WASHINGTON, DC – America’s seniors could have received an estimated $388 billion more in Social Security benefits since 1975 if a consumer price index based on spending by the elderly had been used to determine cost of living increases. That’s the conclusion of a memorandum by the Congressional Research Service (CRS), requested by Rep. Alan Grayson (D-FL09), estimating the difference in payments between two consumer price indices.
The memo outlines CRS’s estimates of how the Cost of Living Increase (COLA) would differ if the Consumer Price Index for the Elderly (CPI-E), which weighs more heavily the costs of what seniors spend more on, had been used instead of the current Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). According to CRS, “On average, the CPI-E has increased by about 0.2 percentage points faster than the CPI-W since 1982, and the Social Security Administration’s Office of the Chief Actuary expects the differential to remain at that level.” The CRS report estimates that using the CPI-E would have resulted in increased COLAs between 0.2% and 3.0% each year since 1975, including 2.9% in 2014.
“If COLAs effective for payments in 1975 and later had been based on the experimental CPI-E rather than the CPI-W, [actual Social Security] expenditures would have been approximately $400 billion higher and would have totaled approximately $15.2 trillion,” the memo states.
“It’s clear, based on the data CRS analyzed, that our seniors deserve a raise,” Congressman Grayson said. “When comparing CPI-E based COLAs to the current system, our seniors were underpaid by $25 billion last year. Since 1975, not basing COLAs on the CPI-E has cost seniors an estimated $388 billion.”
Randall Hunt, CEO of Senior Resource Alliance, and President of the Florida Association of Area Agencies on Aging, said, “The current cost-of-living-adjustment used for Social Security is flawed, and it does not reflect the true price hikes seniors face in their everyday lives. I applaud Congressman Alan Grayson for bringing much-needed attention to this issue, and what it has cost seniors over the years. It’s my genuine hope that he and others in Congress can work together to fix it, as well as make other obvious reforms to protect and preserve Social Security.”
Congressman Grayson has announced that he will introduce the “Seniors Deserve a Raise Act” when he gets back to Washington in early September. The bill will increase Social Security payments by 2.9% for 2016, and require the CPI-E be used to determine each year’s COLA whenever it would result in a higher COLA than using the CPI-W.
“Social Security Works and the Strengthen Social Security Coalition applaud Congressman Grayson for his new legislation, Seniors Deserve a Raise Act,” said Nancy Altman, President of Social Security Works and Chair of the Strengthen Social Security Coalition. “Congressman Grayson understands that most seniors are barely getting by, and tomorrow’s seniors, facing a looming retirement income crisis, are likely to be even more vulnerable. Seniors around the country are struggling to put food on the table, pay for life-saving medications, and pay for other basic necessities of life. As the bill is titled, they deserve a raise.”
Congressman Alan Grayson represents Florida’s 9th Congressional District, which includes Osceola County, as well as parts of Orange and Polk counties.
