Brian Beutler, writing in Talking Points Memo, suggests that Obama will offer a Social Security benefit cut as part of the “fiscal cliff” negotiation. It’s utterly pointless and economically illiterate (but politically expedient) to respond to the looming threat ((The markets perceive austerity as a threat even if economically illiterate politicians of both parties don’t.)) of the automatic January 1st austerity cuts by (1) imposing even more austerity cuts, and by (2) applying them to a program that has nothing to do with the nation’s debt and deficit. ((The Social Security trust fund is quite real, and not fictional, by virtue of being a social contract. Think of this analogy: Your bank account balance is real by virtue of your “social” contract with the fractional reserve banking system, under which your deposits are insured against bank runs. In reality, your bank does not have sufficient reserves on hand to satisfy all (the aggregate of all) deposits it nominally holds. Strictly speaking, therefore, the Social Security trust fund should be safer than your bank balance. It’s only really threatened by the willingness of politicians to abrogate that social contract through new legislation. But with new legislation, of course, nothing is safe and anything is always possible.))
It’s shameful to throw seniors (like us) “under the bus” in order to make an unnecessary deal. Is Obama an economic illiterate like those he is negotiating with, or does he just not care about seniors? And does it matter which?
The truth is that Obama walks like a conservative and quacks like a conservative, so … he’s a conservative. (The chained CPI was originally a conservative proposal).
In the same way that Nixon (secure in his Republican bona fides) was in a better position to pursue a more liberal policy toward China, Obama (as a Democract) is in a better position to erode entitlement programs like Social Security and Medicare. Of course, by doing that, he is tarnishing what little sheen is left on the Democratic “brand,” no real favor to Democrats in Congress who may hope to get re-elected someday based partly on the strength of their commitment to traditional Democratic values.
This is not the change we voted for.
If President Obama and House Speaker John Boehner do reach a broad deal to avert the fiscal cliff, Obama’s up front concession to Boehner will very likely be to make the Social Security cost of living adjustment formula less generous.
The quasi-technical term for the new index is called chained CPI. It’s been kicking around in policy circles for years, and loomed large in budget negotiations between Obama and Boehner in 2011.
Supporters like to describe it as a technical fix to the way the government calculates inflation. But in practical terms, it will effectuate a genuine Social Security benefit cut. If it’s applied across the board, it will also reduce food stamp benefits and veterans benefits, and function as a modest but regressive tax increase, as brackets grow more slowly and taxpayers find themselves pushed across income thresholds more quickly than in the past.
“Is this rumored deal better than no deal?” asked Paul Krugman, articulating the internal conflict liberal Democrats will grapple with if the deal takes shape. “I’m on the edge. It’s not clear that going over the cliff would yield something better; on the other hand, those benefit cuts are really bad, and you hate to see a Democratic president lending his name to something like that. There is a case for refusing to make this deal, and hoping for a popular backlash against the GOP that transforms the whole debate; but there’s also an argument that this might not work.
I wouldn’t mind making this small sacrifice “for the good of the nation.” But this is good for nothing except political expediency in the service of stupidity.
By the way, Obama does not have the authority and the power to make such cuts unilaterally administratively. It won’t be a done deal until Congress does it. We need to create a firestorm of opposition.
Read Brian Beutler’s complete article here: “The Social Security Benefit Cut Obama May Agree To”
- “The Chained CPI: A Painful Cut in Social Security Benefits and a Stealth Tax Hike” by Alan Barber and Nicole Woo
- “Chained-CPI: a hit to seniors, especially women” by Diana Vacca
- “Obama Caving on Social Security” by Matthew Rothschild
- “Social Security: Will Obama Cave?” by Robert Kuttner
- “Our ‘How-to Manual’ for Betraying Seniors and People with Disabilities” by Nancy Altman and Eric Kingson
- “Though Liberals Carp at Chained CPI, Pelosi Says She Could Live With It” by David Dayen
- “Obama Considering Chained CPI Deal, and Why That’s a Bad Idea” by Dean Baker
- “8 Deficit Reducers That Are More Ethical—And More Effective—Than the ‘Chained CPI’ ” by Richard Eskow
- Comments by Congressman Deutsch on the Chained CPI
These comments (brief, < 2 min) from last year by Congressman Deutsch are an excellent description of the chained CPI proposal and what’s wrong with it (including that “it affects CURRENT recipients”). His remarks are glaringly out-of-date in one respect, though: he blames the proposal on Republicans. Now that Obama is embracing the idea, he really owns it.