Massive cuts in essential federal programs are being proposed by the Obama administration. The chained Consumer Price Index would affect Social Security and other benefits, while $400 billion would be taken out, over 10 years, of Medicare, Medicaid and other health care programs for the poor and elderly.
These efforts are purportedly connected with the need to trim the federal budget deficit. A “sequester,” imposed earlier this year, has resulted in furloughs for government workers, health care industry layoffs and the elimination of decades-long programs for low-income people.
The chained CPI will severely reduce the limited yearly increases in Social Security payments as well as benefits received by retired government employees, veterans and Supplemental Security Income recipients.
The Center for Global Policy Solutions has placed the Obama administration’s proposals within a broader context – showing that the historic national oppression of African Americans has rendered this community lower wages and less accumulated household wealth. The continuing five-year economic crisis has also disproportionately driven down the living standards of African Americans and other peoples of color.
The CGPS says, “African Americans are among the most vulnerable when it comes to economic security. As of 2011, over half of the African-American senior population was financially insecure.” This stems from the lack of opportunity and systematic national discrimination in education and the labor market. Additionally, the decades-long restructuring of the industrial and service sectors of the U.S. economy has left whole layers of the workforce without decent jobs with adequate salaries and benefits.
After retirement, African Americans face even lower incomes due to pensions and Social Security payments based on their earnings during their last employed years. Any cuts to incremental increases in retirees’ monthly payments can only result in deeper poverty.
CGPS stresses, “The persistent income and wealth inequality seen among African Americans comes from years of disproportionately lower levels of earnings, employment, educational attainment, and ownership of family assets. … African Americans have had significantly fewer opportunities to build assets over time and often lack the savings to ensure financial security throughout their post-working years.”
Obama administration proposes COLA cuts
The corporate media offer misinformation, suggesting if there is not “substantial reform,” the Social Security system will run out of funds. There is no mention of the separate Social Security Trust Fund, with enough reserves to maintain payments for many years to retirees, people with disabilities and family members.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is used to compute yearly cost-of-living adjustments that are applied to benefits. It is supposed to boost payments so that recipients can keep up with escalating costs of housing, food and other necessities.
The CGPS asserts, “The Obama administration proposes to substitute the regular CPI-W for the chained Consumer Price Index for all Urban Workers (CPI-U), a measure of inflation that takes into account substitutions of less expensive goods. …” It would reduce the annual COLA increase by “about $3 for every $1,000 in benefits – and its effects would be compounded over time.”
This new measure could substantially reduce the purchasing power of those who rely heavily on Social Security and SSI payments. Moreover, it fails to take into account the high costs of health care services and medications.
The Social Security Administration, the Joint Center for Economic and Political Studies (JCEPS) and the Center for Disease Control indicate that 47 percent of African-American seniors rely on Social Security for more than 90 percent of their retirement income; 40 percent of Black retirees depend solely on these benefits.
In 2010, nearly 20 percent of African-American adults over 65 had income levels below the official poverty line, compared to 7 percent of non-Hispanic whites of the same age.
Due to life circumstances and inadequate access to health care, African Americans are more likely to suffer from ailments that require costs not covered by insurance. Moreover, African-American men’s life expectancy is two years less than that of white men, so they receive benefits for a shorter span of time.
Additionally, there is a higher rate of people living with disabilities among the African-American population. Nearly 20 percent of those receiving benefits are Black, although African Americans only constitute 10 percent of the workforce. About 21 percent of children receiving disability benefits are African American, yet they are only 15 percent of the youth population.
The JCEPS says Medicaid funding reductions would cause tremendous suffering among the African-American and Latino/a populations. The center argues that these cuts would increase health care companies’ costs since people would still need care whether it is funded by the government or not.
JCPES President Ralph B. Everett says, “[C]utting Medicaid will likely hit hardest at communities of color and, in particular, those who depend on the program to manage and treat their chronic illnesses.” (October 2011)
A study posted at Families USA, “Medicaid: A Lifeline for Blacks and Latinos with Serious Health Care Needs,” says cutting Medicaid won’t reduce costs. “It shifts the burden to states, families, hospitals and the uninsured. … [C]utting assistance for treatment can actually increase costs over the long run.”
The labor union movement, Congressional Black Caucus, and Civil Rights and human rights organizations should vigorously oppose these proposed changes in government programs. An alliance of these forces with retiree groups could exert the necessary pressure to drop these draconian policy proposals and put forward demands that enhance programs that benefit the working class and the poor.
The “federal budget deficit” is the result of the U.S. government’s failure to tax the rich or to enact major cuts in the Pentagon budget – or eliminate it entirely, along with the wars, occupations and weapons stockpiles that bloated the budget in the first place. There must be a political movement to resist these actions, which attempt to reduce the deficit on the backs of youth, seniors and the most marginalized segments of the working class and nationally oppressed.