Tag: chained cpi
Having Sworn To Protect Social Security, Trump Is Scheming To Cut It

Having Sworn To Protect Social Security, Trump Is Scheming To Cut It

Donald Trump’s recent budget proposal included billions of dollars in Social Security cuts. The proposed cuts were a huge betrayal of his campaign promise to protect our Social Security system. Fortunately for Social Security’s current and future beneficiaries, he has little chance of getting these cuts past the House of Representatives, which is controlled by Democrats.

So Trump and his budget director/chief of staff Mick Mulvaney, who has long been hostile to Social Security, are trying another tactic to cut our earned benefits. They are pursuing a long game to reach their goal. In a divide-and-conquer move, the focus is not Social Security. At least, not yet.

Last week, the Trump administration revealed that it is planning to employ the so-called chained Consumer Price Index (CPI) in a way that does not need congressional approval. “Chained CPI” might sound technical and boring, but anyone who has closely followed the Social Security debate knows better. It has long been proposed as a deceptive, hard-to-understand way to cut our earned Social Security benefits.

Trump plans to switch to the chained CPI to index the federal definition of poverty. If he succeeds, the impact will be that over time, fewer people will meet the government’s definition of poverty—even though in reality, they will not be any less poor. The definition is crucial to qualify for a variety of federal benefits, including Medicaid, as well as food and housing assistance. The announcement was written blandly about considering a variety of different measures, but anyone who knows the issue well can easily read the writing on the wall.

So, what does this have to do with Social Security? Like the poverty level, Social Security’s modest benefits are automatically adjusted to keep pace with inflation. If not adjusted, those benefits will erode, slowly but inexorably losing their purchasing power over time. These annual adjustments are already too low, but they are better than no adjustment at all. The chained CPI would make these adjustments even less adequate. The top line of the following chart shows what a more accurate adjustment would look like. The line below it shows what the current adjustment does to benefits, and the bottom line shows what the stingier chained CPI would do:

Proponents of the chained CPI say that it is better at measuring “substitution,” but don’t be fooled. The current inadequate measure already takes into account substitution of similar items. This is the idea that if the price of beef goes up, you can substitute chicken. In contrast, the chained CPI involves what are called substitutions across categories. If your planned vacation abroad goes up, you can stay home and buy a flat screen television and concert tickets instead.

Of course, neither form of substitution is much help to seniors and people with disabilities whose health care costs are skyrocketing. There’s no substitution for hospital stays and doctor visits. Those who propose the chained CPI are apparently fine with letting seniors who can’t afford even chicken substitute cat food.

The idea of substitution within or across categories makes no sense for people with no discretionary income. If all of your money goes for medicine, food and rent, how does substitution make sense? If you are so poor that your children go to bed hungry, how do you substitute?

Back in 2012, President Barack Obama proposed a so-called Grand Bargain to cut Social Security using the chained CPI, in return for Republicans agreeing to increase taxes on the wealthy. The goal of this Grand Bargain was ostensibly to reduce the deficit, despite the fact that Social Security does not add a single penny to the deficit.

Grassroots activists around the country fought back, and Obama ultimately realized his error. He removed the chained CPI from his budget proposals and endorsed expanding, rather than cutting, Social Security’s modest benefits. Social Security expansion is now the official position of the Democratic Party.

Yet Republicans have still continued to push Social Security cuts, including the chained CPI. Back in December 2017, they passed a massive tax cut for corporations and the super-wealthy. Afterwards, they used the predictable deficits their tax cuts caused as an excuse to call for cutting Social Security. Senate Majority Leader Mitch McConnell and other Republicans made well-publicized statements about the so-called “need” to cut Social Security. What was much more secret was a provision in the tax bill which replaced the measure used to index the tax brackets with the chained CPI.

Now, Trump wants to apply the chained CPI to the calculation of poverty rates. This will directly hurt many seniors and people with disabilities by making it more difficult to qualify for Medicaid and other programs many of them rely on, including food and housing assistance. It is also a long-term threat to Social Security itself.

The strategy is clear: Trump and his Republican supporters in Congress plan to apply chained CPI everywhere else, and then say that it is only common sense and indeed fair that we apply it to Social Security as well. We should be consistent, right?

Trump thinks that he can get away with executing this long-game attack on Social Security quietly, while the media and public are focused on his tweets, name calling, and scandals. But we must not be distracted. If we do not stop this attack in its tracks, our earned benefits will be next.

If you want to forestall another fight over cutting Social Security through the chained CPI, call your members of Congress, write to your local paper, and tell your friends: No chained CPI! No chained CPI for our earned benefits! No chained CPI for the most vulnerable among us!

This quiet effort to embed the chained CPI is a fight Trump does not want to have, certainly in an election year. But it is one we will bring to him. Grassroots activism defeated the chained CPI before. This time it will be harder because Trump can substitute the chained CPI without legislation. That means we have to simply fight harder. If we stick together, we surely will win. And we must. All of our economic security depends on it.

Obama Drops Proposal For Entitlement Trims From Budget Plan

Obama Drops Proposal For Entitlement Trims From Budget Plan

WASHINGTON — President Barack Obama has dropped a proposal included in previous budget offers that would have changed the way entitlement benefit increases are calculated, an acknowledgment that the era of “grand bargain” fiscal talks with Republicans has ended — at least for now.

The decision also comes as the White House has worked to iron out major differences with Democratic allies in Congress and the party’s liberal base in an election year.

The president’s now-abandoned proposal to use an alternative measure of inflation than the consumer price index would likely have resulted in significant savings in long-term entitlement programs, such as Social Security and Medicaid. Obama had indicated his support for the so-called chained CPI in fiscal battles with Republicans in Congress over the debt ceiling and government funding, starting in 2011.

It was most recently a bargaining chip in the fiscal-cliff discussions in late 2012, though many Democrats in Congress expressed opposition. Obama had offered it again in his budget plan last year, when the White House said there was still “a little bit more optimism” about concessions from Republicans.

A White House spokesman said that although Obama will not include the idea in this year’s budget proposal, the offer “remains on the table” in the event of any new efforts to reach a major deficit-reduction deal of the sort he has discussed with Speaker John Boehner (R-OH) in the past.

But such grand-bargain-style talks, in which Democrats sought new revenues in the form of higher taxes in return for spending reductions sought by GOP lawmakers, have been superseded by a new two-year budget deal that Sen. Patty Murray (D-WA), and Rep. Paul Ryan (R-WI) brokered last fall.

“We’ve made substantial progress in reducing the deficit. There’s more that we can do, and that’s why the offer remains on the table,” said Josh Earnest, a White House spokesman. “But the president also believes it’s important that we start spending some time focusing on what kinds of policies we can put in place that will expand economic opportunity for every American.”

Brendan Buck, a Boehner spokesman, said the move shows Obama “has no interest in doing anything, even modest, to address our looming debt crisis.” “With three years left in office, it seems the president is already throwing in the towel,” he said.

Washington has entered a rare fiscal cease-fire, with the threat of a government shutdown off the table until October and the nation’s borrowing capacity intact through March 2015.

The move on the debt ceiling last week served both parties’ interests in moving into the election season with as few internal divisions as possible.

Rep. Nancy Pelosi of California, the Democratic leader in the House, applauded Obama’s decision.

“House Democrats have stood behind President Obama’s honest efforts in recent years to forge a bipartisan grand bargain with congressional Republicans,” she said in a statement. “In the course of those negotiations, he put chained CPI on the table as a gesture of good faith; yet Republican leaders were unwilling to budge or close a single unfair tax loophole, and decided to walk away from opportunities to find common ground.”

Sen. Bernie Sanders of Vermont, an independent who has been among the staunchest critics of the chained CPI proposal, hailed what he called Obama’s decision “to protect Social Security.”

“With the middle class struggling and more people living in poverty than ever before, we cannot afford to make life even more difficult for seniors and some of the most vulnerable people in America,” he said.

AFP Photo/Alain Jocard

How Paul Ryan Helped Save Medicare And Social Security By Trying To Gut Them

How Paul Ryan Helped Save Medicare And Social Security By Trying To Gut Them

President Obama’s new budget will not include a proposal to implement “chained CPI” to slow the growth of Social Security benefits, according to White House officials.

And there’s one man who deserves most of the credit for making sure there will be no cuts to benefits to seniors until at least 2017 — ironically the politician who has worked the hardest to reduce the promises made to America’s retirees — Rep. Paul Ryan (R-WI).

The president had included the reform measure in his 2013 budget as an attempt to provoke a so-called Grand Bargain with House Republican leaders. Such a deal would have required them to end some tax breaks for the rich. That was never going to happen and the White House’s acceptance of this fact helps focus the 2014 elections on votes most Republicans in Congress have taken in the past to cut both Social Security and Medicare, thanks to Paul Ryan.

The chairman of the House Budget Committee’s first budget plan in 2011 not only privatized Social Security — a proposal that President George W. Bush could not even get a vote on when the GOP controlled both houses of Congress — it remade Medicare into a voucher program that radically shifted the financial burden to seniors without doing much to reduce the overall cost of health care. The plan was so popular — at least with Republican donors — that it instantly made Ryan a national hero and possible presidential candidate.

The chances of enacting the plan with President Obama in office were zero, but Ryan, buoyed by his new stardom, helped guide House Speaker John Boehner (R-OH) into a debt-limit crisis that shook global markets still dizzy from the financial crisis. House Republicans demanded a dollar in cuts for every dollar the debt ceiling was raised and President Obama obliged with a plan that not only included chained CPI, but also raised the Medicare eligibility age. To sell this plan to Democrats, the president demanded a small percentage of new revenues by ending tax breaks on upper-income Americans.

Boehner was about to make the deal, when Ryan “dropped a bomb” on it, fearing it would guarantee Obama’s re-election. Instead both sides settled on the sequester.

Ryan released another budget in 2012 that dropped Social Security privatization and added a public option to his Medicare plan.  Desperate for Tea Party credibility, Mitt Romney selected Ryan to be his running mate after being forced to embrace the congressman’s budget during the primary. Together, the two men re-elected the president.

After Obama’s re-election, Speaker Boehner reportedly tried to take the offer Ryan had rejected in 2011. The president told him was off the table, and likely will be for the rest of his term unless Republicans consider higher taxes on the rich, which they won’t.

In the past two years, the deficit has been cut in half and is projected to be even lower within 10 years as a share of GDP than if the Simpson-Bowles debt plan or Paul Ryan’s first budget had become law. If the reforms to Medicare implemented in the Affordable Care Act continue to slow the growth of costs as they have since 2010, our long-term debt crisis may be solved, despite Paul Ryan’s best efforts.