Why Is the Chained CPI in the President’s Budget?

April 25, 2013

My last post took on some of the basic questions raised by the debate over using the chained CPI (Consumer Price Index) to adjust Social Security benefits.

I deferred the question in the headline here because the post was already quite long, and the answer isn’t simple. So here goes …

Social Security and the Deficit

Strictly speaking, Social Security doesn’t belong in the budget at all — at least, not in the package of spending and revenue proposals we ordinarily think of as such.

It has its own revenue stream — the payroll tax, plus an earmarked portion of income taxes paid on some of the benefits it provides. It also has $2.7 trillion in reserves, i.e., the unused portion of these taxes, invested in Treasury bonds, and the interest on these.

That’s all it’s got.

A shortfall would be dreadful, but it would have no impact on the deficit — unless, as seems likely, Congress used general tax revenues to avert a sudden, big benefits cut.

This, however, is an argument for crafting a measure that will keep the program solvent, not for putting the chained CPI in the budget.

Some say that the Trust Fund is just an accounting fiction. The Treasury bonds the reserves are invested in signify money that’s being used to help pay for items in what we ordinarily think of as the budget.

When Social Security starts drawing on its reserves, as it already has, the Treasury Department has to sell some bonds to other investors in order to pay the program what it owes — or use revenues from taxes not specifically intended for Social Security.

This doesn’t mean that Social Security is contributing to the deficit, however — any more than you or I could be said to increase the deficit if we cashed in some savings bonds a grandparent once gave us.

More Revenues Without Tax Reform

The chained CPI is probably in the President’s budget in part because it would increase tax revenues without any rate-raising or loophole-closing at all.

According to Congressional Budget Office estimates, the federal government would gain $123.7 billion* over the first 10 years because tax brackets and other annually-adjusted tax provisions, e.g., the personal exemption and standard deduction, would rise more slowly.

So even a quite small increase in income could get taxed at a higher rate. The amount we’d owe wouldn’t be a whole lot greater than what we’d owe if the Internal Revenue Service continued to use the same inflation measure it’s been using.

But the tax code would be somewhat less progressive because filers at fairly low and moderate-income levels would take the biggest hits.

And at least some low and moderate-income families would get smaller reductions and/or refunds from the Earned Income Tax Credit because the maximum credit is adjusted for inflation, as are the phase-outs that gradually lower the credit when earnings reach some level above the amount eligible for the maximum.

There would be no impact on the refundable Child Tax Credit if Congress makes the current threshold for claiming it permanent, as the President has proposed.

Big if here, since we know that Congressional Republicans have wanted the EITC and the Child Tax Credit to revert to their more restrictive pre-Recovery Act forms.

Political Strategy

The revenues raised would be a small portion of the total increase the President now says he’d settle for. So it’s pretty clear the chained CPI is in the budget mainly for strategic reasons.

The received wisdom seems to be that he’s again striving for a grand bargain — offering Republican Congressional leaders the chained CPI and Medicare spending cuts they said they wanted in the fond hope they’ll agree to a scaled-back revenue-raising plan.

Or if not that, perhaps proving they’re altogether unreasonable and ought to lose their House majority next year so that Congress can get important business done.

This is what Michael Tomasky at The Daily Beast thinks the President is up to — and why he thinks no one should fret about the chained CPI.

The Nation‘s John Nichols thinks otherwise. Look, he says, at how the chairman of the National Republican Congressional Committee is already messaging the President’s proposal as a “shocking assault on seniors.”

This is likely to depress votes for Democrats next year, Nichols predicts, citing examples from past mid-term Congressional elections.

The chained CPI proposal certainly has complicated life for Democrats in Congress now, even if they ultimately don’t have to cast an up-or-down vote on it — still TBD.

The larger issue, I think, is that the President has, to some extent, legitimized use of the chained CPI as a way to “save” Social Security — and chosen it instead of lifting the payroll tax cap.

So, as Blake Zeff at Salon asks, “How hard would it be for Republicans to push cuts through, when this [the chained CPI] is now mainstream Democratic policy?”

Cuts, I’d add, that could extend to programs specifically for low-income people, which the President’s proposal would hold harmless.

Note how House Majority Leader John Boehner grudgingly welcomes the chained CPI as an acknowledgment that “our safety net programs are unsustainable.”

This implies something far more sweeping than what the President has proposed for Social Security and Medicare, which arguably aren’t safety net programs anyway.

Well, maybe the rumblings and grumblings, mine included, are just worst-case scenarios. But I’m not ready to bet on that.

* The Office of Management and Budget estimates the revenue gain at $100 billion. Differences between CBO and OMB estimates are not unusual.


Chained CPI and Social Security: Some Questions and Answers

April 22, 2013

Back in January I said I’d delve into the impacts of using the chained CPI (Consumer Price Index) to adjust Social Security benefits.

Then the President delivered a strong defense of “the commitments we make to each other,” including Social Security. So I put my draft post aside, figuring the chained CPI was off the bargaining table.

The more fool I. As you’ve probably read, it’s among the entitlement “reforms” in the President’s proposed budget.

The White House has taken great care to package it with other changes that would supposedly protect very elderly retirees and others who’ve relied on Social Security benefits for a long time. Also to shield programs that base eligibility on income.

But as economist/blogger Jared Bernstein said some time ago, the danger is that protections like these will all get swept aside, leaving only the benefits cuts.

Here then are some of the basic issues, as I see them. More to follow in a second post.

Why Do Anything About Social Security?

Our federal policymakers must do something about the Social Security retirement and disability insurance programs — and the sooner the better.

The Trust Fund will run out of money long about 2033. If nothing is done before then, the Social Security Administration will have to rely solely on what it continuously receives from payroll taxes.

That would be enough to pay about 75% of the benefits retirees would get if the Trust Fund still had reserves — a devastating loss for the nearly two-thirds who rely mainly or entirely on those benefits.

What Could Prevent the Shortfall?

At the risk of over-simplifying, our policymakers have two choices, not counting just letting the Trust Fund dry up. They could change the system to take in more or pay out less.

A switch to the chained CPI represents the latter approach because it rises more slowly than the currently-used index — the CPI-W. So, therefore, would the benefits that seniors, severely disabled former workers and eligible survivors receive.

Policymakers could instead “scrap the cap” on the amount of wage income subject to the tax that feeds the Social Security programs.

Or they could raise it enough to cover all but the top 10% of income, as it did in 1982 after Congress stepped in to shore up the program — not for the last time, incidentally.

High earners wouldn’t like this, of course. Nor perhaps would employers, since they’re responsible for half the payroll tax.

The National Federation of Independent Business has already said that its small business members “would violently oppose” it. These, as you know, are the “job creators” that our President and Congressional leaders are so fond of.

Is the Chained CPI More Accurate for Cost-of-Living Adjustments

Proponents of the chained CPI claim that it’s simply a more accurate cost-of-living measure because it reflects consumer responses to price increases. If the price of beef goes up, they buy less of it and more chicken. Etc.

Opponents argue that the index isn’t more accurate for seniors because they spend far higher portions of their income on items that aren’t amenable to switches, especially health care.

Even the CPI-W apparently understates their cost-of-living increases.

For some time now, the Bureau of Labor Statistics has maintained an experimental cost-of-living index specifically for the elderly. Over the long haul, it has risen somewhat faster than the CPI-W. And Social Security’s chief actuary expects it will in the future.

We’d probably see similar results from a cost-of-living measure for people with severe disabilities, since many of them also have disproportionately high health care costs.

So if accuracy were the real issue, Congress would give BLS the funds to fully develop its experimental index, as The New York Times, among others, has suggested.

What Other Objections Have Opponents Raised?

The over-riding objection to the chained CPI switch is that it would effectively cut benefits. The loss in any one year would be small. But losses would mount up over time because the base for each cost-of-living adjustment, as well as the COLA itself, would be lower.

The average earner, says the Strengthen Social Security Campaign, would lose a total of $4,631 by age 75 — more than three months of benefits. Another 10 years and the loss would mount to nearly a year’s worth of benefits.

We need to recall that retired workers now get, on average, only $1,261 a month — and former workers in the Social Security Disability Insurance program somewhat less.

For 36% of seniors, Social Security provides at least 90% of income — not surprising, given what we know about retirement savings. It’s the sole source of income for 29% of the most elderly.

As I mentioned earlier, the President’s budget includes a “benefit enhancement” — popularly known as a bump up. It’s supposed to restore the cumulative losses for people who live long enough to benefit.

Most who do would still get less, according to the SSS Campaign.

Those who don’t are just out of luck, of course. And they’re disproportionately lower-income people, for whom every Social Security dollar counts.

UPDATE: After I published this, the Center on Budget and Policy Priorities issued a brief that provides more detail on the impacts of the chained CPI on Social Security retirement benefits.

“Ponzi Scheme” Keeps Nearly 14 Million Seniors Out Of Poverty

September 27, 2011

I’ve remarked before that the measure the Census Bureau uses for its annual poverty reports was crude from the get-go. Three times the cost of what was then the U.S. Department of Agriculture’s lowest-cost food plan.

The measure has become increasingly inappropriate over time, as food costs have come to represent a smaller portion of basic living costs and living standards have risen.

Shawn Fremstad at the Center on Economic and Policy Research tells us that, in the early 1960s, the poverty line was nearly half the median average income. It’s now slightly under one-third.

Other research, he says, suggests that twice the applicable poverty threshold would be a better indicator. That would put 33.9% of Americans, rather than 15.1%, into the poverty category.

Well, the Census Bureau will be issuing poverty figures based on an alternative measure it’s developing. In the interim, it gives us a bit of a preview, with three “alternative resource measures” pulled from its 2010 Income, Poverty and Health Insurance Coverage report.

One shows how poverty figures would rise if the current measure didn’t include Social Security benefits. Hence the headline.

In 2010, these benefits kept a total of 20.3 million Americans from falling below the poverty threshold. The largest number — 13.8 million — were 65 and older.

In other words, without Social Security benefits, five times as many seniors would have been officially poor — and therefore very poor indeed.

Specifically, a senior living alone would have had to get along on no more than $10,458 for the year, a couple on no more than $13,194.

To put this in perspective, an elderly couple in the Washington, D.C. area would have had only $678 left after paying the rent for a modest efficiency unit.

The other alternative measures show similar, if somewhat less dramatic impacts. For example, 3.2 million people had enough income to lift them above the poverty threshold because at least one household member received unemployment insurance benefits.

The current poverty measure includes Social Security and UI benefits because they’re cash income. Food stamp benefits aren’t.

But, as the Center on Budget and Policy Priorities reports, 3.9 million fewer people would have been counted as poor if they were part of the Census measure.

These figures ought to send a message to policymakers who want to bring the long-term deficit down by drastic cuts in Social Security, as well as key safety net programs.

Also, I think, provide useful perspectives on what they’re hearing from some conservative economists and columnists.

Professor Edward Glaser, for example, argues that the temporary payroll tax cuts in the President’s jobs plan should be paid for by increasing the eligibility age for Social Security retirement benefits because that “was always going to be part of any sensible entitlement reform.”

So much for those with other ideas.

Washington Post columnist Charles Krauthammer puts a new spin on his long-standing insistence that Social Security (and Medicare) benefits have to be cut because too many of us older folks are living too long — and didn’t have enough kids when we were younger.

Social Security is a Ponzi scheme, he says, implicitly endorsing the view of that well-known economist Governor Rick Perry.

This, I take it, is because Social Security operates like other insurance programs, with premiums some people pay, plus returns on investments, funding payouts on claims by others.

Still, Krauthammer allows that Social Security is “vital” and “humane.” Just needs to be adapted to “new demographics.”

Most important fix is to raise the retirement age — “an absurd anachronism” he calls it, using life expectancy figures that the Social Security Administration itself has shown to be misleading.

This isn’t to say that the Social Security Trust Fund won’t eventually lack funds to pay full benefits if we do nothing to change the system. Only that a further increase in the retirement age is hardly the only way to fix it, let alone the best.

What the new Census figures tell us is that a further hike in the retirement age will almost certainly increase the over-65 poverty rate.

What, pray tell, are older workers supposed to do if they lose their jobs or find the tasks too physically demanding?

Just hang in there in until they’re 70? Take a big cut in benefits at a bumped-up early retirement age — a likely companion to an increase in the full retirement age?

Why not instead address the future shortfall by lifting the cap on the payroll tax? Or at least, as Senator Barney Frank (I-VT) proposes, requiring the highest-earning workers to pay more?

A Second Look At Flat-Lined Social Security Benefits For Seniors

November 11, 2010

Before I decided to publicly reject the administration’s proposed $250 Social Security gift, I thought about potential cost-of-living increases that could disproportionately affect retirees. Turns out I gave up too soon.

I knew all too well that Medicare premiums deducted from Social Security retirement benefits can, over time, erode their value because health care costs are rising faster than the overall inflation rate.

But I read that nearly 90% of beneficiaries would be protected from a bigger premium bite next year. Of these, 70% are covered by a “hold harmless” provision, which says that beneficiaries already paying Part B premiums won’t get tapped for increases that would reduce their net benefits, unless they earn enough to subject them to income-adjusted premiums. The remaining 20% because state medical assistance agencies will pay the premiums.

What I’ve since learned is that there’s no “hold harmless” provision for Medicare Parts C and D — the optional alternative coverage offered by private insurance companies and the also-optional insurance coverage for prescription drugs. So some portion of that 70% may have less for other living expenses.

More importantly, I’ve found compelling evidence that the cost-of-living index used to determine the need for benefits adjustments — the Consumer Price Index for Urban Wage Earners and Clerical Workers — doesn’t accurately account for seniors’ rising living costs.

Higher health care costs are a major factor here. Others include higher housing costs and, to a lesser extent, fuel oil costs. We know this because the Bureau of Labor Statistics has been maintaining an “experimental” Consumer Price Index for Elderly Americans since 1982.

It’s found that, over a 25-year period, the CPI-E has risen somewhat faster than the CPI-W used to calculate benefits. The long-term differences translate into an average 3% difference a year. The difference doesn’t matter much in the first year, but it mounts up over time.

For example, according to a recent report by the Senior Citizen’s League, someone who received $816 in 2000 would have received $216 less in 2009 than what the CPI-E indicates would have been enough to maintain a steady state.

Now the CPI-E is only suggestive. As BLS explains, the sample used to construct it is small. And it’s not an altogether accurate reflection of either the demographics of Social Security retirement beneficiaries or their living costs.

It nevertheless suggests that cost-of-living adjustments in retirement benefits ought to be based on a more suitable index.

Congressman John Duncan, Jr. (D-TN) has introduced a bill — the CPI for Seniors Act — that would direct BLS to develop and publish a monthly index of changes in consumption expenditures that are typical for people aged 62 and older.

It’s got five cosponsors and probably not going anywhere fast. Because once you’ve got the index, you’ve got solid grounds for bigger annual increases — thus greater stress on the Social Security Trust Fund we’re supposed to be so worried about.

And you’d still need another index to account for Medicare and other expenditures that are singular or different for the over-full retirement age population.

None of this, to my mind, argues for the proposed $250 across-the-board consolation prize for no cost-of-living increase next year. Nor against my view that the $250 would be better spent as assistance to struggling TANF families.

But it does say that I shouldn’t have been so quick to dismiss the complaints about the unfairness of another year without a COLA.

Keep Your $250 Gift To Retirees … Or Send It Where It’s More Needed

October 25, 2010

I don’t usually find myself agreeing with the Washington Post editorial board these days. But setting aside the nasty “pandering” slant, I share its view that the White House and Congress should shelve the plan to send Social Security recipients another $250 to compensate for the lack of a cost-of-living adjustment next year.

At least, I concur so far as payments to seniors are concerned. Benefits to other affected groups may be a different story. I’m more comfortable speaking only as one of the 41 million or so who receive benefits because we’ve reached the official retirement age.

Would I like an extra $250? Sure, even though I’d have to pay part of it back in income taxes. Am I disappointed that my monthly benefits won’t be higher next year? Of course. But do I, like some of the recipients who’ve reacted, feel that level payments will be unfair? Absolutely not.

Like other recipients, I’ve already benefited from a protection in the COLA system. Benefits go up when the Consumer Price Index for Urban Wage Earners and Clerical Workers rises, but they can’t go down when it drops.

In 2009, benefits reflected a sharp 5.8% rise in the CPI-W the year before. They stayed level in 2010 when the CPI-W dropped by 2.1%. And as the Center on Budget and Policy Priorities explains, I and all my fellow beneficiaries will still be ahead of the game next year.

This isn’t to say that many recipients of Social Security retirement benefits won’t feel strapped. CBPP reports that the average benefit in June 2010 was $14,000.

More than half of the recipients rely on the benefits for the majority of their cash income. For about a quarter, it provides more than 90%. Dependence increases with age, as income from work becomes less likely and savings get used up.

If you’re trying to make do on $14,000 — or less if you were a low-wage worker — even $250 can make a real difference. But the proposed extra cash would go to all recipients, even the wealthiest.

The White House argues that seniors have seen their savings fall as a result of the recession. Undoubtedly true, as my monthly statements can attest. But we’re likely to have taken less of a hit than younger people — assuming we followed the standard advice to shift toward lower-risk investments as we aged.

In any event, a recent survey by the Pew Research Center found that 70% of us have held our own during the recession — a much higher percentage than for any other age group. This, I suspect, is a combination of investment strategy and, perhaps more importantly, Social Security itself.

Now maybe there’d be nothing wrong with a modest gift from the fed if everyone else had enough to get along on. As things stand, the poverty rate for seniors dropped a bit last year — down to a record low 8.9%. The child poverty rate was more than twice as high — 20.7%. For single-woman families with children, it was a shocking 38.5%.

Which brings me to my last point. While Social Security benefits keep about 90% of seniors out of poverty, a new CBPP analysis shows that TANF cash benefits to parents and children aren’t enough to lift the families out of deep poverty, i.e., above 50% of the federal poverty level, in any state in the country.

Even combined with food stamps, they’re not enough to get families to 75% of the FPL in 41 states and the District of Columbia. (For the District, the maximum TANF cash benefit for a family of three is 28% of the FPL. With food stamps, the family gets to 59% of the FPL.)

Not only that. In all but three states, the benefits are lower in inflation-adjusted dollars than they were when TANF was created in 1996. They’ve lost at least 20% of their value in 29 states and the District, where the loss has been 25.8%. No COLAs here.

In all but one or maybe two states, a TANF family of three was getting less than half the average Social Security retirement benefit in July 2010. What will happen unless Congress renews the now-expired TANF Emergency Contingency Fund is an open question since a majority of states have used a portion of their allocation for basic cash assistance.

So if the White House and the Democratic leadership in Congress want to send $250 checks where they’re needed most, I suggest they send them to TANF families.

“Welfare mothers” aren’t as politically popular — or as likely to vote — as seniors. But they’re raising a generation of desperately poor children, who are at high risk of lifelong poverty — and ultimately dependence on Social Security checks that won’t be big enough to lift them out.

Simpson Gaffe Shows Where He’s Coming From

September 9, 2010

Former Senator Alan Simpson, co-chair of the President’s fiscal commission, has taken a lot of heat for comparing Social Security (or maybe all government programs) to “a milk cow with 310 million tits.”

But Washington Post columnist Dana Milbank says he’s right on target. The outrage merely confirms that the simile is “spot on.” It’s proof positive that “special interest groups …, the real sucklings at the public teat,” don’t want the commission to “do its job right,” i.e., recommend spending cuts across the board.

The Post editorial board wants to give Simpson a pass. He should have watched his language. Indeed, he’s apologized. But his fundamental point about Social Security is correct.

Up to a point, the Post editors are right, though I don’t think Milbank is. The e-mail that provoked the controversy says that we’ve got to make Social Security “sustainable and assure long-term solvency.”

I don’t think anyone would quarrel with that. As I earlier wrote, the latest report from the system’s trustees projects a long-term shortfall in the Trust Fund, which holds bonds in which surplus payroll taxes are invested. If nothing changes, there won’t be enough funds to pay full benefits in 2037 or thereafter. Better to do something soon than wait till that happens.

But words matter. And Simpson’s are very telling. They’re not just some momentary lapse in tact. They’re a clue to what someone who may have a lot of influence on the future of Social Security and other social programs is coming from.

Consider first the simile. A cow with 310 million “tits” (one for every American) is a monster — obviously something we must do away with. All those people sucking at them are draining the system of resources. They’re getting something for nothing — sustenance they don’t deserve.

This is certain a novel way to look at an income insurance program — one that beneficiaries have, in essence, paid premiums for to protect themselves and their dependents from destitution if they become disabled and/or when retire, voluntarily or otherwise, at a fairly advanced age.

As Simpson himself acknowledges, this isn’t the first time he’s made “cracks about people on Social Security who milk it to the last degree.” (Note that figure of speech again.)

Back in April, he ridiculed the concerns he was hearing as coming from “old cats 70 and 80 years old who are not affected one whiff [sic]. People who live in gated communities and drive their Lexus to the Perkins restaurant to get the AARP discount.” (Former President Reagan’s Cadillac queens of welfare recycled.)

Which brings us to the other telling part of the e-mail — its blatantly insulting and dismissive treatment of individuals and organizations that have raised concerns about cutting Social Security benefits.

The recipient, who’s Executive Director of OWL (the Older Women’s League), is told she’s one of those people who “babbles into vapors.” Simpson refers her to a chart, if she’s “any good at reading … anything that might challenge [her] biases and prejudices.” She should call him when she gets “honest work.”

Asked about the commission’s prospective work on Social Security, he told a CNBC interviewer, “You’ve got to scrub out of the equation the AARP, the Committee for the Preservation of Social Security and Medicare, the Gray Panthers, the Pink Panthers, the whatever. Those people are lying …. They don’t care a whit about their grandchildren.”

So far as he’s concerned then, everything isn’t on the table, notwithstanding what President Obama said at the commission’s first meeting. He’d staked out his position long before then. “To think you’re entitled to something regardless of your net worth or income is just BS.”

So obviously are, from his perspective, any recommendations that would preserve Social Security for the long term without breaking the contract it’s based on.

And we know what will happen if that contract gets broken. Those “greedy geezers” whose benefits will be drastically cut — or eliminated — because they’re not in dire straits will get on board with a scheme to privatize the system.

I’m betting that would be just fine with the eccentric but nonetheless staunchly conservative former Senator from Wisconsin.

Social Security “Fix” Would Leave Low-Wage Workers Broke

September 6, 2010

Social Security celebrated its 25th birthday last month. The milestone probably got more attention than it would have otherwise because the system is reportedly in the bulls-eye of the President’s fiscal commission.

Why it should even be on the table isn’t altogether clear. By law, benefits must be self-sustaining, i.e., funded by payroll taxes, plus the interest on Treasury bonds in which excess revenues are invested.

Perhaps the answer is that benefits owed are projected to consistently exceed annual payroll revenues, beginning long about 2015. So the federal government will lose funds it’s been using for other purposes. Thus, as New York Times columnist Paul Krugman says, the system’s costs “could prove unsupportable for the federal budget as a whole.”

This year is a foretaste of what could happen because for recession-related and accounting reasons the system is short on current tax revenues. The trustees project a $41 billion deficit, excluding interest income. Alarm bells from the far right notwithstanding, this doesn’t mean the system is broke.

The trustees project a reversal in 2012. But they say the trust fund, i.e., the bonds and accumulated interest, will be exhausted in 2037. At that point, payroll taxes will still cover about 78% of benefits, plus administrative costs (now less than 1% of the total). But what about the missing 22%?

Virtually all the experts agree that the federal government shouldn’t wait till the system gets to this point. People who’ve retired and those near retirement age will have counted on Social Security for a good part, if not all of their income for the rest of their lives. It will be too late for them to prepare for a drastic drop in benefits — assuming they could have if they’d known in advance.

Hence the many views we’re seeing now on what should be done to keep the system solvent. One that’s getting a lot of play is to prospectively raise the eligibility age for Social Security retirement benefits.

The government already did this to prepare for the bulge in claims by aging baby boomers. If you were born after 1942, you’ve got to be at least 66 to retire with full benefits. The age continues to rise until to reaches 67.

House Minority Leader John Boehner recently got a good bit of heat for suggesting the age be raised to 70. House Majority Leader Steny Hoyer has also spoken of some mix of reforms that could include a higher retirement age or “one pegged to lifespan,” which probably means a retirement age indexed to life expectancy.

I’m with those who think this is the wrong way to go. A couple of major reasons.

First, low-income workers have jobs that are physically demanding, e.g., construction, waiting tables, home health care. They may not be able to keep up with these demands in their mid-60’s or later.

Second, both they and other older workers who lose or have to quit their jobs will have a hard time finding alternative employment. We’re already seeing this in the experience of older workers laid off because of the recession.

In fact, one of the reasons Social Security is technically in the red this year is that far more older workers are claiming benefits before they reach full retirement age. This means their monthly benefits will be permanently reduced.

By how much depends on how far short of 66 they are. The cut could be as much as 25%. The National Committee to Preserve Social Security and Medicare says that workers who retire at 62 when the full retirement age reaches 67 will lose 30%.

Now, this may not matter a whole lot for older workers who’d held high-paying jobs. They’re likely to have 401(k) accounts and possibly other investments that will have regained their value by the time the proposed age increase went into effect.

But it’s going to cut the rug out from under low-income workers. The Center on Budget and Policy Priorities recently issued a Social Security fact sheet that gives us some indicators.

Today, more than a quarter of post-retirement beneficiaries rely on Social Security for more than 90% of their income. Surely the vast majority of them were low-wage workers. Obviously any benefits reduction would have a major impact on their financial situation.

Looking toward the future, the amount of pre-retirement income Social Security replaces will fall because more will be deducted for Medicare premiums — unless health care costs miraculously level off to the overall inflation rate. By the time the retirement age reaches 67, it will probably be, on average, about 31%.

It will, of course, be less for workers constrained to retire earlier. There will be more of them in this group if the full retirement age is raised. And if their earnings were low during their work years, they’ll be in dire straits.

Some have suggested that the higher eligibility age could include a carve-out for low-wage workers. Or maybe the Supplemental Social Insurance rules could be changed so that benefits would be available to those with less than debilitating conditions.

This, however, would still leave a very large number of older workers between the rock and the hard place unless they could continue working full time until well into what are supposed to be our golden years. Much more likely for professors, lawyers, financial managers, etc. than for factory workers.

Seems to me there ought to be a better way to shore up Social Security — and I don’t mean Congressman Paul Ryan’s new/old plan to privatize it.