By Blueberry T
My mom is 89 years old and
she receives $971 per month from Social Security, from which is immediately
deducted $249/month for Medicare and supplemental coverage. This leaves $722/month for: housing; food;
heat; electricity; water; telephone/internet/TV; additional medical expenses; clothes; shoes; personal and household necessities;
and any other expenses. She has a modest
amount of savings, which was helping bridge the income gap but is currently earning close to zero interest.
Well, she couldn’t do it;
she couldn’t make ends meet. She ran up big credit card bills, and then racked
up interest charges that were completely unaffordable. I discovered this when I visited her last spring
and went over her finances with her – it was not a pretty picture! So, we had to take most of her savings to pay
off the credit cards. Now, we’re tapping into the remaining principle each
month to make ends meet, but at least she isn’t running up the credit card
bills. I hope. (I canceled the accounts and cut the cards up.)
We’ve been over her
expenses many times, trying to figure what can be cut. We got rid of all the non-necessities. Until
last year, she had an old car and paid for gas, maintenance and insurance. She made the decision to stop driving when
she turned 88, in part for safety reasons and in part because she could no
longer afford having a car. That saved a lot of money, but unfortunately, she
is now almost entirely a shut-in, as the elder-transportation system in her community
is so overbooked that she has been on the waiting list for more than a year.
She has always been a kind
and generous soul, and the downside of that is that she is easy prey for every con-artist,
scam, and even legitimate charitable organizations. They call constantly for donations,
and each time, she gave. That had to
stop. Now, she gives small donations to just a few charities and
gives $5 to her church every week, even though she can no longer attend
services. It saddens her that she cannot give more, though.
She also sends money to the
family for birthdays and holidays – a matter of both generosity and pride. We
tried not cashing the checks, but that upset her as she wants to be able to do this. Let’s just say that now, some
of these gifts might find their way back into one of her own accounts.
Her meager savings were in
CDs that were earning 4%, but when they matured, the new rate was close to
zero. The low interest rates are bad enough, but holding them so low for such a
long time is really hurting elderly people like my mom. She can either accept
very low interest, and spend down her principle, or shift her money to riskier
investments. That is because the financial sector and its regulators have jointly
concluded that interest rates should be kept near zero, going on 5 years now
and projected until at least the end of next year, to address the financial calamity that they
caused and/or abetted. My mom and the rest of us are paying the price for their
high crimes and misdemeanors. (Actually, I think they were all felonies, but
Eric Holder says they’re “too big to jail.” Fortunately, not everyone agrees.)
As if things aren't tough enough, now President Obama proposes that Social Security benefits should be "adjusted" lower by using "superlative" (a misnomer if ever there was) or “chained
CPI." This would save $130 billion over 10 years.
How do those savings materialize? By cutting benefits, with the cuts "compounded" over time and thus hitting the eldest recipients the hardest. Robert Reich explains. (Here and here is more on
the subject and here is AARP’s calculator
to estimate the reduction in benefits over
time.) The fallacy is that elders spend a high percentage of their income on medical costs, which have a high rate of inflation; elders cannot simply substitute for cheaper options as the chained CPI formula assumes.
To many, this feels like a
betrayal by the President of all those who worked so hard to elect him, and of
the promises he made on the campaign trail. (To be fair, it was Joe Biden who "flat guaranteed" no changes to Social Security during last year's campaign; then-candidate Obama said that raising the income cap was the preferred option back in 2007-08.) The blogosphere is aflame with
scathing critiques of President Obama’s decision to cut Social Security
benefits. I want to give him the chance
to explain himself. If it is NOT a
betrayal, then I say: "Mr. President, please explain yourself. In
detail. Sooner rather than later. Please."
This is not an abstraction
for me and my family, nor for millions of other Americans, especially older women. I realize that my mom is probably not going to live long
enough to have the new chained CPI proposal affect her Social Security income by large amounts. That will be my generation’s problem and that of our kids, and theirs.
But my mom’s story is pretty typical and will play out for many millions of Social Security recipients in the future. How
would someone at her benefit level survive on ~10% less income per year, when
she can’t get by now? They will be consigned to poverty.
Chained CPI will hit women especially hard. Women typically receive lower Social
Security benefits because women earn less than men, even for comparable work;
many women (like my mom) were stay-at-home mothers or worked part-time for a
significant part of their “working” years, thus building a lower earnings
record on which their own benefits are calculated; and many women are only
eligible to receive half their husband’s benefit. Women are more dependent on
Social Security for a large percentage of their retirement income, and women live
longer, and will thus be subject to the larger benefit cuts over time that will occur
with chained CPI.
Chained CPI will also reduce benefits to veterans and the disabled.
I realize that President
Obama has said that he will carve out some exemptions from “chained CPI” to
protect the vulnerable, but what on
earth does that mean? Enough with
being cagey about the exemptions. I need to know what that means; we all need
to know.
We need to see for
ourselves and judge for ourselves whether this is a fair proposal. I don’t want
to have a knee-jerk reaction, but the lack of information from the
Administration makes it hard not to. My hope, perhaps delusional, is that he will
actually propose increases in benefits for people like my mom at the low end of
the benefit curve, protect the disabled, and save the benefit reductions for
those who have substantial income in addition to Social Security. If so, it may be a reasonable reform. I
realize not everyone will agree!
We will still be left to
wonder why it is not a better “fix” to raise the cap on income subject to FICA taxes; it seems like so much more
reasonable an approach to resolving whatever issues Social Security may have in
the future. The President himself said so (when he was a candidate). Otherwise, it seems to me
that we’re really talking about definitely cutting benefits now to avoid
possibly cutting benefits later. What a deal! (Not.) And, as Senator Bernie Sanders
so often reminds us, Social Security does not add to the deficit. The Senate has now voted in opposition to chained CPI (in a largely symbolic vote).
At this point, I think it
is fair to say that the President’s chained CPI proposal is immensely unpopular with progressives, his base and the elderly.
AARP did some surveying about it; here is their report. I ask President Obama - why should the Congress listen to the American people on gun reform, as you have repeatedly argued - but yet you ignore the American people on Social Security?
Some claim this is President Obama's strategy to show how uncompromising the GOP is. [More here on Obama bluffing.] We already knew that they are uncompromising. What we didn't know that a Democratic President would undermine one of the most successful social programs in history, a signature Democratic accomplishment that has saved millions of Americans from poverty. That is a bad, bad message.
As was true with mischaracterizations
of the Affordable Care Act (like Sarah Palin’s “lie of the year” about “death
panels”), President Obama is not doing himself any favors by keeping his cards
close to his chest on this. He is
allowing others to write the narrative, instead of doing so himself. It sure
would help if he would explain why he thinks this is reasonable, and what exemptions he proposes, rather than
leaving us to guess as to what he means, or conclude that he is betraying us
and lambaste him as "the Democratic President who cut Social Security."
So, why should we not
oppose this? Please proceed, Mr.
President.
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