We knew it was coming. Still, now here, it's causing quite a stir. President Obama's new budget proposes a change in the formula for Social Security cost-of-living adjustments.
Many Democrats are saying they disagree with their president. Many Republicans are saying they like the idea and want it implemented quickly. And advocates for older Americans are saying, "No way."
The proposed change, called the chained CPI, is a twist on the consumer price index, the formula that helps Social Security, veterans benefits, food stamps and other federal programs keep up with inflation. The chained CPI would reduce the expected COLA each year, and reductions would grow larger over time.
Here's what the budget proposal, titled " Reducing the Deficit in a Smart and Balanced Way," said about the chained CPI: "The president has made clear that any such change in approach should protect the most vulnerable. For that reason, the budget includes protections for the very elderly and others who rely on Social Security for long periods of time, and only applies the change to non-means-tested benefit programs. The switch to chained CPI will reduce deficits by at least $230 billion over the next 10 years."
It could take a while to sort out what the "protections" are, but responses to the chained CPI proposal were immediate.
"I can almost guarantee that you know someone - a family member, friend or neighbor - who counts on Social Security checks to get by. ... That's why I was shocked to hear that the president's newest budget proposal would cut $100 billion in Social Security benefits. Our Social Security system is critical to protecting middle class families, and we cannot allow it to be dismantled inch by inch." -Sen. Elizabeth Warren (D-Mass.), in an email to supporters
"He does deserve some credit for some incremental entitlement reforms he has outlined in his budget. I would hope that he would not hold hostage these modest reforms for his demand for bigger tax hikes. Why don't we do what we agree to do? Why don't [we] find the common ground that we do have and move on that?" -House Speaker John Boehner in " GOP: Enact CPI Now" on Politico.com
"AARP is deeply dismayed that President Obama would propose cutting the benefits of current and future Social Security recipients, including children, widows, veterans and people with disabilities, to reduce the deficit. Social Security is a self-financed program that doesn't contribute to the deficit, so it shouldn't be cut to reduce it." - AARP on White House Budget Proposal
Also of Interest
- 9 Things to Look for in the President's Budget
- Spring Cleaning Cheapskate Style
- Join AARP: Savings, resources and news for your well-being
See the AARP home page for deals, savings tips, trivia and more