social security

Social Security’s cost of living adjustments (COLA) are designed to protect against the erosion of retiree purchasing power when prices go up, as measured by the Consumer Price Index (CPI). “Now Social Security self-styled ‘reformers’ seek to lower COLA every year based on their claim that COLA overstates inflation,” says Merton C. Bernstein, LLB, a nationally recognized expert on Social Security. The proposed substitute for the current CPI formula, ‘Chained COLA,’ is based on the assumption that benefit recipients substitute lower-priced goods as prices go up. “This the assumption is unrealistic for those millions who only have access to convenience stores that typically offer fewer choice and higher prices,” says Bernstein, the Walter D. Coles Professor Emeritus at Washington University in St. Louis School of Law. “And, further, it is not reasonable to assume that most consumers can outwit the wiles of merchandising experts.”

Social Security recipients will receive a cost of living adjustment (COLA) of 3.6 percent beginning in 2012, the first increase since 2009. “COLA is welcome but will not fully maintain beneficiary purchasing power,” says Merton C. Bernstein, LLB, a nationally recognized expert on Social Security and the Walter D. Coles Professor Emeritus at Washington University in St. Louis School of Law. “The formula setting that rate does not meet fully the needs of Social Security recipients, especially when considering medical costs.”

Texas Gov. Rick Perry’s “Ponzi scheme” charge and Florida Sen. Mark Rubio’s assertion that Social Security is unsustainable recycle baseless attacks that go back as far as the 1930s, says Merton C. Bernstein, LLB, a nationally recognized expert on Social Security. “These are attempts to muster political support by appealing to long-held prejudices to satisfy those who never accepted Social Security,” Bernstein says. “To use them as guides to public policy would undermine our country’s most successful family protection program.”

AARP’s ambiguous statements about Social Security benefit cuts have led to a public roasting of the organization for caving into public pressure, says Merton C. Bernstein, LLB, a nationally recognized expert on Social Security and the Walter D. Coles Professor Emeritus at Washington University in St. Louis School of Law. “Whatever stance AARP has taken, it does not provide ‘cover’ for the Obama Administration to agree to cut benefits now, soon or in the future. If AARP does not vigorously and clearly repudiate what some see as willingness to accept benefit cuts, AARP will be the loser.”

Social Security’s yearly cost-of living adjustments (COLA) are targeted for reduction through a proposed “chained COLA” formula, and that could be a huge problem for those dependent on Social Security income. “COLA is an invaluable feature of Social Security,” says Merton C. Bernstein, LLB, a nationally recognized expert on Social Security. According to Bernstein, Republican “reformers” propose to reduce COLA claiming that the current method of calculating it overstates inflation. “This unrealistically assumes that people have the opportunity to buy lower priced substitutes when millions of people lack access to markets that offer such choices,” he says.

A government shutdown is looming and many politicians who are claiming “we’re broke” are proposing short-term or long-term federal budget plans with steep budget cuts as the only option to reduce the deficit. “But it looks like budget deficits are being driven in part by a deliberate strategy to sustain them, so policymakers are forced to cut spending,” says Timothy McBride, PhD, economist and associate dean for public health at the Brown School at Washington University in St. Louis. “The evidence certainly supports the theory that the Republicans are using a strategy of ‘starving the beast,’” he says.

The meltdown of private pension plans, 401(k)s and Individual Retirement Accounts during the recession demonstrates that Social Security is more essential than ever, says Merton C. Bernstein, LLB, the Walter D. Coles Professor Emeritus at Washington University in St. Louis School of Law. Bernstein discussed the crucial role of Social Security in a report for the university’s Weidenbaum Center on the Economy, Government, and Public Policy.

Nearly half of all Americans between the ages of 60 and 90 will encounter at least one year of poverty or near poverty, says a recent study by Mark R. Rank, PhD, professor at the Brown School at Washington University in St. Louis. The findings are published in the current issue of Families in Society: The Journal of Contemporary Social Services.

Standard and Poor’s recently released study on “Global Aging 2010: An Irreversible Truth” calls for the raising of the retirement age and says that age-related public spending is “unsustainable without policy change.” But Merton Bernstein, LLB, the Walter D. Coles Professor Emeritus at Washington University in St. Louis, says raising the retirement age could be a costly mistake.

Recent calls to cut Social Security benefits are grounded in misinformation and misunderstanding, says Merton C. Bernstein, LLB, the Walter D. Coles Professor Emeritus at Washington University in St. Louis School of Law. “Cutting the program will lead to undiminished deficits, more poverty, less purchasing power, less business income and more unemployment,” he says.