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

Multimedia Obama, Modi Break Nuclear Deal Deadlock

Impasse over liability issues had been stalling bilateral civilian nuclear cooperation; deal reached at start of US president's three-day visit to India More

WHO's Late Efforts in Tackling Ebola Highlight Need for Reform

Health experts debate measures to reform agency’s response to global public health emergencies in special one-day session on deadly outbreak More

One Tumultuous Year in Power for CAR's President

As sectarian violence raged across Central African Republic, interim President Catherine Samba-Panza has Herculean task: to end civil war and put country back on right track More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Worldwide Photo Workshops Empower Youthi
X
Julie Taboh
January 23, 2015 11:08 PM
Last September, 20 young adults from South Sudan took part in a National Geographic Photo Camp. They are among hundreds of students from around the world who have learned how to use a camera to tell the stories of the people in their communities through the powerful medium of photography. Three camp participants talked about their experiences recently on a visit to Washington. VOA’s Julie Taboh reports.
Video

Video Worldwide Photo Workshops Empower Youth

Last September, 20 young adults from South Sudan took part in a National Geographic Photo Camp. They are among hundreds of students from around the world who have learned how to use a camera to tell the stories of the people in their communities through the powerful medium of photography. Three camp participants talked about their experiences recently on a visit to Washington. VOA’s Julie Taboh reports.
Video

Video US, Japan Offer Lessons as Eurozone Launches Huge Stimulus

The Euro currency has fallen sharply after the European Central Bank announced a bigger-than-expected $67 billion-a-month quantitative easing program Thursday - commonly seen as a form of printing new money. Henry Ridgwell reports for VOA from London on whether the move might rescue the eurozone economy -- and what lessons have been learned from similar programs around the world.
Video

Video Nigerian Elections Pose Concern of Potential Conflict in 'Middle Belt'

Nigeria’s north-central state of Kaduna has long been the site of fighting between Muslims and Christians as well as between people of different ethnic groups. As the February elections approach, community and religious leaders are making plans they hope will keep the streets calm after results are announced. Chris Stein reports from the state capital, Kaduna.
Video

Video As Viewership Drops, Obama Puts His Message on YouTube

Ratings reports show President Obama’s State of the Union address this week drew the lowest number of viewers for this annual speech in 15 years. White House officials anticipated this, and the president has decided to take a non-traditional approach to getting his message out. VOA White House correspondent Luis Ramirez reports.
Video

Video S. Korean Businesses Want to End Trade Restrictions With North

Business leaders in South Korea are calling for President Park Geun-hye to ease trade restrictions with North Korea that were put in place in 2010 after the sinking of a South Korean warship.Pro-business groups argue that expanding trade and investment is not only good for business, it is also good for long-term regional peace and security. VOA’s Brian Padden reports.
Video

Video US Marching Bands Grow Into a Show of Their Own

The 2014 Super Bowl halftime show was the most-watched in history - attracting an estimated 115 million viewers. That event featured pop star Bruno Mars. But the halftime show tradition started with marching bands, which still dominate the entertainment at U.S. high school and college American football games. But as Enming Liu reports in this story narrated by Adrianna Zhang, marching bands have grown into a show of their own.
Video

Video Secular, Religious Kurds Face Off in Southeast Turkey

Turkey’s predominantly Kurdish southeast has been rocked by violence between religious and secular Kurds. Dorian Jones reports on the reasons behind the stand-off from the region's main city of Diyarbakir, which suffered the bloodiest fighting.
Video

Video Kenya: Misuse of Antibiotics Leading to Resistance by Immune System

In Kenya, the rise of drug resistant bacteria could reverse the gains made by medical science over diseases that were once treatable. Kenyans could be at risk of fatalities as a result if the power in antibiotics is not preserved. Lenny Ruvaga has more on the story from Nairobi.
Video

Video Solar-Powered Plane Getting Ready to Circumnavigate Globe

Pilots of the solar plane that already set records flying without a drop of fuel are close to making their first attempt to fly the craft around the globe. They plan to do it in 25 flying days over a five month period. VOA’s George Putic reports.
Video

Video How Experts Decide Ethiopia Has the Best Coffee

Ethiopia’s coffee has been ranked as the best in the world by an international group of coffee connoisseurs. Not surprisingly, coffee is a top export for the country. But at home it is a source of pride. Marthe van der Wolf in Addis Ababa decided to find out what makes the bean and brew so special and how experts make their determinations.
Video

Video Yazidi Refugees at Center of Political Fight Between Turkey, Kurds

The treatment of thousands of Yazidis refugees who fled to Turkey to escape attacks by Islamic State militants has become the center of a dispute between the Turkish government and the country's pro-Kurdish movement. VOA's Dorian Jones reports.
Video

Video World’s Richest 1% Forecast to Own More Than Half of Global Wealth

The combined wealth of the world's richest 1 percent will overtake that of the remaining 99 percent at some point in 2016, according to the anti-poverty charity Oxfam. Campaigners are demanding that policymakers take action to address the widening gap between the ‘haves’ and the ‘have nots’, as Henry Ridgwell reports for VOA from London.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid