News / USA

New Budget Cuts Cost of Living Adjustments for US Retirement Fund

New Budget Cuts Cost of Living Adjustments for US Retirement Fundi
X
April 11, 2013 12:24 AM
The White House released a new budget plan Wednesday that would reduce entitlement benefits for retired Americans. The budget proposal seeks to limit Cost of Living Adjustments (COLA) to Social Security by using a less generous formula to measure inflation for computing future benefit increases. Called "Chained CPI" -- some conservatives say the plan would save the government billions of dollars. But others say the proposed changes also place an unfair burden on people who can least afford it. Mil Arcega has more.
The White House released a new budget plan Wednesday that would reduce entitlement benefits for retired Americans.  The budget proposal seeks to limit Cost of Living Adjustments (COLA) to Social Security by using a less generous formula to measure inflation for computing future benefit increases.  Called "Chained CPI" -- some conservatives say the plan would save the government billions of dollars. But others say the proposed changes also place an unfair burden on people who can least afford it.

About 58 million Americans receive social security benefits.  Many live day-to-day on fixed incomes.

"Everything is going up.  It's rising and there is not much you can do about it," Dennison said.

Kay Dennison works part time at a retirement center in Maryland. She worries she could lose everything if her monthly checks don't keep up with inflation.

"Probably my home, because everything is so tight and so high, and the mortgage rates.  We've been in our home 40 years and we still owe," Dennison said.

The proposed changes to annual cost-of-living adjustments would save the government an estimated $130 billion over ten years.  But AARP, a seniors' advocacy group, says under the new formula the average retiree would get $220 less a year after five years and $862 less annually after 20 years.

Economist Monique Morrissey at the Economic Policy Institute says reducing already meager benefits on average about $1,200 dollars a month, unfairly targets the most vulnerable Americans.

"Poverty rates for the oldest, old are higher, incomes are lower, they've often used up other resources, they have more out of pocket expenses for healthcare. They're the last group you would ever want to target to take the brunt of these cuts," Morrissey said.

With the U.S. population aging, social security now takes in less revenue than it spends.  Conservative economists say more cuts may be necessary to keep the program solvent.

Charles Konigsberg at the Federal Budget Group says Americans have a choice: increase their contributions or face reduced benefits.  

"The good news is that these problems can be solved if they're addressed now.  The longer we wait, the more difficult it is to fix the problem because the growth in spending accumulates over time," Konigsberg said.
 
Retired educator Virginia Levy is more fortunate.  Her monthly social security checks help supplement her teacher's pension.

"I'm worried more about future generations, what it's going to do to them.  My children are 40 and what's going to happen to them when they are retiring?  Their social security is going to be a fraction of what ours is," Levy said.

Indeed, Monique Morrissey says the proposed changes will affect all Americans.

"People think social security is for old people, they don't realize that the benefits that are being cut are really for young people who will be old at that point.  This one form of cut, by cutting the COLA, doing it immediately, affects both young and old people," Morrissey said.

The president's proposed budget includes additional cuts to Medicare, and eliminates loopholes for wealthier Americans.  But with a mid-term election next year, analysts say it's unlikely Congress will approve the budget without making changes.

You May Like

UN Ambassador Power Highlights Plight of Women Prisoners

She launches the 'Free the 20' campaign, aimed at profiling women being deprived of their freedom around the world More

Satellite Launch Sparks Spectacular Light Show

A slight delay in a satellite launch lit up the Florida sky early this morning More

Fleeing IS Killings in Syria, Family Reaches Bavaria

Exhausted, scared and under-nourished, Khalil and Maha's tale mirrors those of thousands of refugees from war-torn countries who have left their homes in the hopes of finding a better life More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Nobel Prize Winner Malala Talks to VOAi
X
August 31, 2015 2:17 AM
Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video Nobel Prize Winner Malala Talks to VOA

Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video War, Drought Threaten Iraq's Marshlands

Iraq's southern wetlands are in crisis. These areas are the spawning ground for Gulf fisheries, a resting place for migrating wildfowl, and source of livelihood for fishermen and herders. Faith Lapidus has more.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Rebuilding New Orleans' Music Scene

Ten years after Hurricane Katrina inundated New Orleans, threatening to wash away its vibrant musical heritage along with its neighborhoods, the beat goes on. As Bronwyn Benito and Faith Lapidus report, a Musicians' Village is preserving the city's unique sound.
Video

Video In Russia, Auto Industry in Tailspin

Industry insiders say country relies too heavily on imports as inflation cuts too many consumers out of the market. Daniel Schearf has more from Moscow.
Video

Video Scientist Calls Use of Fetal Tissue in Medical Research Essential

An anti-abortion group responsible for secret recordings of workers at a women's health care organization claims the workers shown are offering baby parts for sale, a charge the organization strongly denies. While the selling of fetal tissue is against the law in the United States, abortion and the use of donated fetal tissue for medical research are both legal. VOA’s Julie Taboh reports.
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.
Video

Video Ages-old Ice Reveals Secrets of Climate Change

Ice caps don't just exist at the world's poles. There are also tropical ice caps, and the largest sits atop the Peruvian Andes - but it is melting, quickly, and may be gone within the next 20 years. George Putic reports scientists are now rushing to take samples to get at the valuable information about climate change locked in the ice.

VOA Blogs