The “chained CPI” proposal in President Obama’s budget
continues to draw much-deserved fire, which is only likely to increase
as more information about it becomes known.
Here are ten embarrassing facts about the chained CPI which the White House and its defenders would prefer to see overlooked:
1. Of course it’s a benefit cut.
Chained-CPI
defenders say it’s not a benefit cut, just a slowdown in the rate of
the benefit’s planned increases. That’s a silly semantic game unworthy
of serious leaders or analysts. The Social Security benefit, as laid out
on the Social Security Administration’s website, includes adjustments
designed to keep pace with the rising cost of living.
Those
adjustments aren’t a benefit increase. They’re designed to prevent the
benefit from being decreased as a result of inflation. If you lower that
adjustment, you’re cutting benefits. Period.
2. Of course it’s a benefit cut. Of course it’s a tax hike, for everyone but the wealthy. s a tax hike.
Same
goes for the tax impact of the chained CPI. Our tax brackets were
designed to make sure that taxes didn’t go up inadvertently because
inflation kicked them into a higher tax bracket. That was done to make
sure that people who weren’t earning more in real dollars – which
includes many (if not most) of the “99 percent” – weren’t hit with an
unearned tax hike.
The President has repeatedly promised that there will be no middle-class tax hikes while he’s President.
If
you substitute the chained CPI for the current formula, as the
President has proposed, people will be kicked into higher tax brackets
earlier. Then they’ll pay more in taxes, even if they’re not making any
more “real” money.
That’s a tax hike.
3. And it’s a tax hike for everybody but the wealthy.
In
fact, it’s a tax hike on all but the highest levels of income. The
richest earnings won’t be affected because they’re already in the
highest tax bracket.
Got it? So it’s a tax hike on everybody
except the richest among us. (Actually, it’s a tax hike for them too,
but only on their lower levels of income. The richer you are, the less
you’ll see in a tax-rate increase.)
4. You could save much more money in other, better ways.
The
White House has said the chained CPI will save $122 billion in benefits
over ten years. Leaving aside the fact that Social Security doesn’t
affect the deficit (which we’ll discuss shortly), here’s
what isn’t being done:
Close capital gains loopholes: $174 billion.
End the Bush tax cuts at Obama’s original $250,000 level, rather than the
compromise $400,000 number: $183 billion.
Cut overseas military bases by 20 percent: $200 billion.
Negotiate with drug companies: $220 billion.
Enact “Defense-friendly” Pentagon cuts: $519 billion.
End corporate tax loopholes (without being “revenue neutral,” as the President’s proposing): $1.24 trillion.
Enact a financial transaction tax on the folks who ruined our economy: $1.8 trillion.
Faced
with those numbers, the chained-CPI benefit cut is … well,
embarrassing. (Details, and additional alternate deficit reducers,
here.)
5. The White House’s proposed “bump” disproves its own argument.
The
Administration’s been claiming that the chained CPI is merely a
“technical adjustment” designed to make cost-of-living increases more
accurate. But it’s just introduced an adjustment for seniors who live
longer in order to offset the impact of its reduction over time.
But
if the chained CPI really measured inflation more accurately, it
wouldn’t affect real benefits any more after twenty or thirty years than
it did after the first year. Confusing? We explain
here. (With pictures and everything.)
Bottom line? They know it’s a benefit cut.
6. It’s political suicide for Democrats.
The polls are clear on that question.
Voters over fifty hate the chained CPI. It doesn’t matter whether they’re Democrats, Republicans, or independents. They hate it.
And older Americans are more likely to vote than other voters (who also hate it, according to earlier polls.)
It took the Republicans all of
fifteen minutes to
portray this move, which they’ve supported for a long time, as a
“shocking attack on seniors.” They’re ready to run a reply of their
successful 2010 strategy, when they ran to the left of Dems with a
“Seniors’ Bill of Rights” – and recaptured the House.
7. The Social Security cut doesn’t reduce the deficit.
Social
Security doesn’t contribute to the deficit, since it’s funded
separately. In fact, it’sforbidden by law from contributing to the
deficit.
It doesn’t even belong in these negotiations.
8. That tax hike on everybody except the wealthy will help a little. But …On
the other hand, they’ll be hitting everybody except millionaires and
billionaires with tax increases that grow with every passing year.
If regressive taxation is something you believe in, then I guess that’s something.
Except for our next embarrassing fact …
9. The deficit’s already shrinking rapidly.
The deficit is already shrinking – and “rapidly,” in the words of those radical lefties at
Goldman Sachs.
The
deficit isn’t our most urgent economic problem. It’s not even close. We
desperately need jobs, real wage growth, consumer confidence, financial
security for the elderly and disabled (which means increasing Social
Security) …
Sure, deficits need to be addressed after the economy’s been righted, but right now they’re nowhere near the top of the list.
In
fact, there’s an extremely good chance that the cuts in the President’s
budget will make the deficit worse, as austerity cuts have in Europe.
The Republican budget would certainly have that effect, since its cuts
are far more severe.
10. It doesn’t matter if “the GOP asked you to” do this.
It
doesn’t matter if “the GOP asked” the White House to call for this
benefit cut and middle-class tax hike,as White House Press Secretary Jay
Carney is now
saying. The President’s been floating the idea for years. He and his appointees have defended it publicly.
And now the President has officially included it in his budget.
The Republican budget did not include it.
And
now they’re using it against the President and his Party. That should
surprise no one. To paraphrase the question asked by generations of
American mothers: If the Republicans asked you to jump off a bridge … ?
The
chained CPI is the wrong answer to the wrong problem at the wrong time.
It’s time for the White House to recognize that, cut its losses, and
ditch this turkey of an idea. In the meantime Democrats need to walk
away from it fast, before they pay a high price for it at the polls.
Richard (RJ) Eskow is a
blogger and writer, a former Wall Street executive, an experienced
consultant, and a former musician. He has experience in health insurance
and economics, occupational health, benefits, risk management, finance
and information technology.
No comments:
Post a Comment