Democrats Want It Both Ways On Social Security


By Arthur Delaney

WASHINGTON -- Congressional Democrats held a press conference Thursday to denounce a Social Security cut that has been embraced by President Barack Obama and House Speaker John Boehner (R-Ohio) in budget negotiations.

But the Democrats who spoke did not rule out voting for a deal that includes "chained CPI," an alternate measure of inflation that would make Social Security's future cost-of-living adjustments less generous. When asked during the conference by The Huffington Post if they would vote against such a deal, they did not say they would.

"What we're saying here today is a deal is not done yet," Rep. Donna Edwards (D-Md.) said at the presser. "And so there is still time in the negotiations, because we want to make it clear both to the president and to our leadership that the chained CPI is an inaccurate reflection of what real living costs are for our seniors, and would result in a real benefit cut for them."

Rep. Barney Frank (D-Mass.) said that including chained CPI would substantially reduce the likelihood of Democrats supporting a deal to avert the so-called fiscal cliff, the simultaneous tax hikes and spending cuts scheduled to take effect after Jan. 1.

"It is conceivable that you could have a package that is attractive in so many other ways that you might swallow it," Frank said, "but here's the problem ... there are going to have to be compromises in other areas, and what we are saying is this one for many of us is a deal breaker, or close to a deal breaker by itself, and so it might could well be part of a broader package, but that broader package ain't gonna be no Christmas present."

Some other Democrats have given firmer answers.

"I will not vote for something that includes chained CPI," Rep. Keith Ellison (D-Minn.) said in an interview. "There are multiple measures of inflation, but anything that results in a benefit cut to seniors I am a 'no' on."

Ellison is co-chair of the Congressional Progressive Caucus, which circulated statements from more than a dozen members criticizing the chained CPI. Five of the members besides Ellison said they would oppose "any deal" that includes the policy.

House Minority Leader Nancy Pelosi (D-Calif.), however, said this week that she did not consider chained CPI a benefit cut and that she could get enough Democrats to support it.

Each year, the Social Security Administration uses the Consumer Price Index for Urban Wage Earners and Clerical Workers to determine whether Social Security recipients should get a cost-of-living adjustment. The latest COLA, which takes effect this month, will boost benefits by 1.7 percent. The Congressional Budget Office has estimated chained CPI would result in COLAs that are 0.25 percent smaller going forward.

Economists say chained CPI is a more accurate measure of inflation since it accounts for the way consumers avoid rising prices by substituting for cheaper goods. The change would reduce Social Security spending by more than $100 billion over 10 years, according to the CBO.

The Bureau of Labor Statistics illustrates the logic of chained CPI with an example: "If the price of pork increases while the price of beef does not, consumers might shift away from pork to beef."

Democrats opposed to the cut say that seniors, who represent the vast majority of Social Security beneficiaries who'd be affected by the change, already devote a disproportionate percentage of their income to always-rising medical costs.

"[The current] CPI dramatically understates the annual increases of costs of necessities for seniors," Rep. Peter DeFazio (D-N.Y.) said. "This chained CPI is even more unfair than the existing CPI."

Rep. Frank mocked the logic underlying the policy. "This economist myth of the 84-year-old woman who has got complete mobility to go comparative shopping for her health care, for her transportation, for her place to live, is just nonsense," he said.
 

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