Americans need to oppose this unjust tax scheme

Republicans have resurrected the Chained Consumer Price Index for All Urban Consumers (Chained CPI). It’s hidden deep in the House tax bill, and if passed, will be the first step toward cutting a host of retiree programs, including Social Security.

In 2013, many in Congress were seriously considering cutting Social Security benefits by tying the cost-of-living adjustment (COLA) to the Chained CPI (C-CPI-U), a smaller measure of inflation. This change would have caused significant lifetime losses in benefits for the average Social Security beneficiary — $6,000 over 15 years for the average retiree at the time. Only after a huge outcry from current and future retirees who opposed cuts to their earned retirement benefits was the idea scrapped.

{mosads}The GOP tax bill resurrects this lousy concept and applies the chained CPI to the tax code. In fact, Republicans would have the change take effect immediately. It will lead to something called “bracket creep,” taxpayers being moved into a higher tax bracket as their taxable income increases. Workers whose pay barely tracks the rate of inflation can slip into higher tax brackets and end up worse off than they were before getting a raise.

This is the nose under the camel’s tent; the slippery slope. If the chained CPI concept becomes part of the tax law, it will increase pressure for Republicans to apply it to Social Security COLAs, Veterans Administration (VA) benefits and federal workers’ pensions, for the sake of “consistency.”

The 4.4 million members of the Alliance are fighting to protect Social Security so it is available for current retirees and future generations. That means constantly being on the lookout for schemes that hurt working Americans and threaten retirement security, like the chained CPI.

In 2013, the Alliance for Retired Americans and unions held over 50 “human chain” events around the country to oppose the chained CPI cut to earned Social Security benefits. These events were covered in dozens of papers, on-line, and on television, raising awareness about the issue and putting politicians on notice. Our members knew that this “technicality” would almost certainly lead to a cut in the benefits they earned over a lifetime of hard work.

Once the chained CPI creeps into our projections, it is insidious. It’s not just a simple technical change without any impact — it’s a real cut to the benefits you have earned every year into the future.

If this formula change advances with tax reform and then becomes part of the Social Security, VA benefits, and federal workers’ pension discussions, it will NOT be just a small benefit cut. Switching to a chained CPI would compound benefit reductions dramatically over time, resulting in an annual Social Security benefit that is roughly $1,000 (2012 dollars) lower by the time a beneficiary reaches age 85.

The last time we went through this drill, politicians in Washington were using the deficit as an excuse to cut Social Security. They tried to do it behind closed doors, thinking we wouldn’t notice or understand. This year, the change so far revolves around taxes, but it is again under the radar.

The chained CPI is not the only bad idea in this tax bill. The list of provisions that disproportionately harm older Americans is long. Eliminating the medical expense deduction hurts older Americans the most.

The sharp deficit increases in the House bill will trigger $25 billion in cuts to Medicare almost immediately. Eliminating the Affordable Care Act’s individual mandate will increase health insurance premiums for people between the ages of 50 and 64 significantly.

We urge all Americans to oppose this unjust tax scheme for those reasons, and because it brings the chained CPI back from the dead. Call your Representative and Senators and tell them to reject this tax bill.

Richard Fiesta is the executive director at the Alliance for Retired Americans. He served in the Clinton administration in congressional and public affairs positions at the Departments of Labor and the Interior and the Pension Benefit Guaranty Corporation.