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April 25, 2013 2:45 PM Chained CPI: Irresistible Force and Immovable Object

By Ed Kilgore

So today MoveOn is launching protests at Democratic congressional district offices around the country against the administration’s Chained CPI proposal, and members of the Congressional Progressive Caucus are asking the president for a sit-down meeting to discuss the issue. More than a hundred House Democrats signed an earlier letter warning Obama not to include Chained CPI in any budget negotiations (he has, of course, at least twice). And it’s much easier to find extremely angry opposition than any even mild support in the left-of-center precincts of the commentariat and blogosphere.

It kind of makes you wonder how this will turn out in terms of Democratic politics. Obama’s not going to just reverse himself on Chained CPI after offering it in early “grand bargain” discussions and then in his FY 2014 budget. He’s probably already done about everything he can to mitigate its impact on the very old and the very poor via limitations and offsets. And everyone already understands that his budget (and probably, for that matter, “grand bargain” talks with Reublicans) ain’t going anywhere in Congress. But on the other hand, progressive anger on the subject is genuine, has strong elite and grassroots support, and isn’t going to just go away, either.

I know a lot of readers think the solution is for Obama to be beaten into submission on this issue, but seriously, is there any face-saving way out of this collission on either side? The only one I can think of is obvious: some other political threat coming along that leads liberals and the administration to put this conflict aside and make common cause. If there’s another, please feel free to offer it in the comment thread.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

Comments

  • T2 on April 25, 2013 3:06 PM:

    Any discussion of Social Security that doesn't Start and End with raising the earnings cap from it's current level to, say, a modest $130,000 is a farce. This CPI thing is chump change relative to a higher cap (realistically something in the range of $150K to start the negotiation).
    But of course the GOP wouldn't increase the tax, Grover Norquist (an unelected person who controls the Republican Party) prevents that. So we are left with Mr. Grand Bargain throwing the least offensive thing he can think of on the table and hoping the GOP rejects it for the same reason they reject everything else he proposes...because it's his idea.

  • Jan in Stone Mtn on April 25, 2013 3:14 PM:

    Face saving for who? and why?

    This anger over Obama cutting SS isn't going away and no one cares about the who or why of face saving, we just want this crap stopped.

  • KK on April 25, 2013 3:15 PM:

    Perhaps the Prez should have thought about that? All these Dems need to run again and I would like to think they have no shot of passing something like that through a Dem controlled Senate. I've written Gillabrand and Shumer expressing my disgust as I am certain many others have.

  • Perspecitcus on April 25, 2013 3:19 PM:

    As, I believe, Brother Benen said, the Republicans have given him the out. They have rejected his proposals. Combine Republican criticism (and no, I do not believe the fact it's a minority Republican criticism matters) with criticism from his support, it should have been easy for him to announce "Gee, I had no idea everybody felt so strongly about it. out it goes." Now, maybe the moment is gone since this was a subject several weeks ago. And, of course, Chained CPI may actually be a preferred Obama policy. But otherwise, I see no reason Obama cannot just withdraw his budget and never speak of Chained CPI again.

  • bh on April 25, 2013 3:23 PM:

    The only one I can think of is obvious: some other political threat coming along that leads liberals and the administration to put this conflict aside and make common cause.

    But there's no threat that accepting Chained CPI would counteract. That's where a lot of the anger comes from -- this is a betrayal of core Democratic values in exchange for nothing.

    Obama f'd up, full stop, and it's not liberals' job to clean up after him. It wouldn't work anyway, any more than it does when the Democratic party as a whole is expected to clean up after Republicans.

    On the other hand, the policy-illiterate, morally-broken trash that works in places like the WaPo and Politico thinks Chained CPI is swell, so I guess Both Sides Are To Blame.

  • c u n d gulag on April 25, 2013 3:25 PM:

    Uhm...
    How ironic would it be, that at a time when it looks like the Republicans are about to splinter into their many different, once conglomerated, factions, if it's the Democrats who split into those willing to go along with the President and Chained CPI (C-CPI), and the ones who vehemently oppose it, first?

    If President Obama had left the issue alone, and let Republicans make their case to the public for him, he might have found it easier to actually achieve his idiotic, and unnecessary, dream of a Grand Bargain, and C-CPI.
    And some more Democrats might have been convinced, if there indeed was enough public support.

    But, NOOOOOOOOOOOOOOOOOOOOOOOOOO!!!!!!!

    Instead, he horrified Democrats across the country, by PROPOSING IT! - something most, if not all, of us, never thought a major Democratic poltician, let alone a Democratic PRESIDENT, would propose.

    He has really, REAllY, pissed-off his base - people like me!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    And, with the nation's deficit shrinking more and more every day, there's NO reason to even leave C-CPI on the table - ESPECIALLY SINCE SS HAS ABSOLUTELY NOTHING TO DO WITH THE NATION'S FECKIN' DEFICIT ANYWAY!!!!!!!!!!!!!!!!!!!!!

    Even for 11th Dimensional Chess, this was a stupid, unnecessary, move.

    He needs to take personal responsibility, to clear ALL other Democrats of it, and give a speech, today, that says something like this:
    "My fellow Americans, without the Democratic Parties approval, I took it upon myself, at my own personal risk, and presented something I thought might make the Republicans in Congress see the possibility of finding some sort of common ground - maybe - much as this hurt me, personally, to put on the negotiating table.
    But, they didn't accept my generous offer, and, instead, rejected it.
    And I have become convinced by my Democratic colleagues, that this move would be as as hurtful, as my offer was unnecessary.

    Chained CPI, is now OFF the table!
    OFF!
    This offer was mine, and mine alone. And I now understand the error of my ways.

    Rest assured, that I will never, ever, again talk about SS, in any other way, than of INCREASING benefits. And my Democratic colleagues have told me, in no uncertain terms, that this has been their position all along, and will remain so.

    So, again, MY offer is off the table.
    I'm here now to discuss a way to INcrease SS payments, while lengthening its lifespan - eliminating the FICA cap.
    That's right.
    Eliminating the FICA cap that means that people currently making more than $113,700, will be paying the same rate as you are, instead of NOTHING above that amount.
    This means that your favorite ballplayers, musicians, actors, actresses, writers, politicians, pundits, etc., will now be paying the EXACT same rate as you do, if your income is less that $113,700.
    This will also apply to investment income, including stocks, bonds, trades, and trust income.

    By doing this, ALL American workers will have the same amount of skin in the game.
    ALL OF US!

    And we can now make some slight increases in current SS payments to existing retirees.
    And, given some time, seeing how the program is working, we could possibly give larger increases shortly, to present, and future retirees.
    SS will now be secure for another century.
    At least.

    Since all of the Democrats have already given me their approval, please call your Republican Congressperson and Senators, to make this possible, in this, the greatest nation in the world.
    I thank you for your time."

    And everybody lives happily ever after.
    The End.

    Yeah, I know...

  • gratuitous on April 25, 2013 3:29 PM:

    Yeah, yeah, chained CPI ain't going anywhere in Congress. But doggone if it doesn't keep popping up, like a cork on a storm-tossed sea! It's not a bargaining chip, it doesn't make the Republicans look any more idiotic, and really, really angers the people who handed the president a second term just five months ago. But it'll never pass. Probably. Not like that hare-brained sequester proposal! Boy, was someone smoking something *that* day.

    If the president wants to propose some dead-end, go-nowhere idea, why not one that at least curries favor with the people who voted for him, rather than the ones who interrupt his State of the Union speech, or waggle a reproving finger in his face? I have yet to see an answer to that question from the folks who think chained CPI is some sort of cunning plan (and no, telling me I'm stupid or I just don't "get it" isn't an answer).

  • howie on April 25, 2013 3:31 PM:

    It's old news that the GOP's weakness is that they pander to their base exclusively and that the Dems weakness is that they have nothing but contempt for their base.

    Obama would much rather try in vain to get Republicans to like him than to actually support positions favorable to those who already like him.

    I used to blame his advisors for his constant need to punch the hippie. Now I understand that the POTUS is the hippie abuser in the administration.

  • Lance on April 25, 2013 3:40 PM:

    God, what whining.

    Obama has proposed Chained CPI be used not only to adjust the increases of Social Security payments, but also the adjustments of the marginal income tax rate brackets.

    After all, Sauce for the Goose is Sauce for the Gander.

    If you want to derail Chained CPI, stop complaining about its effects on Social Security and talk about its effects on income tax brackets.

    And insist that if it is applied to Social Security it HAS to be applied to income tax bracket adjustments.

    And stop whining.

    But think about this. This is an undercover increase of tax rates back towards the rates of the 1990s, when we have the best decade of growth for the middle class in years.

    It's a lot easier to propose an uptick of the COLA on Social Security than it is to raise revenue through adjustments of the income tax.

    Also, its a lot easier to elect Democrats to MAKE THE ADJUSTMENT of the COLA if Seniors know they don't have as much Social Security increases 'baked in' for the future and can vote their little racist hearts for Republicans.

    So here's some more advice.

    Get behind the President on this.

  • June on April 25, 2013 3:48 PM:

    We go through these hysterics every time Pres. Obama has to negotiate with Republicans, and then none of the worst fears come to pass. Sausage-making (negotiating) isn't pretty, but 'we' all reach for the fainting couch on cue at the sight of it. It's not for us to figure out how this all plays out, it's for the congressional Dems out there on Twitter and otherwise who are whipping our own into a fury over a negotiating tactic as to how they now convince the same folks to turn out and vote in the mid-terms. Should low turnout make McConnell Majority Leader, grumbling from these short-sighted Dems will certainly ring hollow.

  • Joe Friday on April 25, 2013 4:07 PM:

    "He's probably already done about everything he can to mitigate its impact on the very old and the very poor via limitations and offsets."

    Isn't that proof enough that it's a bad thing to do, that you have to protect people from it's impact ???

  • Lev on April 25, 2013 4:09 PM:

    If anything, the problem is about to get much worse. Republicans are now rethinking the sequester (typically, because it's now inconveniencing them), and they'll demand chained CPI as a prerequisite to doing anything more. This will make Obama's feeble negotiating tactic backfire enormously. I noticed a little while ago that no federal Democrat has endorsed this proposal, even grand bargaineers like Steny Hoyer. Now, Obama will have to ram it down the throats of his congressional party to lift the sequester, and that effort will have the makings of a revolt the likes of which Ronald Reagan and G.W. Bush experienced many times each during their second terms. After all, who wants chained CPI? Safe seat Democrats are mostly the most liberal ones, and red state Democrats are up for re-election next year.

    Obama hasn't been right on money stuff once this year. I don't agree with comparisons between Obama and Jimmy Carter, but the latter discovered that going too far away from what your party wants ultimately saps your support from them. Let's hope Barack doesn't have to learn that lesson.

  • iyoumeweus on April 25, 2013 4:10 PM:

    SOCIAL SECURITY
    Ronald Reagan said it best, “Let’s lay it to rest once and for all … Social Security has nothing to do with the deficit. Social Security is totally funded by the payroll tax levied on employer and employee. If you reduce the out go of Social Security, that money would not go into the general fund to reduce the deficit, it would go into the Social Security trust fund. So Social Security, has nothing to do with balancing a budget or easing or lowering the deficit”.
    I am 75 years old. I have had cancer twice. The first time at fifty when irradiated in a government owned nuclear facility under contract to a large private corporation who fired me as soon as they knew of the diagnosis. The second time at sixty-five I was found to have prostate cancer which was removed. I know the so called ‘chain COL’ and these austerity programs will cost my wife and me some hardship, my wife, even more after I am gone. We are not willing to accept our reduced status since we know ‘sacrifice is for suckers’. Our elected officials seem to ‘love’ sacrifice so let us join together and ask them to make a few once shown the way perhaps we would be more willing. I must applaud President Obama and member of his administration for taking a 5% pay cut but more is required from all branches. Here are a few suggestions our elected and appointed government officials could sacrifice and have some of their “skin in the game’:
    1. Have their own cost of living adjustments also calculated based upon the chain COL and reduced over time in the same fashion
    2. Raise the amount of ‘out of pocket’ payments for their own pensions and healthcare, thereby reducing the tax payers share
    3. Either allow the government to negotiate directly with Medicare D providers or pay the same amount for their meds as Medicare recipients pay
    4. Let them reduce their pay by the same amount Federal Worker’s pay is to be reduced (about 4%)
    5. Give former Presidents their pension $200,000 plus $100,000 for expenses, and ten years of Secret Service protection. Cut all of this is half for former Vice Presidents.
    6. Once an elected official leaves office, all of their unused campaign contributions will go into a For the People Election Fund to support candidates who refuse to accept Citizen United Corporate PAC money.
    A better fairer approach would be to allow all those 55 and over who have been unemployed for two years or more to apply for a reduced Social Security benefit with a full benefit defined as starting at age 65. To fund this increase in expense we will define gross income as all sources including: wages, salaries, dividends, capital gains, bonuses, personnel management fees, interest, etc. and this gross income would be subject to a progressive entitlement tax. One approach could be as follows:
    Change the pay roll tax by reducing it from 6 to 5 per cent on the first $100,000 which would be matched by the employer then a graduated upward tax on all earnings (gross income) above that amount. Such a tax could look something like this:
    The first $100,000 5%
    $100K – 1M +1%
    $1M - 5M +2%
    $5M - & above +3%
    Everything paid above the first $5,000 would be a tax deduction. In words a person making one million dollars would pay $5,000 on the first $100,000 and $9,000 on the remaining $900,000 for a total of $14,000. Someone fortunate enough to be making $10,000,000 would pay $5,000 plus $9,000 plus $80,000 or 2% on the next $4M and $150,000 or 3% on the final $5M for a total of $244,000 or 2.44% of earnings of which $239,000 would be tax deductible.

  • boatboy_srq on April 25, 2013 4:43 PM:

    TABMITWH strikes again. A less-than-palatable concession offered by BHO is promptly rejected by the GOTea for "unspecified reasons" (translation: "he's a BLAH president, and we can't work with that").

    BHO could offer the GOTea a full dismantling of the Great Society and New Deal programs, complete with refunding the tax dollars used to fund them (or rolling them into the general fund to diminish the deficit), and the GOTea would whinge that he hasn't proposed reinstating debtors' prisons and pillories for the indigent/homeless.

  • Colby on April 25, 2013 4:50 PM:

    "The only one I can think of is obvious: some other political threat coming along that leads liberals and the administration to put this conflict aside and make common cause."

    Isn't that pretty much what's happening, though? Between Boston, the gun bill, and the immigration bill, the zone is pretty well flooded right now. Daily Kos- usually a useful barometer for lefty anger- doesn't even have anything about Chained CPI on the front page today.

  • kindness on April 25, 2013 5:26 PM:

    Liberals/progressives in Congress have a well deserved reputation for compromising their cherished ideals more than their opponents. President Obama knows this.

    Chained CPI is one (there are many others) area where liberals/progressives in Congress need to tell President Obama they will vote against any bill that has it (and the others) even if they are given huge compromises by their opponents. Then they need to go out and let Obama lose on the issue.

    In that context, it is the liberals/progressives that are fighting the good fight for their team and it will be Obama who just wants to win a fight without caring whose team won.

  • paul on April 25, 2013 5:37 PM:

    What's to fight? The GOP rejected his offer, and it wouldn't get through anyway, so he should just take it off the table and go big the other way.

  • KK on April 25, 2013 5:53 PM:

    Lance, if u deindex taxes we get the pleasure of paying more in taxes(everyone that swings into a new bracket earlier, that be everyone) and receiving less benefits. That's a real election winner. Something we are clamoring for so let's throw out the fact- SS has shite to do with deficit- and line up behind POTUS!
    I haven't gotten particular outraged by much, understanding that he needs to deal with simpletons and dopes but don't screw with SS, Medicair and Medicaid. Raise the fricken limits, job done.

  • angler on April 25, 2013 6:04 PM:

    I think the prez is stuck with chained CPU for good or ill. To make it work for him and the party he needs to keep playing to the Washington Post/beltway media. I don't think this is a winning electoral strategy but given the fits over trying to avoid the sequester, chained CP{I looked like an attempt to better corner the GOP as obstructionists. It still serves that purpose but the rest of the commenters are right that this is bad policy for Democrats running for re-election. Running as budget cutters might help, but not at the price of social security. The GOP has already hit us from the left for cutting medicare.

    One way to unite the party on liberal economic issues is jobs. Government jobs, get them going by whatever means available.

  • Doug on April 25, 2013 7:14 PM:

    Where does it say that whatever a Democratic President proposes, fellow Democrats *have* to unquestioningly support it?
    There's absolutely *nothing* stopping every Democrat in the House and Senate from just saying "I believe that, in this instance, the President is mistaken and I neither support nor will vote for chained CPI."
    Now, was *that* hard?

  • Robert Abbott on April 25, 2013 7:30 PM:

    Reagan was right that Social Security has nothing to do with the debt. Except, the $2.7 trillion in surplus that's been paid into the Trust Fund so far, a surplus that is to fund the baby boom retirement before being exhausted in 2037, has been entirely invested in US bonds. Of the $16+ trillion of the national debt, $2.7 is owed to SS. Republicans hate taxes because they will have to be raised in order to pay down the national debt, including SS loans. So that surplus is in no way safe and secure and my retirement is likewise in jeopardy. You will recall that the Republicans said a default on our debt would be entirely manageable. We'd just pay off publicly held debt first. That means SS goes to the end of the line!!! Compared to the cuts a failure to pay the Trust Fund would impose on us, C-CPI is negligible. I got a $4 a month COLA this year. C-CPI could hardly be much less. So if the Republicans will bite the bullet on taxes in exchange for C-CPI, I think we should take it. Or let's quit shooting at other Democrats so that we can take back the House and hold on to the Senate and Presidency. Then we can do what we want.

  • pjcamp on April 25, 2013 10:32 PM:

    Somebody should have realized it was a stupid place to drive the car in the first place.

    Like, maybe, the First Driver.

  • RaflW on April 25, 2013 11:20 PM:

    This fury is not really for Obama's ears, but for Congressional Dems and 2016 Democratic presidential candidates to hear.

  • david1234 on April 26, 2013 1:46 AM:

    Obama does not have to be reelected anymore. Progressives need to be just as demanding and unwilling to compromise as Republicans. If Obama is embarassed, that is his problem.


  • 14All on April 26, 2013 7:02 AM:

    Yes, there most certainly is a point to all this ranting about chained CPI, regardless of whether Mr. Obama acknowledges it or not. The point is to make it blindingly clear to anyone who ever considers running for office that proposing cuts to these programs is a non-starter. It's the only way to make sure we don't lose them.