Social Security is one of the greatest anti-poverty programs this country has ever developed. Millions of older Americans would either have to live with their children or get on some form of welfare if it weren’t for a steady Social Security check. That’s why anytime the bureaucrats “in charge” try to make changes to Social Security, we should be careful to scrutinize every bit of detail.

The Tax Cuts and Jobs Act (2017-2018) includes a provision to switch how COLA is calculated for Social Security recipients. The proposal would switch to using the Chained CPI instead of the all urban CPI-W to calculate COLA increases. This is a subtle difference that government officials trying to pass the bill would you to not know about.

The Affect of the Switch on Recipients

Social Security recipients will see a 2% increase in Social Security benefits for 2018. That increase was based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increasing by 2%. Using the Chained CPI would’ve raised benefits by 1.5% in 2018. What’s the difference between the two measures? Well, the Chained CPI (C-CPI) is always lower than the CPI-W because it reflects the substitutions that consumers make as prices increase.

Your Social Security won’t increase as much if Congress attaches COLA to the Chained CPI. I ran the numbers on a hypothetical $1,000 benefit that starts in 2007 through 2017. The chart below shows that for each and every year the increase using the Chained CPI is less. Congress wants to lower the benefit and this is an especially nebulous way of doing it.

Chained CPI Affect on Social Security

I’m of the opinion that Congress shouldn’t touch Social Security calculations. Social Security recipients already see their actual costs for everyday items increase faster than the rate of CPI-W inflation. No matter the way the Bureau of Labor Statistics decides to calculate inflation, people tend to see a higher rate of inflation over the long term. In the short term, prices bounce all over the place. Food prices have actually decreased in 2017 and not because Amazon bought Whole Foods and proceeded to lower prices drastically.

Social Security will have to be cut in the future as it stands. The SS Trustee Report shows that the Social Security Trust Fund will run out in 2034. Cutting the increases in Social Security may extend the life of the Trust but that’s not the root cause of the problem. The root cause is the demographic shift in America.

You Can Stop It

You have the power to change this provision before it’s written into law. You need to contact your Congressmen and tell them you would like the Social Security COLA provision struck from the bill. The more people that people know the specifics of this the better. Swaying even a couple Senators or a handful of Representatives could be the difference in increases in millions of peoples’ Social Security benefits.

Politicians generally don’t do things that would cost them a lot of votes. If they think they’ll lose re-election, they’ll do something to make their constituents happy. Although sometimes politicians will vote on bills that their constituents strongly disagree with. They may owe another Congressman a favor or vote with their ideology. Either way it doesn’t hurt to speak up and let your voice be heard.

Millions of People Rely on Social Security

66.0 million people received benefits from programs administered by the SSA in 2016.

5.5 million people started receiving Social Security benefits in 2016.

62% of beneficiaries received at least half of their income from Social Security in 2015.