New Economic Analysis Shows Billion$ of Dollars and Hundreds of Thousands of Jobs Would Be Lost While Seniors, Veterans & Disabled Put At Risk
The National Committee Foundation has released a startling new report today which details, state by state and Congressional District by District, the true economic impact of adopting a new formula called the “Chained CPI” to measure annual cost of living adjustments (COLA). While some in Washington portray this benefit cut as nothing more than a “technical tweak” the truth is it would be a benefit cut imposed on the oldest and most vulnerable Americans who would be least able to afford it.
Our report, “The Chained CPI: Shackling America’s Economic Recovery,” was created in consultation with economist Dean Baker and provides a detailed look at what the adoption of a stingier cost of living adjustment really means for communities and states.
“The negative impact of the Chained CPI should not be ignored or trivialized. This new analysis clearly illustrates just how harmful this COLA cut will be to seniors as well as state economies and local businesses. Washington’s blind determination to cut Social Security benefits in the name of deficit reduction must be stopped and those who continue to peddle the Chained CPI should now explain to American workers, retirees and their families how losing up to $31 billion in economic output and more than 200,000 jobs nationwide is a ‘modest adjustment’ we should accept.” Max Richtman, NCPSSM President/CEO
“Social Security plays an enormously important role in stabilizing the economy during a downturn. It maintains a flow of income to a group of people (the elderly and disabled) who will overwhelmingly spend it. In this way it sustains demand and consumption. The downturn we have seen since 2007 would have undoubtedly been far more severe without Social Security altogether. Any measure that reduces benefits would lessen the stabilizing role that Social Security plays.” Dean Baker, Co-Director Center for Economic and Policy Research
“The Chained CPI: Shackling America’s Economic Recovery,” uses CBO projections to calculate state and Congressional district level impact of the Chained CPI proposal. Many districts with large senior populations would be especially hard-hit by the Chained CPI cuts, top among those:
In Pennsylvania’s 12th congressional district, a largely rural area in the southwest corner of the states, the benefit cuts would be $5.0 million in 2015, $44.9 million in 2020, and $71.3 million in 2023. This would imply a loss of output in the district of $7.2 million in 2015, $65.2 million in 2020, and $103.3 million in 2023. The implied job loss would be 60 in 2015, 440 in 2020, and 630 in 2023.
In Florida’s 16th congressional district, which includes Sarasota and other cities along the Gulf Coast, the benefit cuts would be $6.1 million in 2015, $53.3 million in 2020, and $87.7 million in 2023. This would imply a loss of output in the district of $8.9 million in 2015, $80.2 million in 2020, and $127.2 million in 2023. The implied job loss would be 70 in 2015, 550 in 2020, and 780 in 2023.
Congressman Ted Deutsch is a champion of Social Security, Medicare and Medicaid on Capitol Hill. His legislation extends the solvency of Social Security – without raising the retirement age or slashing benefits – and finally guarantees adequate and accurate cost of living adjustments each year.
“We’ve heard the Chained CPI just slows COLA growth but this cut actually hurts not only seniors but also the communities where they live. No matter how you try, you simply can’t make this proposal sound reasonable to seniors, veterans, the disabled and their families. Losing billions in output, hundreds of thousands of job and taking a step backward in our economy at this moment simply doesn’t make sense. We’ve got to make some changes for Social Security’s long-term solvency and we can do that. But the problem isn’t lavish benefits to seniors.” Rep. Ted Deutsch (D-FL)
While Washington’s well-financed austerity lobby has downplayed the economic impact of losing billions in benefits spent in local communities due to the chained-CPI, step outside the Beltway and state lawmakers and business owners alike understand what this benefit cut would mean:
“Social Security is invaluable not only to our senior citizens, but to our economy. We must stand firm against any change that imperils both our seniors and our economy. Benefit changes that lead to a loss in purchasing power and employment would be detrimental to both national and local economies.” New Jersey Assemblywoman Celeste M. Riley
Abraham Kapusuz owns the Green Olive restaurant in Bridgeton, New Jersey. The vast majority of his patrons depend on Social Security and he knows first hand what a cut in benefits would mean to his customers and his business:
“I’ve talked with many of my customers about the chained CPI proposal and they are 100% opposed. Not only would they feel a big pinch in the wallets, but my employees could be hurt too. If I have fewer customers, I obviously can’t keep a payroll of 50 people so some staff would lose their jobs. The chained CPI sounds like a lose-lose proposition. It will hurt my customers, it will hurt me and it will harm my local economy.” Abraham Kapusuz, small business owner
A full breakdown of the economic and employment impact of the Chained CPI, by state and each Congressional District, can be found on the National Committee Foundation’s website.