been under the current COLA. And after 30 years, average monthly benefits would be $107 less than they would be under the current method -- a relatively small impact on most people's retirement planning.

The Obama administration told The Associated Press that the administration hadn't totally removed the proposal from consideration but wouldn't push it as part of the 2015 budget proposal, which is expected to be announced next month.

Nancy Altman, co-director of Social Security Works, an organization whose mission is to protect Social Security, said this was the right thing to do. "We should be talking about expanding Social Security, not cutting it," she added. "The president is moving in the right direction. We think cutting Social Security would increase wealth inequality and worsen the impending retirement crisis."

The office of House Speaker John Boehner, R-Ohio, criticized President Barack Obama's decision, stating, "This reaffirms what has become all too apparent: The president has no interest in doing anything, even modest, to address our looming debt crisis."

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15 Comments
Bernie Koppenhofer
March 02, 2014 at 2:49 pm

Reducing SS is a stupid idea, we should be thinking of a Cost of living adjustment for productivity increases. Just like cost of living adjustments for inflation, workers should also receive pay increases for general US productivity increases. All productivity increases are now being "absorbed" by corporations and by the 1%. It would help a lot if we would simply stop building military pyramids, like the 1.3 Trillion dollar F-35 and tanks the military does not want or need.

Geary Hedrick
February 23, 2014 at 12:13 pm

As an economics major, I am convinced that because of the Obama policies, he knows nothing about economics and how to create jobs and apparently none of his advisors do either unless he just refuses to listen to there advise. America will continue to decline until we can get Obama out of office. Please don't forget to vote!!

Steve
February 21, 2014 at 5:39 pm

I am now 62 and worry about SS being there to help me when I retire. I have worked all my life and paid into the system. At full retirement I should receive 2K per month. I have some savings but not nearly enough to live like I would like. That is my problem because I should have saved more. Granted it would have been hard on my small income but I could have done more. What I would like people to understand is the cry to tax the rich more is total BS. They already pay the lion share of the taxes the government collects. If you want to cry fair share then we all should have to pay the same amount. We are all created equal. If you and your neighbor were going to buy something together and have equal ownership would you be happy paying much more than him? The well off are the ones that invest and create jobs. Tax them to death and the jobs go away. Its true they invest to make more and so would you or I. Stop them from investing and they keep their money and jobs are sacrificed.

Connor Larkin
February 21, 2014 at 5:21 pm

The BO administration will never cut anything, except jobs.

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