Bloomberg is reporting that President Barack Obama is weighing a “Social Security concession” in negotiation of a deal to avert the so-called fiscal cliff.
According to the report, Obama is considering a Social Security CPI change. What that means, via Bloomberg:
Switching the inflation yardstick to the so-called chained consumer price index would reduce Social Security cost-of-living benefit increases and generate fresh revenue because it also would reset income-tax brackets. Some Democrats in Congress have said they’re willing to make that change.
The Congressional Budget Office estimated in 2011 that a tweak to the so-called chained CPI could save as much as $145 billion through 2021.
The Washington Post’s Ed O’Keefe has an example of what the switch could mean for an average retiree:
Imagine, for example, a person born in 1935 who retired to full benefits at age 65 in 2000. People in that position had an average initial monthly benefit of $1,435, or $17,220 a year, according to the Social Security Administration. Under the cost-of-living-adjustment formula and 2012 inflation, that benefit would be up to $1,986 a month in 2013, or $23,832 a year. But if payouts were adjusted using chained CPI, the sum would be around $1,880 a month, or $22,560 a year — a cut of more than 5 per cent and more as the years go by.
Obama and House Speaker John Boehner met for approximately 45 minutes today at the White House, and it appears as if talks to come to a deal before a Jan. 1 deadline are progressing.
In recent days, Boehner has reportedly offered some small concessions, as well. On Saturday, Politico, CNN and The Associated Press reported that Boehner proposed a tax hike on millionaires. And on Sunday, The Washington Post reported that Boehner had proposed lifting the debt ceiling for one year.