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

Lesotho Faces New Round of Violence, Political Crisis

Brutal killing of military officer has sent former leaders back into S. Africa where they're watching anxiously as regional officials head in to try to restore peace More

Video US Diplomat Expects Adoption of Bosnian Massacre Anniversary Resolution

Samantha Power says there's broad consensus about killings in Bosnia's war, but Russia calls resolution 'divisive,' backs UN countermeasure More

UN Report Exposes Widespread Boko Haram Atrocities

Damning report graphically details pattern of vicious, widespread atrocities committed by Islamist militants More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Olympics Construction Scars Sacred Korean Mountaini
X
July 02, 2015 4:10 AM
Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Olympics Construction Scars Sacred Korean Mountain

Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Xenophobia Victims in South Africa Flee Violence, Then Return

Many Malawians fled South Africa early this year after xenophobic attacks on African immigrants. But many quickly found life was no better at home and have returned to South Africa – often illegally and without jobs, and facing the tough task of having to start over. Lameck Masina and Anita Powell file from Johannesburg.
Video

Video Family of American Marine Calls for Release From Iranian Prison

As the crowd of journalists covering the Iran talks swells, so too do the opportunities for media coverage.  Hoping to catch the attention of high-level diplomats, the family of American-Iranian marine Amir Hekmati is in Vienna, pleading for his release from an Iranian prison after nearly 4 years.  VOA’s Heather Murdock reports from Vienna.
Video

Video UK Holds Terror Drill as MPs Mull Tunisia Response

After pledging a tough response to last Friday’s terror attack in Tunisia, which came just days before the 10th anniversary of the bomb attacks on London’s transport network, British security services are shifting their focus to overseas counter-terror operations. VOA's Henry Ridgwell has more.
Video

Video Obama on Cuba: This is What Change Looks Like

President Barack Obama says the United States will soon reopen its embassy in Cuba for the first time since 1961, ending a half-century of isolation. VOA White House correspondent Luis Ramirez reports.
Video

Video Hate Groups Spread Influence Via Internet

Hate groups of various kinds are using the Internet for propaganda and recruitment, and a Jewish human rights organization that monitors these groups, the Simon Wiesenthal Center, says their influence is growing. The messages are different, but the calls to hatred or violence are similar. VOA's Mike O’Sullivan reports.
Video

Video US Silica Sand Mining Surge Worries Illinois Residents, Businesses

Increased domestic U.S. oil and gas production, thanks to advances known as “fracking,” has created a boom for other industries supporting that extraction. Demand for silica sand, used in fracking, could triple over the next five years. In the Midwest state of Illinois, people living near the mines are worried about how increased silica sand mining will affect their businesses and their health. VOA’s Kane Farabaugh has more in this first of a series of reports.
Video

Video Blind Somali Journalist Defies Odds in Mogadishu

Despite improving security in the last few years, Somalia remains one of the most dangerous countries to be a journalist – even more so for someone who cannot see. Abdulaziz Billow has the story of journalist Abdifatah Hassan Kalgacal, who has been reporting from the Somali capital for the last decade despite being blind.
Video

Video Texas Defies Same-Sex Marriage Ruling

Texas state officials have criticized the US Supreme Court decision giving same-sex couples the right to marry nationwide. The attorney general of Texas says last week's decision did not overrule constitutional "rights of religious liberty," and therefore officials performing wedding services can refuse to perform them for same-sex couples if it is against their religious beliefs. Zlatica Hoke reports on the controversy.
Video

Video Rabbi Hits Road to Heal Jewish-Muslim Relations in France

France is on high alert after last week's terrorist attack near the city Lyon, just six months after deadly Paris shootings. The attack have added new tensions to relations between French Jews and Muslims. France’s Jewish and Muslim communities also share a common heritage, though, and as far as one French rabbi is concerned, they are destined to be friends. From the Paris suburb of La Courneuve, Lisa Bryant reports about Rabbi Michel Serfaty and his friendship bus.
Video

Video Saudi Leaks Expose ‘Checkbook Diplomacy’ In Battle With Iran

Saudi Arabia’s willingness to wield its oil money on the global diplomatic stage appears to have been laid bare, after the website WikiLeaks published tens of thousands of leaked cables from Riyadh’s Ministry of Foreign Affairs. VOA's Henry Ridgwell reports.
Video

Video In Kenya, Police Said to Shoot First, Ask Questions Later

An organization that documents torture and extrajudicial killings says Kenyan police were responsible for 1,252 shooting deaths in five cities, including Nairobi, between 2009 and 2014, representing 67 percent of all gun deaths in the areas reviewed. Gabe Joselow has more from Nairobi.

VOA Blogs