CHARLESTON, W.Va. — President Barack Obama’s proposed budget, which is waiting on Congressional action, includes cuts to cost of living increases for Social Security over ten years to save an estimated $130 billion.
But Robert Romasco, AARP national president, said Social Security should be left out of the federal budget process entirely.
“Social Security is a social insurance program. It’s an income protection program and, as an insurance program, it benefits because everybody pays in and everybody has the opportunity to get out,” he said.
Romasco was in West Virginia Thursday for an AARP event in Charleston.
He was a guest on Thursday’s MetroNews “Talkline” to talk about the President’s proposed “chained CPI” cut which House Speaker John Boehner has also supported in recent years.
CPI stands for consumer price index which looks at how prices for necessities rise over time. CPI is used to make cost of living increases for programs like Social Security.
Chained CPI is a little different because it factors in an assumption that when prices for some necessities rise, people will substitute in cheaper items. For example, if the price of milk rises, shoppers may switch from a national brand to a store brand to save money.
Romasco said the problem with that formulation is, with retirees, there is little room to shift to lower cost items because they’re buying the basics at set prices. Chained CPI, he said, would lead to lower cost of living adjustments for Social Security in the future.
“When you look at the basket of goods for someone who is retired, you have a very different set of things,” he said. “Medical costs are a much larger share of your income and the theory behind it, substitution, really doesn’t exist. You can’t substitute for utilities. Most seniors are already watching every single penny they have.”
Congress has until Tuesday to approve a budget or a temporary spending bill to avert a government shutdown. Later in October, the U.S. will hit the debt ceiling, meaning the country is in danger of defaulting on its debts if the ceiling is not raised.
Republicans are attempting to tie the defunding of the Affordable Care Act to the passage of those spending measures.