Tags: obama | social | security | change

Liberals Decry Obama’s ‘Chained-CPI’ Change to Social Security

Wednesday, 10 Apr 2013 12:52 PM

By David Yonkman, Washington Correspondent

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President Barack Obama’s budget proposal to limit future benefit hikes for Social Security recipients is drawing a barrage of criticism from his liberal allies.

Vermont Sen. Bernie Sanders, an independent who caucuses with Democrats and normally one of the president's strongest supporters, is vowing to do everything he can to block Obama's proposed change in how cost of living adjustments tied to the Consumer Price Index (CPI) are calculated.

Sanders said Tuesday Obama now “owns” the so-called "chained CPI" approach to reducing Social Security payments, the Huffington Post reported.

“From a political point of view it is to my mind just a really dumb tactic. I don’t understand it,” Sanders reportedly said as he left a rally outside the White House where protesters raised objections to cuts in Social Security benefits.

“Paul Ryan, in the worst budget ever presented in the history of the United States, did not mention Social Security, so of course [Obama] owns it,” Sanders added, referring to the Republican House Budget Committee chairman's own deficit reduction plan.

Under the president's plan the Consumer Price Index formula for calculating inflation would be altered, resulting in a slower measure of inflation than the standard used now. As a result, annual Social Security cost of living adjustments would likely be lower, making benefit payments smaller. The change would save an estimated $100 billion in Social Security payments over 10 years.

The plan is a key part of Obama’s fiscal 2014 budget request, which was finally delivered to Congress on Wednesday. The request contains $3.77 trillion in spending and calls for hundreds of billions in new taxes. It also commits the president to entitlement reform for the first time.

By including the inflation adjustment for Social Security in his budget request, the president was clearly trying to coax Republicans back to the negotiating table, where he hopes to force an agreement to raise additional taxes on the wealthy and close corporate loopholes.

But Republican House leaders rejected a link between the two at a news conference Wednesday, noting that further tax hikes are still off the table.

“He does deserve some credit for incremental entitlement reforms that he has outlined in his budget,” House Speaker John Boehner told reporters. “I hope he doesn’t hold them hostage to tax hikes. Why don’t we find the common ground that we do have, and move on from there?”

In addition to Sanders and other Democratic lawmakers who complained, liberal groups who worked hard to re-elect Obama last year expressed a sense of betrayal over the president’s Social Security proposal and vowed to fight it.

MoveOn.org lashed out at Obama in a statement from executive director Anna Galland, which noted that “Republicans in Congress aren’t even asking for this Social Security cut.”

“Millions of MoveOn members did not work night and day to put President Obama into office so that he could propose policies that would hurt some of our most vulnerable people,” she said. “Just as we fought and defeated President Bush’s plan to privatize Social Security, we will mobilize and stop this attempt to diminish the vital guarantee of Social Security."

Along with Sanders, other Democratic lawmakers complained about Obama using Social Security as a bargaining chip with Republicans.

“Republicans have been trying to dismantle Social Security ever since President Roosevelt proposed it during the Great Depression,” Democratic Reps. Raúl M. Grijalva of Arizona and Keith Ellison of Minnesota wrote in a joint statement. The two co-chair the Congressional Progressive Caucus.

“We should not try to bargain for their good will with policies that hurt our seniors, especially since they’ve been unwilling to reduce tax loopholes for millionaires and wealthy corporations by so much as a dime,” they said as reported by the Business Insider.

Supporters of an inflation adjustment change, however, said the chained CPI approach would be a better way to measure inflation because it's tied to how people actually spend money on goods and services and not just on aggregated price increases. They point out that it would also be beneficial government-wide because it would affect other programs as well, not just Social Security. Overall, the Congressional Budget Office estimates that it would lower the deficit by $339 billion over 10 years by reducing the size of inflation adjustments.

Federal pensions and tax brackets would also be affected, according to former CBO Director Douglas Holtz-Eakin, who noted that the chained CPI plan would actually push people into higher tax brackets sooner than the current measure of inflation would.

“This is a government-wide chain CPI. As a result, that is how you get the tax increases. That’s how you get the Social Security impacts, but you also get the other pension impacts,” he told Fox News.

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