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AARP to Congress: Don’t Cut Social Security in Deficit Deal

Chained CPI would immediately hurt current Social Security recipients.

FOR IMMEDIATE RELEASE:

February 14, 2013

CONTACT:

AARP Media Relations

202-434-2560 or media@aarp.org

Twitter: @AARPMedia

AARP to Congress: Don’t Cut Social Security in Deficit Deal

Chained CPI would immediately hurt current Social Security recipients.

Washington, DC AARP Chief Executive Officer A. Barry Rand sent a letter to Members of Congress today, reiterating the organization’s opposition to cutting Social Security benefits as part of any budget deal. Rand’s letter follows:

“On behalf of millions of members nationwide and all Americans age 50 and over, AARP would like to reiterate our opposition to reducing Social Security benefits for the purpose of deficit reduction, including efforts to address sequestration. AARP believes that using the Social Security benefits Americans have earned over a lifetime of work to remedy a problem that Social Security did not create is neither right nor fair. Instead, in the face of declining pensions, shrinking savings, fallen home values, and rising health costs, Social Security deserves its own national conversation that focuses on preserving and strengthening the retirement security of Americans and their families for generations to come.

“Social Security is currently the principal source of income for nearly two-thirds of older American households receiving benefits, and roughly one third of those households depend on Social Security for nearly all of their income. Half of those 65 and older have annual incomes below $18,500, and many older Americans have experienced recent and significant losses in retirement savings, pensions, and home values. Today, every dollar of the average Social Security retirement benefit of about $14,800 is absolutely critical to the typical beneficiary. Proposals to reduce Social Security benefits through adoption of the chained consumer price index would immediately hurt current recipients who overwhelmingly depend on that income in retirement. And Social Security will likely be even more important to future generations. Due to stagnating income, escalating personal debt and rising costs for education and health care, workers today are less likely than their parents or grandparents to enjoy the living standards of their working years when they retire. If these trends continue, Social Security will be the main source of income for all but the wealthiest retirees in the future. 

“Moreover, in addition to the immediate harm that benefit reductions would impose on current beneficiaries, there is no immediate crisis in Social Security financing that needs to be addressed with benefit cuts. Social Security benefits are self-financed, primarily through payroll contributions from employees and their employers, throughout an individual’s working life. The payroll contributions and benefits paid, including any administrative costs, are accounted for separately from the rest of the federal budget. As such, Social Security has not been a driver of our large deficits. To the contrary, dedicated contributions to Social Security have created significant cash surpluses each year for most of the past 30 years, providing more revenue than needed to pay current benefits. These surpluses have been borrowed to meet other expenses of the federal government. In exchange, the federal government has issued Social Security Treasury bonds of equal value. That is, Social Security has reduced the past need for additional government borrowing from the public and resulted in a publicly held debt that is less today than what it otherwise would have been.

“According to the Social Security Trustees, the program has sufficient income from payroll contributions and assets in Treasury notes to pay 100 percent of promised benefits for the next 20 years, and even with no changes, can continue to pay approximately 75 percent of promised benefits thereafter. Social Security is therefore not in crisis. AARP believes that the current long-term shortfall should be addressed sooner rather than later so that the fundamental structure of the program can be retained, changes can be more modest, and the protections it offers to almost all workers and their families can be strengthened. However, any such changes to the Social Security system must be made within the proper framework of protecting the retirement security of real people who have paid into the program, including a gradual phase-in of any changes to protect current beneficiaries. Strengthening Social Security for the future requires its own debate, separate from the process of reducing the deficit or replacing sequestration.

“Given the already modest benefits current Social Security beneficiaries receive, the program’s continued critical importance to future generations’ income and retirement security, the system’s dedicated financing, and the lack of a contributory impact on our current large deficits, AARP firmly believes that Social Security should not be targeted for cuts for deficit reduction or as part of sequester negotiations. AARP will therefore continue to oppose any cuts to Social Security, including back door cuts to Social Security such as the chained CPI, within this framework. And the American public agrees.

“According to a joint survey by Hart Research Associates and GS Strategy Group in July 2012, only 8 percent of voting adults 18 and older support cutting Social Security to reduce the federal deficit.  86 percent believe Social Security should be addressed separately as part of a plan for retirement security purposes. These survey results align with the information AARP has been gathering from the public through our You’ve Earned a Say initiative over the past year. AARP members and beyond recognize that Social Security did not cause our federal deficits and, therefore, the much-needed benefits of real, hardworking people should not be cut in order to remedy the deficit.

“Older Americans truly understand that budgets matter and that we all need to live within our means. But they also understand that budgets impact real people – Social Security in particular is critical to peoples’ lives and helps ensure that older and disabled Americans can live independently and with dignity as they age. All Americans also understand the difference between programs that have been contributed to and earned over the course of a lifetime of work and those that are not.

“Consistent with the view of most Americans, we again strongly urge you not to cut Social Security benefits as part of a package to reduce the deficit or avoid sequestration.”

For more on where AARP stands on Chained CPI, please visit: www.aarp.org/politics-society/advocacy/info-02-2013/stop-proposals-to-cut-social-security-and-veterans-benefits.html.

 

AARP is a nonprofit, nonpartisan organization, with a membership of more than 37 million, that helps people 50+ have independence, choice and control in ways that are beneficial to them and society as a whole. AARP does not endorse candidates for public office or make contributions to either political campaigns or candidates. We produce AARP The Magazine, the definitive voice for Americans 50+ and the world's largest-circulation magazine; AARP Bulletin, the go-to news source for the 50+ audience; AARP VIVA, a bilingual lifestyle multimedia platform addressing the interests and needs of Hispanic Americans; and national television and radio programming including My Generation and Inside E Street. The AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. AARP has staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Learn more at www.aarp.org.

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