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April 09, 2013 1:24 PM Mitigating the Damage on Chained CPI?

By Ed Kilgore

Confirming a variety of earlier hints, in today’s Wall Street Journal, John McKinnon reports that when the president’s FY 2014 budget is formally unveiled tomorrow, his toxic-to-progressives proposal to embraced Chained CPI for Social Security COLAs will be mitigated by “protections” for the very poor and the very old:

White House officials have said they would propose adopting chained CPI with “protections for vulnerable” Americans, but haven’t released details on the protections or how they define that group.
Obama senior adviser Dan Pfeiffer said Sunday on ABC it would include “the oldest seniors.”
On Monday, a person familiar with the situation said very-low-income seniors and veterans also would be shielded, but didn’t say how. Other protections also would be included, the person said.

We’ll have to wait for the exact proposal, but earlier administration talk about a mitigated version of Chained CPI provoked a detailed pre-buttal by the Strengthen Social Security umbrella group.

It seems the likely vehicle for protecting the poorest-of-the-poor (and the disabled) is to exempt Supplemental Security Income payments. That, claims the “pre-buttal,” ignores the millions of “dual-eligibles” who rely on both SSI and Social Security benefits, and also the poor and near-poor who don’t qualify for SSI.

As for the “oldest of the old,” the administration has been considering what is called a “birthday bump” (a modest benefit increase) for beneficiaries—overwhelmingly women—who have been in the program for 20 years. That would not, says Strengthen Social Security, make these beneficiaries whole, and those who continue to live into their 90s will gradually lose significant benefits.

You can read the whole “pre-buttal” if you want, but the political implications are that progressives angry at Obama for “going there” on Chained CPI are not likely to draw in their horns if the administration includes such mitigating measures. For one thing, their strategy has always been to take Social Security entirely off the table in deficit reduction discussions on grounds that the program really isn’t (in contrast to Medicare) part of the
problem, at least until far down the road. For another, the political opposition to any Social Security benefit cuts is heavily centered among beneficiaries who would not get “protected.” And finally, the meta-argument against this step by Obama is that no matter how carefully he crosses the line, Republicans will declare Social Security (and other entitlements) fully on the chopping block as a matter of bipartisan consensus, and proceed to demand more radical benefit cuts.

We’ll see if the administration gains anything from including mitigating measures alongside Chained CPI with any distinct group in or out of Congress. The other thing to watch tomorrow is the scope of programs and tax adjustments to which the administration would apply chained CPI. Federal employee pensions could also take a hit, and as we are reminded today at Wonkblog (in a reprint of a December piece by Dylan Matthews), Chained CPI could also have negative tax consequences for a lot of middle-class folks.

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

  • kindness on April 09, 2013 1:35 PM:

    My suggestion for mitigating the damage of Chained CPI...Don't let that part pass. That is the only way to keep fighting the good fight.

  • xpara on April 09, 2013 1:35 PM:

    This is worse than economically stupid and morally wrong, it is a potential political disaster. Has Obama forgotten that one reason for the 2010 midterm shellacking was the semi-truthy GOP charge that Obama had "cut" Medicare? Yeah, maybe so. He seemed blindsided by it again in the first debate. How could Romney be so shameless as to accuse Obama of cutting Medicare when he and his running mate included the same cuts in their fantasy budget? The GOP, which has opposed Social Security and Medicare from the beginning, will now be able to run in the 2014 midterms as the saviors of these programs and Obama and any Democrats who go along as the destroyers. Is this naivete or just plain stupidity?

  • Lois Moore on April 09, 2013 1:53 PM:

    What happens to a Social Security Account when a person passes away befor they actually start receiving
    their payments?
    What happens to this money?

  • Gandalf on April 09, 2013 2:03 PM:

    The thought has to cross your mind that Obama knows that the republicans will never accept what he's proposing and that his strategy is then to say look I gave them what they wanted and they still won't budge. It's the only thing that makes any sense. Otherwise cutting SSI benefits has absolutely nothing to do with deficit spending. It's not even part of the equation. The federal deficit and income parts simply aren't related to social security.

  • Joe Friday on April 09, 2013 2:22 PM:

    This is STOOPID.

    If anyone needs to be "shielded" or "protected" from something, then obviously it must not be a very damn good idea to do.

  • biggerbox on April 09, 2013 2:49 PM:

    Since the essential point of Social Security is that we are ALL vulnerable to the trials of unpredictable old age, the simplest way to "protect the vulnerable" would be to drop this whole "chained-CPI" nonsense and raise benefits to everyone.

    That's what a Democratic President should be fighting for.

  • Zorro on April 09, 2013 3:39 PM:

    Chained CPI is addressing the wrong side of the problem. If Social Security has a problem, it's not on the spending side, it's on the taxing side- specifically, that FICA exempts all income over ~$106,000. Remove that cap, and you bring the Social Security Trust Fund into balance for decades- I've heard 70 years given as a rough estimate- without forcing any seniors to switch from human to cat food.

    Cat food, cat food, cat food, AGAIN!
    -Z

  • cwolf on April 09, 2013 3:41 PM:

    Ronald Reagan:
    "Social Security has nothing to do with the deficit."
    http://youtu.be/ihUoRD4pYzI

  • monoceros4 on April 09, 2013 4:01 PM:

    God above. It's pretty plain that Pres. Obama is set on making this his second-term achievement, just as pushing through a weak-ass, fatally compromised health care bill was his first-term achievement. Is the proposed legislation nonsensical and harmful? Who cares? It'll be Very Serious and a sensible compromise and bipartisan and I just want to puke now.

  • c u n d gulag on April 09, 2013 4:18 PM:

    There is a growing group arguing for an INCREASE in SS.

    Of course, they're all DFH's, and not to be taken seriously, by "The Very Serious People" who have tons of money, and attend all of the same DC and NY cocktail parties, and one another kids and grandkids soccer matches, so that some people who are considered "Liberals," defend Liz Cheney as moderate.

    ON WHAT F*CKING PLANET IS SHE ANY SORT OF A F*CKING MODERATE?!?!?!?!?!?!?!?!?!

  • Doug on April 09, 2013 5:48 PM:

    I'm presuming this offering is merely to, again, show the Republicans as being two-faced about the deficit and the WH knows it won't go anywhere. That doesn't mean I like it or that it's not dangerous. What if the Republicans ACCEPTED?
    Possibly providing a ready-made and extremely dangerous campaign slogan for the Republicans? Angering a goodly proportion of your base? For a paltry $58 billion per year in deficit reduction? Really?
    Phooey!
    Either go big; ie, link the CPI with something along the lines of re-instating marginal tax rates on *all* income over $5 million per year, or stay home!
    Please.