Monday, November 11, 2013

Veterans Face a New Threat

Proposed cuts to Social Security beneficiaries will also affect those who receive veterans' disability benefits, Veterans pensions and military retirement pay, by using chained-CPI (rather than CPI-E) to calculate annual cost-of-living adjustments (COLAS).

NOTE: The U.S. Constitution requires that all bills regarding taxation must originate in the House of Representatives. Since House "procedure" is that all bills regarding taxation must first go through the Ways and Means Committee, this committee is very influential. The committee members have jurisdiction over all taxation, tariffs and other revenue-raising measures, as well as a number of other programs, including Social Security and Veterans programs.

According to the Alliance for Retired Americans, besides elderly Social Security retirees and those with disabilities, Veterans will also be affected in multiple ways by the chained-CPI cost-of-living adjustment (COLA) --- which is currently being proposed by both Republicans and a few Democrats, and which even President Obama has considered --- which plainly stated, is nothing more than a cut to earned benefits.

Last week in Dayton, Ohio, area residents who were concerned over proposed cuts to Social Security and Veterans benefits demonstrated outside Rep. Michael Turner's (R-Ohio) office. Members of the Alliance for Retired Americans, Social Security Works, and the Union Veterans Council were among the groups conducting the demonstration who wanted Congressman Turner to know that the cuts were unacceptable. Turner will have the opportunity to vote on a bill for the 2014 budget that comes out of the House-Senate conference committee later this year.

Seniors joined veterans at other Alliance events in Albuquerque, New Mexico; Appleton, Wisconsin; and Champaign, Illinois --- which have been taking place prior to a December 13th deadline, when a House-Senate conference committee is charged with reaching a budget compromise. There is a great danger that the "compromise" will contain a "grand bargain" that would cut seniors' Social Security and Medicare benefits, as well as veterans' benefits.

The Vermont Alliance hosted its own annual conference in Barre last week. Senator Bernie Sanders has been particularly outspoken, saying he fears a budget deal will contain the chained-CPI. President Obama had proposed that remedy only if Republicans agree to raise tax revenue. But GOP lawmakers involved in the current budget discussions have said they would reject such a deal that would raise any tax on any one (especially on the rich.).

Barbara J. Easterling, President of the Alliance for Retired Americans, said "The chained-CPI is a benefit cut that affects Social Security beneficiaries as well as those who receive veterans' disability benefits and military pensions. Because of the number of programs that would be subject to the chained-CPI, veterans would receive double, triple or more hits from the chained-CPI."

At the Appleton, Wisconsin event, activists rallied in front of Rep. Reid Ribble's (R-WI) office to oppose the Social Security benefit cuts that he and 50 other Republican Representatives proposed in a letter to House Speaker John Boehner.

The protesters also delivered petitions from constituents opposing cuts in the name of deficit reduction and called attention to a new report exposing how the chained-CPI will harm veterans and Social Security beneficiaries in Wisconsin --- because Wisconsin's Rep. Ribble has been an outspoken advocate for raising the retirement age, adjusting the COLA formula, means-testing Social Security benefits and other benefit cuts.

The Social Security Administration had recently announced that Social Security beneficiaries will get a 1.5% increase in their monthly payments in 2014. The increase is down from the 1.7% increase for 2013. There was no COLA increase at all in 2010 and 2011, because indexed prices fell during that time in the aftermath of the Great Recession. The 3.6% adjustment in 2012 has been the only significant rise in benefits in recent years. However, the program's COLA will be below 2% for the fourth time in the last 5 years.

Meanwhile, the U.S. House Ways and Means Committee has been deliberately misleading the public about chained-CPI. Following news of the COLA increase, the House Ways and Means Committee Republicans lied to Americans when they released a statement last Monday, saying, "If the more accurate chained-CPI was used to determine the 2014 cost of living increase, seniors would see a 1.7 percent increase as opposed to this year's increase of 1.5 percent."

Edward F. Coyle, Executive Director of the Alliance for Retired Americans, said, "Any economist will tell you, to use an earlier estimate for a figure – as they did – when an adjusted, more accurate number is available, is not sound analysis. The Ways and Means Committee is intentionally trying to mislead us. The chained Consumer Price Index (CPI) would be a cut in benefits – that is why conservatives support it. It is a cumulative cut over time."

In fact, an average earner retiring in 2011 at age 65 would lose more than $6,000 over 15 years if the chained-CPI were adopted. Experts won't know for sure what a hypothetical chained-CPI COLA would have been for 2014 until January 2016, because the chained-CPI is based on surveys of consumer substitution that are not completed until up to two years after the fact. This is one of the implementation problems a chained-CPI COLA would face.

Over the medium and long term, Social Security's actuaries predict substantial differences across three possible COLAs: CPI for the elderly (CPI-E), CPI for Urban Wage Earners (CPI-W), and the chained-CPI. It is long-term trends that matter when it comes to the impact of COLAs on benefits, since the effect of COLAs compounds greatly over time. (Read the Alliance's full statement on the Ways and Means Committee Republicans' use of a less accurate number to make their case that the chained-CPI would increase benefits.)

Last week the Alliance for Retired Americans sent a letter to Ways and Means Committee Chairman Dave Camp (R-MI) insisting that the misinformation be removed from the Committee's web site. (Also read a Huffington Post piece on the issue).

The effort to change the narrative on Social Security got another big backer last week, when Senator Sherrod Brown (D-OH) signed on to legislation that would expand Social Security, instead of cutting it. Brown is endorsing Tom Harkin’s bill to expand Social Security benefits.

From the Washington Post:

Brown argues that if Republicans push for Social Security benefits cuts as part of any deal, Dems should counter with the Harkin proposal to shift the terms of the debate in a Democratic direction. Democratic priorities, he said, should be centered on the idea that declining pensions and wages (and savings) are undermining retirement security, and added that the public strongly opposed gutting social insurance.

The Ohio Alliance President Norm Wernet had shared the stage with U.S. Sen. Sherrod Brown (D-OH) as the Senator announced his co-sponsorship of the bill (S.567, the Strengthening Social Security Act). Wernet said:

"In times like these, people need more economic security, not less. By phasing out the earnings cap on contributions [currently set at $113,700 --- about 65% of a congressional salary], this legislation extends the life of the trust fund and increases average benefits by about $800 per year."

A recent survey by the Associated Press-NORC Center for Public Affairs Research finds passionate opposition to any changes in the way Social Security benefits are calculated that could result in smaller annual raises --- and 61 percent of the people also favored raising the cap.

According to an analysis by USA Today, among companies listed on the S&P 500, over 10 percent paid an effective tax rate of zero percent — or even lower — over the past year. The national Alliance and several state chapters have signed on to a letter urging Congress to include Sen. Carl Levin's (D-MI) bill, S. 1533, in the budget discussions by closing offshore corporate tax loopholes -- (known as the Stop Tax Haven Abuse Act ). A wide range of labor, consumer, and civil rights groups also support closing outrageous loopholes in the tax code.

EDITOR'S NOTE: Besides the "cap" and reforming the tax loopholes, I would also propose taxing capital gains (unearned income) as regular wages (earned income) according to the current marginal tax rates --- and taxing capital gains for Social Security as well.

Our Veterans deserve a cost-of-living formula that accurately reflects the costs they face. The people who rely most on Social Security—the elderly, the disabled and and our veterans—spend more on health care than the general population --- and those costs have been rising rapidly. That’s why Congress needs to listen to the people and implement the more generous CPI-E, which puts the cost of living formula in line with what Social Security beneficiaries actually spend their benefits on.

*** If you haven't already, please add your name to this petition to your senator to support this bill to strengthen Social Security --- not cut it! (See this infographic for more details.)

Happy Veteran's Day!!!

For more information, contact:

Alliance for Retired Americans
815 16th Street, NW Fourth Floor
Washington, DC 20006
202-637-5399 (main)

**** The Strengthening Social Security Act --- Tell Fox News that if they REALLY support our troops, they would advocate this bill on every show (including Bill O'Reilly and Sean Hannity).

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