Last year, when the President finally released his budget, which of course is a political document that will never become law, many observers were shocked to find that a proposal to move to “chained CPI” had been included. Chained CPI is basically a different way of calculating the CPI, or consumer price index. The CPI is used in determining the rate of inflation, so a change in the formula for figuring CPI changes the yearly COLA (cost of living adjustment) adjustment in Social Security, meaning bottom line changes in how much money seniors receive.
In this instance, unsurprisingly, since it was a Republican demand, adding the “chain” to “CPI” significantly REDUCES the amount of money that Seniors, many of whom have been paying into the system for 40+ years, would receive. As Huffington Post’s Ben Veghte reported last year, “Social Security Works finds that if the Administration’s proposed switch to the chained CPI for Social Security were enacted, the average worker retiring today at age 65 would see his or her Social Security benefits cut cumulatively by $15,615 by age 95”. As such, the Obama administration today announced that it would not include chained CPI in this year’s budget.
The Administration explained its move away from “chained CPI” by saying that, even after they endorsed this high-priority Republican demand, the GOP did not find a single unfair tax loophole it would agree to close or tax to raise, meaning that Republicans expected to get their top demand without offering the Democrats a single thing they wanted. Though observers may be familiar with this form of “negotiating” over the last several years, Democrats are not fans, “over the course of last year, Republicans consistently showed a lack of willingness to negotiate on a deficit reduction deal, refusing to identify even one unfairtax loophole they would be willing to close, despite the President’s willingness to put tough things on the table”, said one White House Official.
Republican Majority Leader John Boehner, for his part, responded to the President’s decision to abandon chained CPI, “This reaffirms what has become all too apparent: the president has no interest in doing anything, even modest, to address our looming debt crisis,” said Brendan Buck, a spokesman for Boehner. “The one and only idea the president has to offer is even more job-destroying tax hikes, and that non-starter won’t do anything to save the entitlement programs that are critical to so many Americans. With three years left in office, it seems the president is already throwing in the towel.”
Unfortunately for Democrats, though, all of the acrimony from the two sides does not preclude a deal that would cut benefits to Seniors who have already paid for them, and the poor who desperately need them. As the same White House Official from before continued, “The offer to Speaker Boehner remains on the table for whenever the Republicans decide they want to engage in a serious discussion about a balanced plan to deal with our long-term fiscal challenges that includes closing loopholes for the wealthiest Americans and corporations”.