Chained CPI... Is Suddenly An Orphan

America doesn't have a spending problem; America has a problem with its elites forgetting who they work for

The angry uproar over the Obama-Boehner proposal to lower Social Security payments through Chained CPI has both parties backing away from it as fast as they can.

Republicans, including House of Representatives Speaker John Boehner of Ohio, said Obama's offering-- made Wednesday in his budget plan for the 2014 fiscal year-- did not go far enough to cut spending.

Many Democrats thought it went too far, with House Minority Leader Nancy Pelosi of California saying that it should be debated, but not be part of any deficit reduction deal or budget proposal.

And White House spokesman Jay Carney said it was not originally Obama's idea, but was included in the budget because the president thought Republicans wanted it as part of any deficit reduction deal.

"This is a Republican proposal," he said in his daily briefing.

...Obama also proposed increasing means-testing for some beneficiaries of the government sponsored health insurance program for seniors, Medicare.

The fact that these were Republican proposals did not stop the head of the National Republican Congressional Campaign Committee, Representative Greg Walden of Oregon, from calling Obama's budget "a shocking attack on seniors" in a CNN interview Wednesday.

...Pelosi told reporters she thought Democrats ought to hear both sides, arranging a debate conducted by outside experts for Democrat members.

Pelosi joined the rest of her membership at the weekly House Democratic Caucus meeting where lawmakers heard from Damon Silvers of the AFL-CIO labor federation, representing opposition to Obama's proposal, and Robert Greenstein, executive director of the liberal Center for Budget and Policy Priorities, which favors including entitlement reform in budgets.

Representative Keith Ellison of Minnesota told Reuters after the meeting that while there were a few Democrats in favor of maintaining an open mind to Obama's proposal, the caucus as a whole "overwhelmingly" delivered the message that the so-called chained-CPI was a non-starter.

"There was a lot of concern," Ellison said.

On the Republican side, Boehner, while saying he was "encouraged that the president acknowledged that our safety net programs are unsustainable," said Obama's offer was "nothing close to what we need in order to preserve these programs and to put ourselves on a path to balance the budget."

Boehner, at a news conference, distanced himself from Walden's comment on CNN but Walden's remarks served as notice that supporters of changes to Social Security could find it being used as political ammunition against them.

"The Walden statement has had a huge impact," Greenstein said. "There is a very large, very palpable fear" among House Democrats that if they support the chained CPI, that Republican challengers running against them in 2014 will do attack ads against them and campaign against the Democrat voting to cut senior Social Security benefits.

The fear is rooted in Democrats' memories of how the cuts to Medicare spending in Obama's signature health legislation were used against Democrats in 2010, he said.

"Prior to the Walden statements there were some making the arguments that Democrats would be played for suckers in 2014," Greenstein said. "I think the Walden statement just confirmed this. I saw firsthand today the viral effect it's had," Greenstein said Thursday.

Democrats are up in arms at the very idea that a Democratic president-- even one as much of a transparent corporate shill as Obama has always been-- would try to remove the "third rail" status from Social Security allowing future Republicans to come in and destroy the system the way Bush tried (and failed). Party hack James Carville on Morning Joe Friday said Obama loves the idea of angering the progressive base and making nice-nice with the corporate right (his natural constituency): "I think he likes that. I don't think he's upset. He got a very favorable Washington Post editorial. Morning Joe, very favorable commentary right here. I guarantee you if he's up watching this right now. Got a good David Brooks column. He's kind of excited this morning. This is kind of important to him."

That's why I can't overemphasize how important that Grayson Takano No Cuts letter has always been and continues to be. It's the gold standard for House Members who want to protect benefits for seniors. Those who sign it do; those who don't sign it... have to be, at best, suspect.

Friday, a New Dem non-signer, conservative upstate NY Congressman Dan Maffei wrote Obama a letter asking him to take Chained CPI off the table. He says budget negotiations are the wrong venue for discussions of Social Security reforms.

Any reforms should aim to strengthen the program for current beneficiaries and extend its long-term solvency for future generations. Shifting to the chained-CPI is bad policy because it fails to accurately track seniors’ and disabled beneficiaries’ real expenses. The chained-CPI is not a technical tweak to reduce runaway cost-of-living adjustments. To the contrary, beneficiaries have gone without increases in recent years and are often managing meager household budgets. We appreciate your efforts to reach a budget compromise, but cutting Social Security would compromise the hard-earned benefits of America’s seniors and disabled.

The Secretary of the Treasury and former Director of the Office of Management and Budget have clearly stated, Social Security is not the problem. As you know, not one penny of the deficit or our national debt is due to Social Security. Built up for the express purpose of supporting the retirements of the Baby Boomer generation, Social Security’s $2.7 trillion Trust Fund will fully fund benefits into the 2030s and 75 percent of owed benefits thereafter. Social Security is a self-sustaining social insurance program that protects every American against absolute destitution due to old age, a disabling accident, or the death of a breadwinner. At your inauguration you made clear that Social Security frees us to take risks that make this country great. Therefore, we strongly urge you to reconsider making benefit cuts in order to pay for deficit reduction.

...The chained-CPI is a benefit cut that compounds throughout retirement. Cutting the benefits earned and relied upon on by retirees may seem to be a modest change, but even slight reductions will meaningfully impact the quality of life of millions of Americans. The chained-CPI will result in a cut of nearly $1,600 by the time the average beneficiary is in his or her nineties, taking away a month’s worth of benefits in the final months of one’s life.

The chained-CPI will disproportionately hurt women and cut veterans’ disability benefits. The average yearly benefit for women is $2,000 less than for men, women rely more heavily on Social Security as a greater proportion of their retirement income and live longer than men. Finally, we should not forget that veterans would also be hit with enormous cuts. A fully disabled veteran who began receiving benefits at age 30 would have a yearly benefit cut of $3,200 by age 65. We simply cannot do that to our veterans.

We appreciate the difficult position you are in as you attempt to reach a budget compromise that will reduce the deficit, but we respectfully ask that you consider the impact the chained-CPI will have on Americans already relying on fixed incomes from Social Security. We must work to reduce the deficit, but do it the right way; not on the backs of seniors and working families who have contributed to Social Security their entire lives.

Good-- as far as it went... which wasn't even close to far enough. The Obama budget-- part of a minuet he and Boehner have scripted-- also savagely goes after Medicare benefits while being oh so gentle with the self-righteous prerogatives of the multimillionaires and billionaires who fund political careers. Back to the simple heart of the Grayson Takano letter:

"We will vote against any and every cut to Medicare, Medicaid, or Social Security benefits-- including raising the retirement age or cutting the cost of living adjustments that our constituents earned and need."

Maffei's letter to the president is ok in terms of Chained CPI-- but it doesn't go far enough, and coming from someone like Maffei who has refused to sign the Grayson Takano letter, it should have alarm bells ringing. Rhode Island Congressman David Cicilline is a signer of Grayson Takano so I'm not alarmed by the congressional resolution he proposed Friday:

Expressing the sense of the Congress that the Chained Consumer Price Index should not be used to calculate cost-of-living-adjustments for Social Security Benefits

Whereas the Social Security program was established more than 77 years ago and has provided economic security to generations of Americans through benefits earned based on contributions made over a worker's lifetime;

Whereas the Social Security program continues to provide modest benefits - averaging approximately $14,000 per year-- to more than 53,000,000 individuals, including 37,000,000 retired workers in February 2013;

Whereas the Social Security program has no borrowing authority, has accumulated assets of $2,700,000,000,000, and, therefore, does not contribute to the Federal budget deficit;

Whereas the Board of Trustees of the Federal Old-Age and Survivors Insurance Trust Fund projects that such Trust Fund an pay full benefits through 2032;

Whereas the Social Security program is designed to ensure that benefits keep pace with inflation through cost-of-living adjustments (COLAs) that are based upon the measured changes in prices of goods and services purchased by consumers, currently the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) published by the Bureau of Labor Statistics;

Whereas the Bureau of Labor Statistics publishes a supplemental measure of inflation, the Chained Consumer Price Index for all Urban Consumers (C-CPI-U), or "Chained CPI," which adjusts for projected changes in consumer behavior resulting from price fluctuations known as the "substitution effect," which occurs when consumers buy more goods and services whose prices are rising slower than average and less of those rising faster than average;

Whereas studies indicate typical Social Security beneficiaries spend significantly greater shares of their budget than consumers generally on health care, prices for which have increased at higher than average rates, and health care may not easily be substituted by consumers such as seniors;

Whereas the Congressional Budget Office has estimated that using the Chained CPI to calculate Social Security COLAs would reduce Social Security benefits by .25 percent per year as compared to current policy, resulting in a reduction in outlays of $112,000,000,000 over the first decade;

Whereas reductions in Social Security benefits from using the Chained CPI to calculate Social Security COLAs would continue to compound over time, and the AARP Public Policy Institute estimates that such reductions would grow to 3 percent after 10 years and 8.5 percent after 30 years;

Whereas Social Security Works estimates that using the Chained CPI to calculate Social Security COLAs would reduce annual Social Security benefits of the average earner - who is making $43,518-- by $658 at age 75, $1,147 at age 85, and $1,622 at age 95; and

Whereas reductions in Social Security benefits would harm some of our most vulnerable populations: Now, therefore, be it

Resolved by the House of Representatives (the Senate concurring), That it is the sense of the Congress that the Chained Consumer Price Index should not be used to calculate cost of living adjustments for Social Security benefits.

I bet Boehner will never allow a vote on that one!