Showing how difficult it is to make the smallest reductions in federal spending, New York Times personal finance reporter Tara Siegel Bernard's latest "Your Money" column criticized, as hurting the old and poor, a proposed change in how inflation is calculated that would slightly curb the annual increases in entitlement spending. The proposal is generally supported by conservatives and reviled by liberals.
Bernard doesn't like it either. The headline over her Saturday column: "Budget Negotiating Chip Has Big Downside for Old and Poor."
President Obama has put Social Security on the table in an attempt to reach a bipartisan agreement on the federal budget deficit, a move that would hit the program’s beneficiaries when they are at their most vulnerable.
The president has proposed slowing the rate at which benefits increase over time, a change that would ultimately hit the oldest of the old, often single women, many of whom have probably exhausted any other savings. Many members of this group also face higher health costs, have little hope of working again and often live without the support of a life partner.
Glossing over the dire state of the Social Security system and the enormous entitlement spending problem that looms over the next few decades, Bernard instead warned "the rate of slower growth...would ultimately cost many older people thousands of dollars over the course of their retirement."
So take a woman with an initial benefit of $1,100 a month, or $13,200 a year, which is the median benefit of single women 65 and older, according to the National Women’s Law Center. (This benefit represents about 73 percent of this group’s total income, which is about $18,000.)
By the time she is 75, her benefits would be $41 less a month, or nearly $500 a year less, than under the current program.
“That doesn’t sound like so much,” Ms. Entmacher said. “Well, it’s equal to five days’ worth of food. So if you have your monthly Social Security check and you are trying to figure out how to get to the doctor, how to pay your rent and how you pay your out-of-pocket medical expenses, every dollar counts. So are you going to skip a meal for 15 days, each month, to save five days’ worth of food? Or are you going to cut your pills in half?”
Bernard predictably favored higher taxes on high earners instead.
Social Security advocates say there are a variety of other ways to strengthen the program that would not be as burdensome to retirees. Currently, employees and employers each pay 6.2 percent on the first $113,700 of earnings (self-employed people must pay the entire 12.4 percent). Eliminating the cap on which earnings are taxed would eliminate about 88 percent of the current shortfall, according to the Social Security Administration.
“What we want Congress to do is follow the will of the people,” said Nancy Altman, co-director of Social Security Works, an advocacy group. “They don’t want to see benefits cut. As a wealthy country, we can afford this.”
Bernard betrayed similar big-spending preferences in a February column expressing the wish the U.S. would embrace Europe's cradle-to-grave safety net mind-set, lumping America with apparently inferior countries like Liberia, Suriname and Papua New Guinea for the sin of not offering paid maternity leave: "While the United States takes great pride in its family values, it is the only high-income country that does not offer a paid leave program."