On the December 14 edition of FOX News' Special Report with Brit Hume, the "FOX All-Star" panelists agreed that Social Security's annual cost-of-living adjustment (COLA) is ripe for a cut. Media Matters for America noted on December 15 that the panelists based their argument on the incorrect assumption that the COLA increase is indexed to wages rather than to actual cost of living, which -- if true -- would mean that Social Security payments increase at a faster rate than inflation. On the December 16 Special Report, Hume corrected the misstatement, acknowledging that COLA increases in Social Security benefits are in fact based on prices, not wages. But he did not note that the correction undermines the panel's justification for arguing that Social Security's COLA increase was too high and should be cut.
As Media Matters noted, Weekly Standard executive editor Fred Barnes, syndicated Washington Post columnist Charles Krauthammer, and Washington Post staff writer Jeffrey H. Birnbaum -- all regular FOX News contributors -- agreed on December 14 that without benefit cuts, Social Security would be "insolvent"; they suggested that the proper way to institute the cut is to index the COLA to prices instead of wages. Hume then asserted that "cost-of-living adjustment" is a misleading title, since "they are not called raises," even though that's what they are. The other panelists agreed:
KRAUTHAMMER: [T]he only way to make the numbers work is to have a cut, in the sense that you're no longer going to index the pension to wages. And to be indexed to inflation.
BARNES: And there is a reason why you have to do that because --
KRAUTHAMMER: Otherwise it's insolvent.
BARNES: Yes. It's insolvent.
HUME: Let me go back to this question of these increases in benefits. They are called, if I'm not mistaken -- I remember you are covering this issue, "cost-of-living adjustments." They are not called "raises."
HUME: They are called "cost-of-living adjustments," and they are supposed to be for the purpose not of increasing their benefits as such, but of keeping the buyer power of the benefits they have now from going down.
HUME: So they are supposed to be holding senior citizens harmless to inflation. Correct? But they are indexed -- that is to say, they're adjusted to keep pace not with costs, not with prices. But they're adjusted now to keep pace with wages as they are generally paid. Is that a true statement?
BIRNBAUM: I think that is correct.
Hume's December 16 correction:
HUME: Before we discuss this issue [Social Security], a correction: It was said on this broadcast night before last that the annual cost-of-living increases in Social Security benefits were based on wages. That was incorrect. Annual increases are based on prices, as reflected in the government's Consumer Price Index. We regret the error.