Social Security cuts under consideration by the White House in deficit-reduction talks would drive 245,000 people into poverty and lower widows' benefits $1,200 a year by 2050, according to Social Security Administration calculations provided to Sen. Bernie Sanders (I-Vt.).
Changing the way inflation is measured to determine Social Security benefits is one option on the table in high-stakes budget negotiations that resume Sunday at the White House. The so-called Chained Consumer Price Index on average results in a lower inflation levels than the more common formula used to adjust benefits.
"The result would be devastating cuts for millions of American seniors and people with disabilities," said Sanders. As chairman of the Senate Subcommittee on Primary Health and Aging, Sanders asked the Social Security Administration's Office of Retirement Policy to calculate the impact on poverty rates and benefits if the revised inflation gauge were to be adopted.
In 2030, according to the report prepared for Sanders, there would be 173,400 more people living in poverty in the United States. The revised formula also would dramatically lower benefits for retirees. Widows would receive almost $70 a month less in benefits, a reduction of $840 a year. People who are 70-79 would receive $49 a month less, a drop of $588 a year. Benefits for those who are 80-89 would drop by $80/month or $960 a year. Benefits for women would fall by 3.5 percent overall while men's benefits would drop by 2.9 percent.
By 2050, the impact would be much worse. There would be 245,000 more people living in poverty at mid-century. Widows' benefits would be $1,200 a year less. Those 70-79 would lose $720 a year, and seniors in the 80-89 age bracket would see benefits fall by $1,200 a year. Overall, women would see a 4 percent reduction in benefits while benefits for men would drop 3.4 percent.
As the deficit negotiations were set to resume on Sunday, Sanders emphasized that Social Security has not contributed a dime to the deficit or the national debt. Funded by the payroll tax on workers and employers, Socials Security has a $2.6 trillion surplus and will be able to provide full benefits for every eligible American for the next 25 years.