Social Security Cuts in Fiscal Cliff Deal: the Real Cost to New York

New AARP County-by-County Analysis Shows Impact of Chained CPI in NY; Assoc. Urges Congress Not to Include Social Security Cuts in Budget Deal

NEW YORK, Dec. 20, 2012 /PRNewswire-USNewswire/ -- Most New Yorkers may be trying to make heads or tails of the fiscal cliff debate taking place in Washington, let alone understand what a Chained CPI is. Today, AARP New York is breaking the debate and the issue down, releasing a new county-by-county analysis of the impact Social Security cuts via a Chained CPI would have in the state.

A Chained CPI (consumer price index) contains changes to the formula used to determine Social Security's annual Cost of Living Adjustment (COLA) with a new and harsh twist, assuming that when prices for one thing goes up, people settle for cheaper substitutes (for example, if beef prices go up, they'll buy chicken). The "substitution" theory under a Chained CPI is inaccurate as most seniors can't simply trade down in their spending on prescription drugs, utilities and other fixed expenses. A COLA formula under Chained CPI would mean lower COLAs, compounding over a person's lifetime, resulting in $112 billion in benefit cuts nationally and $7 billion out of the pockets of New York's Social Security beneficiaries. 

"Most New Yorker seniors receiving Social Security have already traded down as far as they can to fit their fixed incomes; a Chained CPI assumes they can trade down even further when prices rise and that's just not the case," said David McNally, Sr. Manager of Government Affairs for AARP in New York. "This is a national debate that could have very serious local consequences on unsuspecting New Yorkers – we're helping people to see the real pocketbook impact of a Chained CPI. AARP's message to Congress is simple: Don't cut New Yorkers' Social Security."

The cost of a Chained CPI formula to Social Security beneficiaries by county in New York:

In New York State, 2.4 million seniors currently receive Social Security for an average annual benefit of $14,600. Social Security makes up about 58% of the typical older New Yorker's income, lifting 32% out of poverty.  In addition, it pumps $45.6 billion into the state's economy.

"Adopting a Chained CPI would mean older New Yorkers receive less Social Security benefits - that's the bottom line," added McNally. "The move will worsen over time, push many seniors below the poverty level and cause economic hardships for those trying desperately to keep up with rising prices."

AARP is urging New Yorkers to make their voices heard on the issue by visiting www.earnedasay.org and sending a message to the President and Congress urging them not to include cuts to Social Security as part of a fiscal cliff deal.

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AARP is a nonprofit, nonpartisan organization with a membership that helps people 50+ have independence, choice and control in ways that are beneficial and affordable 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 50+ Americans and the world's largest-circulation magazine with over 35.1 million readers; AARP Bulletin, the go-to news source for AARP's millions of members and Americans 50+; AARP VIVA, the only bilingual U.S. publication dedicated exclusively to the 50+ Hispanic community; and our website, AARP.org.  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.  We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.

SOURCE AARP New York State