Cutting social security by stealth

Shaving the consumer price index that is supposed to keep benefits in line with inflation is an old scam of economists

Dean Baker
guardian.co.uk, Monday 25 July 2011 19.01 BST

There is a full-fledged drive to cut social security benefits by lowering the annual cost of living adjustment for people already receiving benefits. The plan involves changing the index for calculating the cost of living. The new index, which is known as the "chained consumer price index" (CCPI), typically shows a rate of inflation 0.3 percentage points less than the CPI currently used to adjust benefits.

A reduction of 0.3 percentage points in benefits may seem small, but this will accumulate through time. After being retired ten years, benefits will be almost 3% lower with the CCPI. After 20 years, the loss will be near 6%, and after 30 years, the reduction in benefits will be close to 9%. This is a serious loss of income for seniors, the vast majority of whom rely on social security for most of their income.