Obama's Chained CPI-- Great For Republicans, Disaster For Everyone Else

I'm not crazy about how Robert Reich begins his explanation of Chained CPI (above): "The White House and prominent Democrats are talking about reducing Social Security payments." That's a hallmark of Republicans, not a Democratic White House and "prominent Democrats."

The Democratic politicians I speak with universally oppose this scheme. Alan Grayson (D-FL), for example, is very straight-forward in his assessment: "I'm against the proposed chained CPI cut in Social Security because it substantially undermines the protection against inflation that Social Security recipients enjoy under current law. The existing cost of living adjustment already understates actual increases in the cost of living; the chained CPI would exacerbate the problem." In fact earlier this week, I talked with two candidates running for Congress, Bob Graham's daughter Gwen in the Florida panhandle and then state Senator Daylin Leach in Pennsylvania. When I asked Gwen, a specifics-adverse candidate straight out of the pages of the DCCC playbook, what she thought about the Chained CPI, she had no response other than wanting to protect Social Security, followed by a warning that the cell signal wasn't strong and that we could lose contact. I hope she beats Republican Steve Southerland; I'm sure she'd be better than he's been. Blue America won't be involved in the race though.

Thursday Blue America endorsed state Senator Daylin Leach for the congressional seat Allyson Schwartz is giving up in Montgomery County and northeast Philadelphia. His response to the Chained CPI question was what I was hoping to get from Gwen Graham. I have no idea if she would support it, although I suspect she will. I am 100% positive that Daylin will never. "At a time," he told me, "when corporate profits, executive compensation, the stock market and wealth disparity are at near record highs, it is obscene to even consider balancing our budget on the backs of seniors and veterans. I fully supported President Obama's election, but I can't support any drift towards corporatism to appease tea-party extremists. If we are really serious about ensuring the solvency of Social Security while preserving benefits well into the future, there is a simple solution. We should raise the cap on income subject to the payroll tax from $110,000 per year to $200,000 per year. This is fair, reasonable, and keeps faith with those who rely on Social Security to survive."  This morning Jackie Calmes reported in the NY Times that "President Obama next week will take the political risk of formally proposing cuts to Social Security and Medicare in his annual budget in an effort to demonstrate his willingness to compromise with Republicans and revive prospects for a long-term deficit-reduction deal, administration officials say." It's a terrible, losing strategy, a diaster for seniors and a disaster for Democrats and, as I expect he will soon see, a disaster for Obama.

  As you know, the top-ranking Democrat in the House, once a liberal lioness herself, has said she's willing to accept the Chained CPI. Didn't President Obama and the Democrats campaign on a solemn promise to not cut Social Security benefits? And that's exactly what the Chained CPI does. It makes no sense for Pelosi to destroy her legacy by buying into this dreadful idea. In a few days President Obama will release his budget and there's a good chance that he will break with Democratic tradition going back to FDR's days by calling for implementing a Chained CPI. This could signal the end of the Democratic Party as the party that stands up for working families and seniors. No Democrat who backs Obama on this will ever be trusted again.

It's worth reading Mike Lux's Huff Po piece, Your Budget Represents Your Values for a good overview. "By embracing-- embracing!-- Social Security cuts as part of his budget, his statement of values, the president is telling the American public, senior citizens, and progressives that he wants to cut what they overwhelmingly and passionately support."

If Obama includes it in his budget, he is claiming this as a policy idea he supports before he even starts negotiations with the Republicans. This is terrible policy and terrible politics at the same time. In a budget document that has no actual policy impact but that symbolically represents what he stands for and who he wants to fight for, he will alienate senior citizens and the families who worried about taking care of them, he will split his political party down the middle, and-- by being the first one to formally propose cuts to Social Security-- he will hand Republicans a big political weapon to hurt Democrats in 2014.

I understand the president has political reasons he wants to do this. He wants to look like the most reasonable guy in the room, and he wants the Republicans to look like they are the extremists who won't compromise. He doesn't want the attacks that will come from the deficit hawk crowd if offers nothing on "entitlement reform," and he feels like this is a modest cut compared with the budget ax the Republicans are threatening. He feels like he can lessen the impact of the Social Security cuts by adjusting the formula to protect the oldest and poorest recipients.

But, folks, this is rotten public policy, and all those political reasons pale in comparison to the damage he is doing here. With the demise or curtailment of most pensions, the drop in family wealth due to the collapse of the housing sector in 2008, the big unemployment numbers cutting into many families' life savings, the flattening or decrease of wages for most workers, and the inflation in many essentials among those who are working driving down the ability to save for retirement, this is the absolute last time we should be looking at cutting incomes for retirees.

As to the idea that Obama will keep the most vulnerable low-income seniors from harm, I am very appreciative of that fact that he cares about them and is trying to preserve them from cuts. Obama's compassion for the poorest of the poor is something to be lauded, one of his best values. But I used to do a lot of organizing with moderate income senior citizens, and I know a lot of middle-income seniors. I can tell you that even for those a little above the cut-off line but still living mostly on Social Security, they are not living in luxury, they are in fact just making it. When groceries or utilities or out-of-pocket health care expenses spike, it hurts and hurts bad. I have been in the apartments of seniors when utility prices were going on one of their periodic jumps, have seen what they can afford to eat, have felt the cold in their apartments in the winter because they can't heat their place. I know in my heart, because I have seen the evidence up close and personal, that for a lot of seniors the $500 a year they will have lost from chained CPI a few years from now if this cut goes into effect will result in more seniors dying of hypothermia or malnutrition.

Most Americans, over 80 percent in polls I have seen, understand that cutting Social Security benefits is a terrible idea, and I believe that if that is what happens people will be angry. But even if the politics were not on our side, this is a moral issue pure and simple. The president should not propose cutting Social Security, and Democrats in Congress should raise hell and oppose him if he does. As Democrats, according to all that rhetoric I kept hearing during the campaign last year, we believe in fighting for the middle class, and this proposal punches the middle class-- both older Americans and the families who care for them-- in the gut.

Since I was disappointed in Gwen's nonresponse, I want to point out the response to the Chained CPI proposal from another Florida candidate for Congress, Nick Ruiz, who's running against anti-Social Security fanatic John Mica in the Orlando area. A professor and activist, Nick is pretty passionate on this subject:

"There is a sinister trick to rob citizens of retirement security, which is being promulgated as sound policy in this discussion. Let's reveal it. Congress and the President have continued to stifle wages and reduce job opportunities for citizens, and now suggest that upon retirement or disablement, people should receive less. Why? By all measures, the economy needs more jobs, and citizens need higher wages, with more robust retirement and disablement assistance. So, reducing any of these things, will make people suffer.

"But the Congress is not suffering. Nor is the President. Nor is the Fortune 500 that bankroll fake populist political campaigns and wealth-biased policy think tanks. Thus, it's plain to see. This President and Congress, enabled by the wealthy and their enterprises-- aim to make Americans suffer. There are many selfish reasons why they would do this, that are probably beyond the scope of a conversation about cutting benefits with the chained CPI trick-- but it starts with the basic premise that the world economy will not grow for the foreseeable future. With smaller net margins expected, the capital stream is being tightened to preserve their wealth and nothing else.

"The important thing to recognize is that these hateful agendas that will further decimate average living standards will not stop-- unless progressives stop them."

Have you ever called the White House? It's easy. Just dial 202-456-1414 and tell them you oppose this Chained CPI scheme and will tolerate no cuts to Social Security. And if you want to make sure that there are people in Congress who will oppose the Chained CPI and similar corporate schemes to enrich the rich at the expense of society's most vulnerable... you'll find those people here.

UPDATE: Does Obama Seriously Expect Republicans To Back Him Now?

The leaders of the Progressive Caucus, Keith Ellison and Raul Grijalva released this warning to Obama and ConservaDems who want to follow him over the cliff after news of his betrayal, long expected, finally broke today:

“Republicans have been trying to dismantle Social Security ever since President Roosevelt proposed it during the Great Depression. We should not try to bargain for their good will with policies that hurt our seniors, especially since they’ve been unwilling to reduce tax loopholes for millionaires and wealthy corporations by so much as a dime.

“One hundred seven Members of the House of Representatives, a majority of the Democratic Caucus, have already stated our vigorous opposition to cutting Social Security, Medicare, or Medicaid benefits. Americans all over the country depend on every single dollar they get from Social Security to put food on the table and pay for housing. Using chained CPI will shift more costs onto already struggling American families, seniors, veterans-- including our 3.2 million disabled veterans who also depend on the Social Security calculation for their Veterans Affairs benefits-- individuals with disabilities, and children on survivors’ benefits.

“This week, a new study from the New America Foundation finds that proposals to cut Social Security benefits could be disastrous for our economy because the recession has led more seniors to rely to Social Security for income. Cutting benefits now, when people are already struggling to make ends meet, will mean unnecessary hardship for millions of people. It is unpopular, unwise and unworkable.”

AARP seems very disappointed with Obama's betrayal. They posted this campaign video from 2008 on their Facebook page today-- along with this note for their members: "Mr. President: Keep Your Promise! Call 1-877-814-7890 and tell your Senators to oppose the Social Security cuts in Obama's budget!"