Congressman Dennis J. Kucinich (D-OH) today brought forth a new case against the Administration’s so-called Social Security reform plan by exposing the precipitous drop in future retiree benefits implicit in the Administration plan to switch from wage indexing to price indexing.
In a speech this morning on the House floor, Kucinich said:
“Social Security benefits have increased over the years because they long have been calculated to wage increases, which on the average go up 3.6% a year. So Social Security benefits increase with rising wages. The Administration wants to change all that. They want to index Social Security benefits based on a price index, not wages.
“As a result, millions of future retirees will see their future Social Security benefits reduced as much as 40%. Because prices do not increase as fast as wages.
“Let me give you an example. If you began working in 1959 and retired in 2003, at age 65, under wage indexing, your benefits rise with rising wages, you would get 58 a month. Under price indexing, your benefits would be frozen, you would get only 1 a month. So it would be a 40% cut in benefits with price indexing, and a person would lose 0,000 in retirement benefits over a lifetime.
“Why the switch to price indexing? Because, the privatization of Social Security will create an additional budget shortfall. The Administration is going to have to borrow money to set up private accounts. The shortfall is going to be for 45 years, and the Administration is going to have to borrow trillion dollars.
“They are going to get the money off the backs of America’s retirees. It is wrong, say no to privatization, no to price indexing.”
Kucinich added that while much attention has been focused on private accounts, price indexing, once understood by both the media and the American people generally, will create such an uproar that it will jeopardize not only the Administration’s plans, but could create great political risk for members supporting the plans.