Joan Ruff said she believes the time is ripe for a national conversation on the future of Social Security. But we doubt that sustained, thoughtful discussions about Social Security will take place in Congress anytime soon.
Ruff, a member of AARP’s national board, recently visited with a group of Advocate writers and editors to underscore the impact of Social Security benefits in Louisiana. AARP, which represents older Americans across the country, has consistently — and vigorously — opposed reductions in Social Security benefits over the years. The group’s influence is one reason that lawmakers and presidents are typically reluctant to debate changes in Social Security policy.
President Barack Obama defied that convention recently by suggesting that Social Security benefits be tied to a more conservative version of the Consumer Price Index known as chained CPI. The change would mean a slightly smaller increase in benefits in response to inflation. Financial writer Dan Kadlec, in a recent opinion piece in Time magazine, noted that the current CPI is running at 1.5 percent. The chained CPI is 1.4 percent.
“The problem is that while such a small difference may sound meaningless in the short term,” Kadlec told readers, “when benefits increases are held back like this year after year, it has a reverse compounding effect. After 10 years, the average Social Security benefit would be about 3 percent less; after 30 years it would be 8.4 percent less.”
AARP released a poll showing that 74 percent of Louisiana voters 50 years of age and older oppose changing the way that Social Security benefits are calculated using the CPI.
Social Security benefits account for 63 percent of the typical older Louisiana resident’s income, according to AARP. Low- and middle-income seniors in Louisiana are more reliant on Social Security benefits, typically receiving 75 percent of their income from Social Security.
Linking Social Security benefits to chained CPI is only one of numerous policy options available for keeping Social Security solvent. The program should be able to pay full benefits for the next 20 years, but won’t be solvent after that unless changes are made. Among the choices for balancing Social Security’s finances are further increases in the retirement age, increasing the payroll tax rate that funds the program, and reducing benefits for wealthier seniors.
AARP gathered experts on both sides of these policy proposals and distilled their arguments into a handy guide available at http://earnedasay.org. To check it out, scroll to the bottom, and look for the “Get the Facts” icon.
We’re not surprised that AARP is opposed to tying Social Security benefits to the chained CPI. But we believe that any reasonable plan for stabilizing Social Security is going to require shared sacrifice by those who fund the program and those who receive benefits. In laying a menu of policy options on the table — and acknowledging opposing viewpoints — AARP officials seem to recognize that Social Security reform will require compromise.
We hope such compromise is possible. Even so, the current tenor of politics in Washington doesn’t make that prospect very likely.