President Obama’s proposed budget contains important benefits to create jobs, invest in infrastructure and manufacturing and help America’s middle class, but could also change the way Social Security benefits are calculated and dramatically reduce payouts. It also has a provision to increase taxes on private planes which affects IAM members in a sector of the aerospace industry that is just beginning to show signs of recovery from the recession.
To help create jobs, the president’s budget proposal includes higher subsidies for child care, an extra $50 billion in infrastructure investments, money for states to rehire teachers and tax cuts for small businesses. The proposed budget would also cancel sequestration and cut the deficit by $4.3 trillion by 2016 as part of a grand bargain with the GOP, but it is linked to several harmful austerity measures.
The proposal with the greatest impact would link future increases in Social Security benefits to the Chained Consumer Price Index, or “Chained CPI” – a measure that would reduce the rate of growth of benefits. The current method of calculating benefits is closer to the inflation rate which keeps beneficiaries from being priced out of basic necessities like food, housing and gas.
“With two out of every five seniors relying on Social Security for 90 percent of their income, there’s never been a worse time to reduce Social Security benefits,” said IAM International President Tom Buffenbarger. “It wasn’t Social Security that caused the deficit and cutting this vital program won’t get us out of it.”
The proposal for reducing Social Security payouts comes as more and more seniors are relying on the program for the majority of their retirement income. The Employee Benefits Research Institute reports that 57 percent of American workers have less than $25,000 put away for retirement in 2013. And, the percentage of workers covered by traditional pension plans has dropped from 28 percent in 1979 to just 3 percent today.
“Switching from the current index to the Chained CPI would immediately begin to cut benefits and would continue to do so year after year,” said Dean Baker, co-director of the Center for Economic Policy and Research to the Associated Press. The Chained CPI would also apply to veterans benefits and could force seniors into higher tax brackets if their income grows more than the inflation-stunted Chained CPI.
The president’s budget also continues to push for tax increases on private-plane buyers – a move that would hurt the aerospace industry and the recovering economy as a whole. The aerospace industry employs 1.2 million people and exported $4.8 billion worth of aircraft last year.
“The last thing we need is a disincentive to buy from an industry that is providing good, reliable jobs in America,” said Buffenbarger. “Couple that with a cut in Social Security, and we see parts of a budget that aren’t good for IAM members or the middle class. We urge Congress to take a more balanced approach to our budget and deficit reduction.”