Will a “grand bargain” to avert the ostensible calamity of going over the “fiscal cliff” forge a legislative accord on the backs of the most vulnerable Americans?
Progressives are increasingly worried about President Obama’s use of Social Security as a bargaining chip with an increasingly rancorous Congress.
Not much more than a month since Election Day, political sensibilities and partisan posturing are back to the paralyzing status quo as the White House and Congress bicker over how to solve the looming tax hikes and spending cuts associated with the self-imposed “fiscal cliff” deadline of January 1. As usual, those that stand to lose the most in any solution are those Americans without deep pockets to woo politicians with campaign contributions or pricey lobbying efforts.
The messy implosion of House Speaker John Boehner’s “plan B” fiscal deal after having failed to win enough support from fellow Republicans for a vote on Thursday could conceivably pave the way to a less GOP-centric outcome, with conservatives unwilling to accept even the slightest tax increase on the very richest millionaires in America.
The White House and Democrats cheered ther demise of Boehner’s reckless gambit, but there is no celebrating being done by Americans that depend on government safety net programs — especially Social Security — to simply achieve daily survival.
At the centerpiece of President Obama’s proposal to avoid the “cliff” is a compromise with conservatives that takes dead aim at the heart of Social Security, a program that tens of millions of Americans rely on but which adds not one penny to the national debt or deficit.
Obama’s plan, one that has garnered much support from centrist Democrats and corporate leadership, would be to avoid tax increases on the wealthy by slashing benefits for all Social Security beneficiaries. This would be done quietly through an innocuous reduction in the wonkishly-named “Chained CPI”; the Consumer Price Index to which Social Security payments are tired to. By tinkering with the CPI, the White House wants to slash benefits for the elderly poor by at least 3 percent.
Progressives have voiced outrage that “Donald Trump” is not being asked “to pay a dollar more” but vulnerable seniors are being hit with the brunt of austerity-driven debt reduction even as the poorest in America suffered the most economic damage during the recent recession and post-recessionary period.
Democrats in Congress, including members of Massachusetts’ delegation, were unhappy Tuesday to learn that President Obama may be willing to trim future Social Security payments as part of a budget deal. But with little progress in meeting a Jan. 1 deadline, even liberals in the party did not rule out such a reduction in a New Deal centerpiece.
Some suggested that targeting Social Security might be the lesser of two evils, compared with the other major idea for entitlement program cuts that has been floated in Washington: raising the Medicare eligibility age from 65 to 67. House minority whip Steny Hoyer said Tuesday that raising the Medicare age is a “much more sensitive’’ issue.
As part of negotiations with Republicans, Obama has raised the possibility of changing the inflation index used to calculate automatic, annual increases in Social Security benefits. The new formula, which some people say is a more accurate measure of inflation, would provide for smaller annual increases. In 2010, the Congressional Budget Office estimated the net result of the change would be a 3 percent lifetime benefit reduction when measured against current projected growth.
Representative Jim McGovern of Worcester left a House Democratic caucus meeting in an unhappy mood after listening to briefings on the negotiations, including the White House position on the inflation index, which is called the “chained CPI.’’
“Asking Donald Trump to pay a dollar more is not the same as taking something away from an old lady or an old man in my district who is just squeaking by,’’ McGovern said.
Critics point that while changing the CPI would have a dramatic effect on the take-home benefits of Social Security enrollees, and is “high on the list” of Republican demands in any “cliff” deal, such a compromise would no only do nothing to cut deficits but do next to nothing in extending the life of the program.
Opponents of the president’s proposal call it a “piece of flesh” to placate conservative lawmakers.
Although the index switch is on the list of GOP demands, it would not have a major impact on reducing deficits, advocates contend. The Social Security trust fund is projected to be solvent until 2033. The Congressional Budget Office has said changing the inflation index would give Social Security an extra four years of solvency. The Medicare trust fund would appear to be in more urgent need of attention, with a projected insolvency date of 2024. Opponents of the change to Social Security say it is simply a bargaining chip and does not represent sound policy.
“The Republicans just want a piece of flesh to vote for a tax increase, and this is a notable one,’’ said Mike Konczal, a fellow at the Roosevelt Institute, a New York organization that is dedicated to defending the policies of President Franklin D. Roosevelt, who won passage of Social Security in 1935.
While the Republican Party’s ultra-conservative base is coddled by the GOP leadership and the White House alike, progressives and those opposed to unnecessary cuts to safety net programs are virtually being shut out by everyone on Capitol Hill in the “cliff” negotiations, including the Democratic leadership in the House and Senate.
House Minority Leader Nancy Pelosi embraced the Obama plan to gut Social Security, telling the press that she considers the CPI change “a strengthening of Social Security” when pressed on grassroots criticism that it would hurt seniors.
Congressional Democrats, led by House Minority Leader Nancy Pelosi (Calif.), signaled greater willingness on Wednesday to cut Social Security benefits, with the party now considering a change to the way inflation is calculated for recipients.
Pelosi told reporters on Capitol Hill that a cut proposed by President Barack Obama in the fiscal cliff negotiations would in fact “strengthen” the program, echoing the claims often made by Republicans about entitlement programs they want to slash.
Her remarks come a day after she said that liberals in Congress who are unhappy with Obama’s concession to the GOP would nevertheless support them.
The cuts would start small, but wind up costing beneficiaries thousands of dollars over time, which is why Democrats have traditionally fought the idea.
But Pelosi wrapped both her arms around it Wednesday, insisting she does not regard it as a “cut.”
“No, I don’t,” she told reporters. “I consider it a strengthening of Social Security, but that’s neither here nor there.”
Standing in the way of any changes to diminish Social Security’s ability to help seniors may be organized labor. So essential to President Obama’s successful reelection bid, labor leaders have voiced their opposition to “bad policy” that hurts Americans that depend on government aid.
AFL-CIO president Richard Trumka called the chained-CPI proposal offered by Obama as part of his recent effort to resolve the so-called fiscal cliff standoff, “bad policy” that he and his group were strongly against. But in an interview with The Huffington Post on Thursday morning, Trumka stopped notably short of urging Democrats to walk away from the table because of it.
“I want to see more of the details. But we oppose the cuts,” Trumka said. “We’ll oppose the cuts. We will be talking to them about a number of things. Obviously I want to look at the whole deal before we make any decision.”
Other progressives are taking a more direct approach in calling out President Obama and demanding that he fulfill his campaign promises to protect Social Security and Medicare, not give them away in questionable congressional negotiations.
Rep. Dennis Kucinich delivered a scathing rebuke of the president’s proposal on the floor of the House this week, arguing that it amounts to “throwing seniors off the fiscal cliff” and would bring a “Cat Food Christmas” to many poor Americans.
“Will Seniors be pushed off the ‘fiscal cliff’? Social Security did not cause the deficit, but the White House’s plan to lower Social Security cost-of-living benefits could eventually reduce Seniors’ annual benefits by hundreds of dollars. The gimmick is called the ‘Chained Consumer Price Index.’ The Chained C.P.I. works this way: As the cost-of-living goes up, seniors inevitably turn to cheaper alternatives.
“For example, if seniors usually eat steak but then can’t afford its higher price, they can switch to something cheaper, like cat food- – and the cost-of-living calculation would be ‘chained’ to the cheaper item – – cat food. So, the less you pay for food the less benefits you get. The ‘chained CPI’ benefit cut will chain aging seniors to a poverty of choices, a lower standard of living, with cheaper products.
“The chained CPI formula doesn’t take into account seniors’ rising health care costs. If it did benefits would go up. There is no justification to cut Social Security benefits. No to throwing seniors off the fiscal cliff. No to a Cat Food Christmas.”
There is little doubt that a shift in the government “chained CPI” formula to determine “Social Security beenfits would have a deep and lasting effect on those who rely on the program the most. Nearly 70 percent of seniors in America rely on Social Security for greater than half of their income.
Robert Reich argues putting such a program on the front lines of “fiscal cliff” talks is a mistake by President Obama.
Social Security should not be part of any such deal anyway. By law, it can’t contribute to the budget deficit. It’s only permitted to spend money from the Social Security trust fund.
Besides, the President’s proposed reduction in annual Social Security cost-of-living adjustments would save only $122 billion over ten years. Yet it would significantly harm the elderly.
It defies logic and fairness to give more tax cuts to the wealthy while cutting benefits for the near-poor.
The median income of Americans over 65 is less than $20,000 a year. Nearly 70 percent of them depend on Social Security for more than half of this. The average Social Security benefit is less than $15,000 a year.
Even Social Security’s current cost-of-living adjustment understates the true impact of inflation on elderly recipients, who spend far more on health care than anyone else – including annual increases in Medicare premiums.