Talks: Inflation change could cut Social Security
(Associated Press) -- by STEPHEN OHLEMACHER --
WASHINGTON (AP) — Once considered untouchable, Social Security is now in play in the debt-ceiling negotiations. And that could mean higher income taxes for many U.S. families in addition to shaved benefits for tens of millions of retirees as they age.
Social Security became part of the private discussions between President Barack Obama and Republican House Speaker John Boehner on coming up with "something big" to reduce deficits by $2 trillion to $4 trillion over the next decade. One option includes a new inflation measure for Social Security that could produce savings close to $200 billion through a combination of reduced benefits and higher taxes, White House officials said Thursday.
Low- and middle-income families could be hit.
The proposal would represent a reversal for Obama. In contrast to his pledge to target tax increases at the wealthy, high-income families would largely be spared from tax increases that would result from changing the way inflation is measured. And until now, the administration has been adamant that Social Security does not add to the deficit and should not be a part of deficit reduction talks.
Adopting a new inflation measure would allow policymakers to gradually cut benefits and increase taxes in a way that might not be readily apparent to most Americans...MORE...LINK