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Obama's Chained CPI Gamble

Updated on May 29, 2013
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President Obama finally released his 2014 budget. In doing do, he becomes the first Democratic president to offer cuts to Social Security in his budget proposal.

Perhaps more importantly, he offers Republican candidates for all eternity, the opportunity to propose taking an axe to social insurance programs "just like Obama did, back in the golden age of reasonable Obama-liberals."

Obama's budget contains a new formula to calculate cost of living increases, with the innocuous enough name of... chained CPI.

Chained CPI was the 11th hour monkey wrench thrown into fiscal cliff negotiations just last December by House Speaker John Boehner. Chained CPI was suddenly the zenith of responsible entitlement restraint.

Now though, House Budget Chair (and honorary P90X spokesperson...) Paul Ryan is relocating the goal posts by suddenly dismissing chained CPI as basic "statistical reform."

Clarifying, "It's no great entitlement reform."

Fair enough...

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Obama seems to be working off of the assumption that GOP leadership will remain adherent to the donor-class raison d'etre of insisting upon continued upward wealth-redistribution above all else.

By offering chained CPI, and incurring the outrage of his own base - Obama is showing any moderates left out there that he is the reasonable adult in the room. Obama has realized that republicans cannot take yes for an answer, and will not come around to his extremely moderate budget proposal.

In the immortal words of Jake Taylor in the modern cinema classic, Major League, in response to knowledge of institutional malfeasance & skullduggery at the highest levels -

"I guess there's only one thing left to do. Win the whole f***ing thing."

Obama is obviously going all in on 2014. Dangerous game, that. Voter turnout levels in mid-term elections fall by roughly a third, and disproportionally depresses democratic turnout. 2010 gerrymandering insists that democrats achieve a 7% nationwide advantage in order to flip the House, which would require 17 additional seats. Certainly no cake-walk.

If the past 40 years is to serve as prologue, then we should brace for a raw deal for regular folks in this country.

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Just six short months ago, Romney/Ryan were attacking Obama for "raiding" Social Security of $700 billion. Now Ryan is using that same $700 billion in his own budget. After demonizing Obamacare throughout the campaign, Ryan now takes advantage of the revenues in his own budget. This is the age old conservative tactic of insisting that liberals make cuts to social insurance programs, and then blaming and attacking them for doing so.

Greg Walden
Greg Walden | Source

Already, House GOP reelection committee chairman Greg Walden (R-OR) is calling Obama's olive branch a "shocking attack on seniors."

What confounds this humble analyst though, is that Obama is conceding to a false premise. Gutting benefits for the elderly and disabled is not a valid budgetary solution - it's a gimmick.

So what is chained CPI? It is a way of calculating inflation for cost of living purposes. What does it do? It saves $130 billion over ten years - by taking it out of the hide of seniors and disabled veterans. It assumes that as prices for prescription drugs rise, seniors can simply buy generic. If seniors are eating steak today, they can simply switch to chicken - then from tuna fish to cat food. See, it's simple!

Problem with chained CPI is the same problem inherent in raising the retirement age - simply shifting costs onto the elderly is not a valid deficit reduction solution (and the working-poor are not benefiting from elevated life-expectancy rates). Not only is it morally repulsive, it does not address the actual root of the problem.

1958 SSI poster
1958 SSI poster | Source
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Conservatives often use their "reform entitlements to save them" meme. However, Social Security cannot add a single red cent to the national debt. This by virtue of having the payroll tax as it's funding source. Saint Ronald Reagan himself notably noted that Social Security has nothing to do with the national debt.

In fact, the federal government owes the Social Security slush fund $1.9 trillion dollars. Social Security is currently solvent at least through 2037.

You want to "save" Social Security? Raise the payroll tax cap from $113,700. Better yet, eliminate the cap altogether. Why should the wealthy get to skip out on paying the rates that everyone else pays? Problem solved.

This brings us to Medicare and Medicaid. Once again, the conservative plan is to shove rising health care costs onto seniors. They have many options, each more sinister than the next.

First is to block-grant Medicaid to states, so conservative governors like Rick Perry can rob the elderly of their earned benefits in federal Medicaid moneys, in a blatantly self-serving ploy to balance their budgets on the backs of seniors.

Then, they would put an end to guaranteed benefits, by turning Medicare into a voucher program. Because that's just what sickly seniors love to do, traipse around town with a coupon bargain-hunting.

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You want to strengthen Medicare and Medicaid? Make the Big Pharma negotiate wholesale prescription prices with seniors, rather than forcing seniors to pay retail prices for wholesale drug purchases.

In addition to the simple task of raising the Medicare tax from 1.45%, the biggest and most effective and needed reform is in our health care system. We pay twice what any other nation pays for health care, and we get horrible results. Sure, we have the best hospitals in the world for those who can afford it. But we have unacceptable health care outcomes overall since tens of millions of us simply cannot afford health care. ACA/Obamacare was a start, in that it began to reform the insurance industry - but the heavy lift is in our delivery system. There are models of quality health care systems here in the US, but we need many more examples of those. We have a fee-for-service system, and we do not do preventative care. We do not cure, we treat. Cures are not profitable.

Lastly, conservatives would privatize Social Security. They would take our hard earned benefits, and throw them to the same Wall Street wolves who helped turn guaranteed pensions into 401(k) crap-shoots.

Luckily, the GOP leadership has rejected Obama's latest budget out of hand. Before it was even released, in fact.

Which is great news for the working poor, the disabled, and the elderly.

4/11/13

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    • Justin Earick profile image
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      Justin Earick 4 years ago from Tacoma, WA

      Totally agree. They let the payroll tax holiday expire, and no one hardly blinked an eye. (At least Obama paid lip service...)

      And it all comes down to the money. All congress-folk are millionaires now. It costs so much money to be elected (relatively anyways, a billionaire can purchase a senate seat for a mere $10 million), they spend literally most of their time working the phones begging for legal bribes.

      They are allowed to practice insider trading. They have a revolving door to the industries they are supposedly regulating.

      If we had publicly funded elections, then corporate personhood and money as speech wouldn't be such a bane to our political existence.

      Compulsory voting would be huge too, though it would likely take an amendment to enact.

      Reps Ellison, Grayson, Grijalva, Miller, Schakowsky, Cummings, Lee, & Welch; Senators Sanders, Harkin, Brown, & Warren - granted it's only a few, but they are fighting the good fight for regular folks.

    • profile image

      Sooner28 4 years ago

      I won't be voting for a conservative anytime in the future. Even if I ever were to drastically change my mind, the Republican's nationalism is far too worrisome.

      Anyway, I agree that Republicans are more aggressive about attacking entitlements, and but very few Democrats are taking a stand against the chained CPI and reduction in Medicare payments to doctors. The Washington Post did an article about the reduction in payments from the last round costing people already! http://maddowblog.msnbc.com/_news/2013/04/05/17616...

      I think liberals must primary the conservative Democrats when they act like Republicans.

    • Justin Earick profile image
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      Justin Earick 4 years ago from Tacoma, WA

      I completely agree that Obama is a moderate conservative - he is more conservative than Saint Reagan on many issues.

      But claiming that Obama has attacked Medicare & SSI? Interesting observation, that.

      Conservative politicians have been dead set against these popular programs from their respective inceptions, and called them socialism and ponzi scheme, and a hammock for welfare queens and strapping young bucks.

      Obama has offered piecemeal reform (which are horrible policy) because it has been necessary to good-faith negotiations.

      Gutting social insurance programs is all conservatives like Boehner, Ryan, and McConnell have been insisting upon.

      They lost the election, and they have a list of demands - gut social programs, and protect tax cuts for the wealthy

    • profile image

      Sooner28 4 years ago

      Obama doesn't beat the drums openly. However, we still haven't left Afghanistan, and the government in Iraq is brutal and tortures political prisoners.

      In addition, more people have been deported under Obama than Bush. http://www.washingtonpost.com/blogs/wonkblog/wp/20...

      Obama has attacked programs for the poor, by putting Medicare and Social Security on the table. He is slightly better on education, but his policies are to give out more student loans, not make college a universal right like public schools are.

      Obama has been mixed on gay rights and women's rights. I will agree here he is MUCH better than a Republican would be. He also nominated two women to the Supreme Court.

      Obama also doesn't deny climate change, but he hasn't exactly pushed hard for a cap and trade bill either, and he has appointed industry insiders to top positions in his administration.

      So, he's continued the war crimes of the Bush administration, put SS and Medicare on the table for the Republicans to cut, and has deported more immigrants than Bush.

      He's more like a moderate Republican of the past on social issues than a true liberal Democrat.

    • Justin Earick profile image
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      Justin Earick 4 years ago from Tacoma, WA

      I do not at all agree with Obama on his policies on whistle blowers, the drug war, drone warfare, extraordinary rendition, extrajudicial targeted killing of Americans, NDAA, Monsanto, bank bailouts, millions of annual data requests...

      But, Obama does not beat the war drum like the chicken hawks representing military industrial complex, at least he does more covert ops than boots on the ground invasions.

      Republicans proudly espouse upward wealth redistribution, relying on the age old trickle-down supply-side voodoo Reaganomics, and falling to their knees for the "job creators".

      They proactively attack women's rights.

      They proactively attack programs that benefit the poor and working poor.

      They brush aside latinos as "illegals".

      Their entire states-rights ideology has always been a ploy to freely discriminate against minorities.

      They use their bible to justify everything from slavery and interracial marriage laws, to homophobic bigotry and climate denial.

    • profile image

      Sooner28 4 years ago

      I know I'm being a little hyperbolic, but the true liberals don't have any influence.

      The Progressive Caucus, Bernie Sanders, they were all shut out of the health care debate, and Obama didn't even try for a single payer. He immediately took it off the table.

      Furthermore, he's also continued many of Bush's foreign policies and has prosecuted whistle blowers aggressively.

      Pretty much the only thing he is truly liberal on is gay rights.

    • Justin Earick profile image
      Author

      Justin Earick 4 years ago from Tacoma, WA

      Politicians all fold on the things they should be standing for, mostly because it takes so much money to buy their positions in office. Money as speech corrupts everything.

      But there are big differences between the parties.

      There was a liberal Back to Work Budget to contrast Ryan 3.0, the media (and Obama) just chose not to notice...

    • profile image

      Sooner28 4 years ago

      America no longer has liberals and conservatives; it now has conservatives and reactionaries.