President Barack Obama slipped the controversial "chained CPI" formula for cutting Social Security cost-of-living increases into his 2014 budget, angering liberal Democrats in the Senate, the House, and progressive organizations.
By Emily Theroux
When Barack Obama introduced his 2014 budget today, one controversial item made it look more like the kind of austerity plan that might have been devised by formidable British Prime Minister Margaret Thatcher than a fiscal proposal by a “stateside” Democratic president.
That’s because, for the first time, a Democratic president has dared to propose cutting increases in Social Security benefits — the linchpin of the American social safety net. His inclusion in the budget of “$230 billion in savings from using a chained measure of inflation for cost-of-living adjustments” broke a campaign promise not to cut benefits for current or near-term retirees. The move infuriated progressives, who delivered 2 million petition signatures to the White House yesterday, demanding that the item be expunged.
An Obama adviser termed the infamous “chained CPI” budget item a “goodwill gesture” to Republicans. The president himself, according to Politico, viewed it as serving “a tactical purpose” by proving he’s not afraid to “flout party orthodoxy.” Liberal organizations like MoveOn, the Progressive Change Campaign Committee, the National Organization for Women, and the Campaign for America’s Future called it a betrayal.
I call using the left (by goading them into a heated public confrontation purely to score points with his opposition) unmitigated, full-throttle political posturing.
New formula would cost retirees $112 billion
Robert Reich
President George W. Bush, barnstorming the country to hawk his much-maligned Social Security privatization plan in 2005, got zero, zilch, nada for his trouble. No one was buying Dubya’s scheme to turn the popular entitlement program into a high-stakes casino.
Obama might have paid more heed to the lessons of recent history before attempting to foist chained CPI on the American electorate. This ill-advised modification of the formula for calculating the consumer price index — a “market basket” of goods and services on which annual cost-of-living adjustments (COLAs) to Social Security are based — would result in what the AARP has understated as “not a small benefit change” for the oldest and most vulnerable retirees, as well as for military veterans.
As economist Robert Reich observed in a videotape last week introducing an anti-CCPI petition later submitted to the president:
“The idea is that when prices go up, most people substitute lower-cost items. So a true calculation of the cost of living should take account of this substitution effect. This makes no sense for seniors, because they spend 20 to 40 percent of their incomes on health care, and they can’t substitute lower-cost alternatives.”
AARP estimates that chained CPI will cost Social Security beneficiaries $112 billion and veterans $25 billion during the next decade. Because the formula compounds benefit reductions over time, it will result in an annual benefit that is “roughly $1,000 (in 2012 dollars) lower by the time a beneficiary reaches age 85,” according to AARP’s Josh Rosenblum. “Eventually, … beneficiaries would lose a month’s worth of benefits every year.”
For veterans, the cuts are even worse. “Permanently disabled veterans who started receiving disability benefits at age 30 would see their benefits cut by … $3,200 a year at age 65,” wrote AARP’s David Certner.
CCPI ‘an idea not befitting a Democratic president’
“Mr. President, the chained CPI is a cut to Social Security benefits that would hurt seniors. It’s an idea not befitting a Democratic president. If you want to reform Social Security, make the wealthy pay their fair share by lifting the cap on income subject to Social Security taxes.”
That was the message delivered by former Secretary of Labor Reich’s petition. On this side of the pond, liberal economists like Reich and Paul Krugman agree with advocacy groups for retirees and veterans that CCPI is a raw deal for Social Security recipients.
Prime Minister Margaret Thatcher/Getty Images
Yet Thatcher, who died Monday at age 87, would no doubt have applauded Obama’s heartless formula. (Thatcher, Reich tweeted, “gave Ronald Reagan the courage of his misguided conviction.”) She didn’t cotton to coddling “the less fortunate,” whom she regarded, as many on the extreme right do, as moochers, malingerers, and reprobates. Baroness Thatcher would have been right at home with Mitt Romney’s opinion of the “47 percent” of Americans who, in his flawed estimation, “believe that government has a responsibility to care for them.”
Mme. Thatcher once opined:
“I think we have gone through a period when too many children and people have been given to understand, ‘I have a problem; it is the government’s job to cope with it,’ or ‘I have a problem; I will go and get a grant to cope with it’; ‘I am homeless, the government must house me!’ … They are casting their problems on society, and who is society? There is no such thing. There are individual men and women, and there are families.”
Even tax-averse millionaires hate chained CPI
Chained CPI has a single dubious claim to fame: virtually everyone loathes it, from wealthy investors to veterans, from aged “pensioners,” as the Baroness would have called them, to hordes of boomers on the brink of retirement.
Everyone, of course, except Thatcherites “dismissing Britons in need as parasites and wastrels” (in the words of progressive blogger Richard Eskow), like-minded congressional Republicans — and, now, our own inconstant leader. The Barack Obama of hope and change has transformed himself into someone that his once-loyal liberal base no longer recognizes.
Our peerless 2008 presidential nominee, whom we hurried to endow with shimmering waves of potentiality and purpose, turned out to be a mirage. Like the Nobel committee did a year later, we pinned on Candidate Obama our most quixotic aspirations, as the seemingly interminable nightmare of the Bush/Cheney oligarchy neared its bitter denouement.
Wisconsin Gov. Scott Walker/AP photo
But our champion inevitably let us down. President Obama didn’t prosecute the torture-mongers for war crimes or the Wall Street banksters for the financial crisis. He didn’t slip on that pair of comfortable shoes and march with union members protesting Wisconsin Governor Scott Walker’s legislative assault on collective bargaining rights. He didn’t advocate single-payer health insurance, fight institutional racism, or battle poverty. He didn’t swoop in to advance gay civil rights or create a pathway to citizenship for immigrants. He didn’t close Guantanamo or reject indefinite detention of prisoners or halt drone warfare, but instead took their precepts to lengths no one could have envisioned.
Despite an impressive record of policy achievements, Barack Obama is not now, nor has he likely ever been, the transformative president he vowed he would become if we worked our collective asses off to put him in office. Home safe after his successful reelection; dissed and thwarted by GOP obstructionists so many times, you’d think he swear off any notion of a “grand bargain,” he’s still trying to burnish his bipartisan cred. The far right may brand him a socialist, but Obama governs, as many on the left complain, like a predictable, center-right Clintonian Democrat or a moderate Republican — not the progressive icon we so badly needed him to be.
Congressional firebrands take action
Vermont Sen. Bernie Sanders/AP photo
I’m not alone in uttering this heresy. The din of disillusionment has been almost deafening in the blogosphere and on Twitter for the past week. If Congress cuts Social Security by implementing this callous adjustment — a deliberate and unnecessary “sacrifice” that, as Reich points out, the Republicans haven’t even asked for —– Senator Bernie Sanders of Vermont, as well as members of progressive groups, have suggested there may be 2014 primary challenges to Democratic members of Congress who vote for it. As for the House, Representatives Alan Grayson and Mark Takano collected the signatures of 29 progressives who vowed to vote against any bill that includes Social Security benefit cuts.
Florida Rep. Alan Grayson
Did Obama at least mean well, before ascending to the tantalizing pinnacle of power? We’ll have to leave that question to history. No one can imagine, before the fact, what it’s going to be like up there, in that rarefied stratum that’s only been attained by 44 Americans in the brief span of almost 237 years.
In the words of the troubadour, it’s lonely at the top, and — as I’m sure the Iron Lady could have told us if her lips weren’t sealed against anyone’s ears but Saint Ronnie’s —– as magnetic as the polar north.
emily@zestoforange.com