Last Updated:October 22 @ 07:01 am

Obama plan hits seniors, low-income taxpayers

By Associated Press

WASHINGTON - President Barack Obama's proposal to change the way the government measures inflation could lead to fewer people qualifying for college grants and anti-poverty programs, reduced benefits for seniors and veterans, and higher taxes for low-income families.

If adopted across the government, the new inflation measure would have far-reaching effects because so many programs are adjusted each year based on year-to-year changes in consumer prices.

Social Security recipients would get smaller benefit increases each year. The federal poverty level would rise by smaller amounts, meaning more people would technically rise out of poverty with only small increases in income.

Taxes would go up because of smaller adjustments to income tax brackets, the standard deduction and the personal exemption amount.

In all, the change would reduce the federal budget deficit by a total of $340 billion over the next decade, according to congressional estimates. However, the White House has said it wants the adjustments to include protections for "vulnerable" recipients, so the savings could be less.

Obama is proposing the new measure of inflation as part of his 2014 budget plan, which is scheduled for release on Wednesday. Obama has already agreed to adopt it twice as part of negotiations with congressional Republicans over reducing government borrowing. Neither of those talks produced an agreement.

Called the Chained Consumer Price Index, the new measure would show a lower level of inflation than the more widely used Consumer Price Index.

The chained CPI assumes that as prices rise, consumers turn to lower-cost alternatives, reducing the amount of inflation they experience. For example, if the price of beef increases while the price of pork does not, people will buy more pork rather than pay the higher beef prices.

The chained CPI is unpopular among many Democrats in Congress and advocates for seniors who complain that it would disproportionately hit low- and middle-income families.

"I am terribly disappointed and will do everything in my power to block President Obama's proposal to cut benefits for Social Security recipients," said Sen. Bernie Sanders, a Vermont independent who caucuses with Democrats. "I also am especially concerned about the impact this change would have on disabled veterans and their survivors."

AARP and other groups have been fighting for years against changing the way inflation is calculated. They argue that seniors don't have the same ability as younger people to buy alternative products, especially health care.

But the new inflation measure is popular among budget hawks in part because it cuts benefits and increases taxes gradually, in ways that might not be readily apparent to most Americans. The savings, however, become substantial over time.

Among the spending cuts over the next decade:

- Social Security: $127 billion.

- Federal retirement programs for military and civilian workers and Supplemental Security Income: $38 billion.

- Medicare and Medicaid: $29 billion.

On average, annual increases in Social Security payments, government pensions and veterans' benefits would be about 0.3 percentage points smaller each year, according to the chief actuary for the Social Security Administration.

The COLA for 2013 was 1.7 percent or about $21 a month for the average Social Security retiree. If the new measure of inflation were in effect, the COLA would have been about 1.4 percent, or a little more than $17 a month. That's $4 less than the current system or about $48 less during the course of a year.

Once the change is fully phased in, Social Security benefits for a typical middle-income 65-year-old would be about $136 less a year, according to an analysis of Social Security data. At age 75, annual benefits under the new index would be $560 less. At 85, the cut would be $984 a year.

The tax increases would start off small, too, but would add up to $142 billion over the next decade, according the Joint Committee on Taxation, the official scorekeeper for Congress.

After 10 years, taxpayers making between $10,000 and $20,000 would see a 14.5 percent increase in their federal taxes with a chained CPI, according to a 2011 analysis. Those making between $30,000 and $40,000 would see a 1.4 percent increase while taxpayers making more than $1 million would get a tax increase of 0.1 percent.

Low-income taxpayers would see the biggest increase because much of their income is not currently subject to the federal income tax. Smaller annual adjustments to the tax brackets would push more of their income into the 10 percent tax bracket.

The wealthiest taxpayers wouldn't feel it as much because most of their income is already taxed at the top rate.

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A service of YellowBrix, Inc.

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23 Comments

  1. nancyjComment by nancyj
    April 6, 2013 @ 9:10 am

    Just like the illegal President to try to destroy people that can’t fight back and give raises to government employees.
    What a guy! Isn’t anyone going to stop him???

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    Rating: 4.8/5 (25 votes cast)
    • chippersmomComment by chippersmom
      April 6, 2013 @ 10:01 am

      As long as hairy reid is the top mop in the Senate, obumba will continue as the usurper-in-chief. reid believes that obumba can not only calm the seas but he can walk on them. The people of Nevada have got to wake up and get rid of reid.

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      Rating: 4.8/5 (23 votes cast)
    • samsimoneauxComment by samsimoneaux
      April 6, 2013 @ 5:04 pm

      Not that you care, but your comments are copied and spread around the web for the rest of the world to enjoy as evidence of the mental decline of the once-greatest nation on Earth. I mean, come on! Why is your president illegal? He’s the reason the US isn’t going down the same plug-hole as the UK. You take David Cameron, we’ll take Obama.

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      Rating: 1.4/5 (9 votes cast)
    • lokiswifeComment by lokiswife
      April 6, 2013 @ 10:14 pm

      Obama, Ben Bernanke and the banksters have already robbed Grandma and Grandpa by reducing interest on CDs from 5% a few years ago to less than 1/2 of 1% now. Older people saved money for their retirement and put it in safe places like savings accounts and CDs. The interest plus their pension checks and SS checks gave them a comfortable income. Now the interest on a $50,000 CD that used to add another $200 a month to their income, gives them $20 or less, a $2,000 cut plus the rising costs of food, gas, utilities, medical insurance, housing means that many of them can’t make ends meet anymore or can’t afford to retire. Add this in to the Obama cuts and our older generation is getting hit hard.

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      Rating: 4.8/5 (9 votes cast)
    • petersenonmainComment by petersenonmain
      April 7, 2013 @ 5:22 pm

      I really hate to say this, but it dose nobody any good to keep talking about the birth certificate as his mother was an American citizen at the time of his birth and that makes him a citizen, Dang it. On the other hand there are plenty of other reasons to dislike him and all are valid.

      I am really getting tired of hearing about how the banks caused the financial collapse when the DemocRATs from 1978 to 2007 did everything in their power to make sure it happened. The Peanut Farmer started it with the Community Redevelopment Act then The Purger in Chief made it virtually imposable to write a honest mortgage that would have even a slight chance of being paid back, then the DemocRATs blocked legislation that would be stopped the mess 3 times from 2003-2007. These are the same *** that try to blame the banks when all they were doing was trying to find a way to survive the government intrusion into a business that they had no knowledge of and really no interest in except as a means of social engineering and a place to put blame if it fell apart.

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      Rating: 4.2/5 (6 votes cast)
  2. arclightComment by arclight
    April 6, 2013 @ 9:53 am

    The left wing nut doofus we have in the White House continues to outdo himself. This recent proposal will go nowhere. It’s YOUR spending stupid, not someone else’s!

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    Rating: 4.8/5 (24 votes cast)
    • capricorn1Comment by capricorn1
      April 6, 2013 @ 11:14 am

      obama is far from being a doofus,he knows exzactly what he is doing.now on the other hand joe biden = big doofus.

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      Rating: 3.3/5 (12 votes cast)
    • tomtComment by tomt
      April 6, 2013 @ 6:56 pm

      Capricorn1, You are quite right about Obama. What he is doing to the USA is exactly what their Agenda calls for. Under the tutelage of Soros, Ayers and the Muslim Brotherhood. He wants the USA to fail. He is a very smart operative.
      Biden, just doesn’t get it. He is totally stupid or is dumb enough to think he will be greatly rewarded for the services he is doing, as in trying to destroy respect for our constitution. He will be up against the wall when no longer an asset to the Revolution. These people we are under the gun with in this Administration are hardcore heavies without concern for the rank and file John and Jane Doe, Americans. You have not even began to imagine the brutality of their “Dictatorship of the Proletariat”.

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      Rating: 4.8/5 (5 votes cast)
  3. 7papa7Comment by 7papa7
    April 6, 2013 @ 10:30 am

    This should be no surprise to anyone. The low income part of society can’t donate big bucks to him. When is America going to get it through their heads that this man is a domestic terrorist and constantly participates in treasonous activities. When is congress going to get a backbone and impeach him, try him and execute him.

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    Rating: 4.8/5 (20 votes cast)
    • mach37Comment by mach37
      April 6, 2013 @ 1:04 pm

      Never mind that the low-income group can’t donate big bucks- they are the people that continue to vote the Democrats into office. They are the low-information (AKA stupid) people who can’t see the damage being done to their nation.

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      Rating: 4.3/5 (12 votes cast)
    • tomtComment by tomt
      April 6, 2013 @ 7:08 pm

      7papa7, Check out whats going on in Maryland.
      Maryland Delegate: Time Has Come For Militia

      “As the House of Delegates debated Gov. Martin O’Malley’s gun control initiative Wednesday afternoon, Del. Don Dwyer was using social media to call for creation of a volunteer militia around the state.”

      http://libertariancrier.com/maryland-delegate-time-has-come-for-militia/?fb_source=pubv1

      The call is out for good men to do something in MD.

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      Rating: 5.0/5 (1 vote cast)
  4. 1940voterComment by 1940voter
    April 6, 2013 @ 10:46 am

    When one looks at the cost of goods and services available to the average person we see that the ability to pick and choose is largely an individual choice. If gas is cheaper at a station 5 miles away do we drive that distance to save $.10 a gal but use 1/2 agal of gas to get this savings? When we shop is it convience and location of the store? Most shoppers in urban/suburban area’s have many choices so it is up to us to make that choice. Chicken instead of beef, pork instead of fish. We are being forced into a system of gov’t controls at every level without much choice. The nanny state is upon us and we did it to ourselves. We elected these clowns.

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    Rating: 4.4/5 (17 votes cast)
    • stevesr54Comment by stevesr54
      April 6, 2013 @ 10:54 am

      You are so right, this is the way of a liberal politician so when it comes time to vote, listen to their words and then research them, these people are masters at the art of telling us, the voter a lie with a straight face and reid is at the top of the game!

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      Rating: 4.7/5 (15 votes cast)
  5. texasoltimerComment by texasoltimer
    April 6, 2013 @ 10:53 am

    Obama already uses a formula to figure inflation that does not include either fuel or food. If they were, our inflation rate would probably rival or be more than that in the Carter years.

    It’s like the unemployment number. We currently have 90 million individuals eligible to work that have no jobs. Last month’s new jobs number was 88,000. Last WEEK’s new unemployment claims were 378,000. With numbers like that, how can the unemployment rate be down to 7.6%? We have fewer people employed today that at any times since 1979 and we were fortunate then to have an election the following year! It’s a matter of simply leaving out all the people that have given up looking.

    When you only include certain factors to come up with a required result, it is fuzzy math or inaccurate science. Leave out fuel and food which everyone has to purchase and which have pretty much doubled since 2009 and the inflation rate is inaccurate. Leave out all the people unemployed who have quit looking and the unemployment rate is inaccurate.

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    Rating: 4.8/5 (20 votes cast)
  6. amazedhumanComment by amazedhuman
    April 6, 2013 @ 10:56 am

    So why is anyone surprised? What you won’t see him doing is reducing – or eliminating,which is what should be done – all of the aid, beniefits and money going out to illegal aliens. This man doesn’t care one iota for legal low-income, or especially seniors, in this county….and if the rest of those over-paid ninnies in Congress go along with this they should all have their salary and benefits cut…the president included….how about down to the level where most of us are trying desperately to live?

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  7. thethinkerComment by thethinker
    April 6, 2013 @ 11:43 am

    Leave it to the government to punish the people for the inflation they create via the monetary policies of the Federal Reserve, designed to monetize the government’s debt while keeping Wall Street flush.

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    • thethinkerComment by thethinker
      April 6, 2013 @ 12:12 pm

      Oops…let me try that again:

      Leave it to the government to punish us, the citizens, for the inflation they, the government, creates via the monetary policies of the Federal Reserve, which is designed to monetizes the government’s debt while keeping Wall Street flush.

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      Rating: 4.6/5 (9 votes cast)
  8. skepticComment by skeptic
    April 6, 2013 @ 12:27 pm

    What needs to be cut is the complete surveillance of law abiding US citizens. From the “Echelon Project” to the “Utah Data Center” to the “drones for everyone programs” to the 33,000 additional “Citizen Cameras” scheduled to be in service by 2015 To Homeland Security’s 2 BILLION rounds of hollow point ammunition, which can only be used on US soil, and the over two thousand seven hundred military tanks modified for use on US streets to the 150 thousand rounds of ammo for The Social Security Administration to 75 thousand rounds for NOAA (The US Weather Agency) to bridges to nowhere to Hurricane Sandy Relief for non Sandy related projects, (50 Million to Amtrac for a tunnel that may be built someday.

    This would be a place to start.

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    • chippersmomComment by chippersmom
      April 6, 2013 @ 12:44 pm

      What we need to cut is: 1. the president’s pay 2. All of the president’s vacations that we foot the bill for. 3. Overuse of Air Force 1 4. Cut Pelosi’s and Reid’s pay (they are wealthy enough that they shouldn’t need any pay) 5. Gasoline for the 4 Bullet proof cars. 6. Money that is used to fund countries that don’t even like us ie: Libya,Egypt,Pakistan and many more of those mid-eastern countries.

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  9. mach37Comment by mach37
    April 6, 2013 @ 1:10 pm

    That’s the Democrats for you – if they can’t get the numbers they need with existing rules, change the rules so they can get the numbers they want.

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  10. darralComment by darral
    April 6, 2013 @ 2:06 pm

    Abolish this Destructive treasonous Democratic party
    Bill of rights gives this right, this authority,

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  11. kuhndogComment by kuhndog
    April 7, 2013 @ 4:49 pm

    People – you aren’t paying attention. You guys don’t seem to remember – This is the chained CPI that we – the republicans – want. Think about what you are saying before you say it.

    The chained CPI is a minor attempt to begin to curb the mnations completely out of control entitlement spending. Its 110B over ten years. A drop in the bucket.

    This is what is wrong with politics these days. EVERYONE must pay something – and that includes the lowest paid workers in the country. Including retirees. (and I’m about to be one.)

    Tax the rich isn’t going to solve anything. EVERYT ONE HAS GOT TO PAY. That’s what we get for allowing goverment to -wildly spend for 50-100 years.

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    • miliman21Comment by miliman21
      April 7, 2013 @ 5:36 pm

      Same old story, Gov’t needs money to line their pockets and Seniors and Retired Military have to pay for it.

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      Rating: 3.0/5 (2 votes cast)

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