Transcript: Dr. Eric Kingson on cost of living adjustments for Social Security recipients

Dr. Eric Kingson called on Congress to implement Social Security cost of living adjustments that accurately reflect the rising cost of health care for American seniors.

U.S. Senate Committee on Health, Education, Labor, and Pensions
Hearing on the Recession and Older Americans
Oct. 18, 2011

Transcript of Testimony by Dr. Eric Kingson, Professor at Syracuse University School of Social Work and Co-director of Social Security Works:

Dr. Eric Kingson, Professor of Social Work at Syracuse University. PHOTO SOURCE: help.senate.gov

“Senator, thank you. Thank you very much to Sen. Franken as well and other members of the committee for holding this hearing and for focusing on human beings in particular. Because ultimately these policies are about lives of Americans, and we lose that too often. So thank you very much.

“As you’ve mentioned, my name is Eric Kingson. I’m a professor at Syracuse University. I also served as staff to two presidential commissions on Social Security, including the Greenspan commission in 1982. Most of my work is on the politics and economics of aging, and [I] now co-direct Social Works and co-chair the Strengthen Social Security campaign, which both members present today the issues and the programs have been extraordinarily supportive of. Thank you.

“Just summarize main points and I’ve entered into testimony my written testimony into the record, if I may.

“There’s nothing – absolutely nothing – that provides the surety of protection, the widespread protection of Social Security, and nothing’s going to replace it in the next 50 years, 60 years.

It is as that chart shows, and I’ll be happy to talk about that in Q&A, the single most important source of income for the vast majority of older people. For older persons with less than $31,000, I believe roughly, it provides 75% of the aggregate income going into their households. Critical. It’s not going to be replaced.

“Former presidents, former Congresses were wise to establish the cost of living adjustment – and it’s my hope that – and to maintain the cost of living adjustment. And it’s my hope that in the future, members of Congress will also be doing the same in trying to maintain a cost of living adjustment that accurately reflects the cost of living changes for older people, people with disabilities, and others.

“The weight of evidence, as has been mentioned, the weight of evidence concerning the current cost of living adjustment mechanism is that it understates the impact of inflation on older Americans. It falls short of assuring that older Americans maintain their purchasing power no matter how long they live, because primarily it does not give sufficient weight to the impact of health care cost increases on these populations.

GRAPHIC SOURCE: Written testimony submitted by Dr. Eric Kingson

“The alternative CPI or the chained CPI or also called the superlative CPI that’s being proposed by some members of the “super committee” and has been discussed in the deficit reduction discussions, that alternative simply does not pass the smell test. It would only make a situation we have today worse. We are not adequately in my opinion and in the opinion of others adjusting for inflation. Today the chained CPI, if it’s implemented, will further reduce benefits. A woman who retires at age 65 living ’til age 75 will get a benefit of about $600 less in real dollars 10 years later at age 85, about $950 or so less at age 95 – if she lives so long – it would be roughly $1,400 less than it would have been if the chained CPI is put into effect.

“The consumer price index for the elderly which the Older Americans Act asked to be developed by the Bureau of Statistics. CPI-E for Americans over 62 is a far superior measure of inflation, but it too is less than perfect but it’s certainly better than what we have in play today.

“In terms of the impact of inflation on older households and on persons with disabilities, the public would be very well served if initially the CPI-E were to put into effect and if Congress requested further development and testing of price indices.

“We all have an interest in an accurate CPI. Democrats and Republicans all have an interest in that. The problem I think we have today is we do not have an accurate CPI. I think if we get a more accurate CPI, it would in fact not increase but adjust benefits. We don’t want a national policy that says the longer you live the less purchasing power your Social Security has. That’s what we will have if we implement the chained CPI. It is also arguably what we still have today because the current CPI does not fully adjust for it.

“The implications, by the way, of the chained CPI on the SSI program are even more deleterious, because it would both cut benefits in the beginning – before people get benefits – and it will also be cutting their benefits after that. Whether implemented in 2011 or 2021, the chained CPI will violate promises that Congress and the president have made that there would be no changes to Social Security benefits affecting people 55 and over. It’s bad policy, and it’s also terrible public relations.

“Social Security is a promise. It’s a promise Americans expect their government to keep. This is true across all political spectrums. It’s true for Tea Party households and union households.

“Americans are not easily deceived. If Congress chooses to implement the [chained]CPI, ultimately they’ll understand that in terms of Social Security over 10 years, it’ll take $121 billion directly out of the pockets of Social Security beneficiaries. They will understand that their government has let them down.

“So it’s very important that you’re casting light today on this issue. It’s very appreciated that you’ve put this panel together, and we are delighted to assist in any way possible.”

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