Friday, April 5, 2013

Chained-CPI: cue poutrage eruption

President Obama is set to release his budget on Wednesday and there are currently some leaks about what it will include. So of course the poutragers are out in full swing because it will apparently include using chained-CPI as the method to adjust both taxes and benefits to inflation.

But lets calm down a bit and take a look at a few specifics that we know about and then talk strategy for a moment.

First of all, I'd suggest that whenever you read a poutrager going ballistic about chained-CPI, look to see if they are including what President Obama's proposal does to mitigate the effect it will have on the most vulnerable. I can guarantee you that they won't because no one has seen the details yet.

But anyone on the left (including President Obama and Nancy Pelosi) who has been willing to negotiate about implementing chained-CPI has stressed the importance of including such measures.
There are two major changes necessary. First, add a bump in benefits to the very old, who are more likely to have high healthcare bills and to have exhausted their savings that supplemented their Social Security income. Second, exempt Supplemental Security Income, which serves the poorest, disabled and blind but still often leaves people below the poverty line.
One easy way to tell if people are including these mitigating measures in their calculations is that CBO has estimated that switching to chained-CPI will save $220 billion over 10 years. If these protections for the most vulnerable are included, that figure is reduced to $100-150 billion.

On strategy, you see people going on and on about how intransigent the Republicans are and how he'll never get them to budge on increasing revenues in exchange for these entitlement reforms. But that's because all along they've been missing the whole point of President Obama's so-called "charm offensive" in assuming that it was designed to win over broad Republican bipartisanship rather than simply explore the option of a common sense caucus the President keeps talking about.
I do know that there are Republicans in Congress who privately, at least, say that they would rather close tax loopholes than let these cuts go through. I know that there are Democrats who’d rather do smart entitlement reform than let these cuts go through. So there is a caucus of common sense up on Capitol Hill. It’s just -- it’s a silent group right now, and we want to make sure that their voices start getting heard.

In the coming days and in the coming weeks I’m going to keep on reaching out to them, both individually and as groups of senators or members of the House, and say to them, let’s fix this -- not just for a month or two, but for years to come.
Here's what the NYT's says about that today.
Neither the president nor senior aides privately hold much hope that Republican leaders — Mr. Boehner and Senator Mitch McConnell of Kentucky, the Senate Republican leader — will compromise. So Mr. Obama’s strategy of reaching out to other Senate Republicans reflects a calculation that enough of them might cut a budget deal with the Democratic Senate majority. If that happens, the reasoning goes, a Senate-passed compromise would put pressure on the House to go along.
I would imagine that President Obama is not completely confident this strategy will be effective. But for him its worth a shot. Greg Sargent does a great job of putting the onus back on the poutragers to come up with what their alternative would be.
Liberals who oppose Chained CPI need to start thinking right now about how to answer this question: Which is worse, a Grand Bargain, or continued sequestration? It’s unclear to me that there is any other likely outcome. Either Republicans will decide to weather sequestration or they will agree to some kind of a deal to replace it. So liberals need a good policy answer to that question.
Bingo! But of course struggling with that question would require a good dose of pragmatism. So its likely to fall on deaf ears.

Still, the poutrage about chained-CPI is likely to play into President Obama's hand. Jonathan Chait thinks the strategy of including it in a budget proposal is meant to shake up the media narrative he describes as "BipartisanThink" - in which both sides are blamed for intransigence.  Outrage from the left helps cement the fact that one side is willing to make the difficult concessions that are necessary for compromise while we wait to see if anyone in the opposition is capable of doing so.

18 comments:

  1. It's also worth keeping in mind that this is a leak about a proposal that is unlikely to be taken up by Congress (since Congress usually tends to ignore budget proposals by the President) and that the Senate has already passed its own Budget Resolution.

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  2. The poutrages are already in full swing on several sites. It just makes me sick, no reasoning with some of them. Thank you for your reasoned approach to this. Is it your understanding that CPI, is, that the calculations for SS benefits cost of living increases will be smaller than what used to be? And do these people forget that for a couple of years we didn't have an increase, but a one time payment from the stimulus. People sure do have short memories.
    Thank you again Smartypants.
    Didn't Deaniac83 at TPV have a good post on this a while back?

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    1. At this point we know what a fully implemented chained CPI would be. But until we see the specifics that PBOl proposes, its impossible to calculate its effects. And as Sargent so brilliantly pointed out - then we have to decide which is worse - making the sequester cuts permanent or chained-CPI.

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  3. "So liberals need a good policy answer to that question." and saying 'raise the cap' while great, is not gonna happen w/a GOP congress. We have to be in the business of winning elections and getting rid of the GOP, until we all realize that, deals like this will keep happening.

    ebogan63

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  4. Thank you. Just thank you. And poutrage may be the best fake word ever.

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    1. I give Al Giordano credit for coining the word "poutrage."

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    2. I agree, thanks for the new word.

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  5. starting out with calling names can NEVER be productive

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    1. When it comes to the poutragers, nothing is productive. Believe me, I spent years trying.

      My goal is to encourage people to ignore their hair-on-fire.

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  6. I've learnt from you and Deaniac over at thepeoplesview.net to never join the poutragers and to withhold my criticisms before I see the details of any deal/budget. Thanks for that again!

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  7. And a GREAT job you do SmartyPants. Great Job indeed!

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  8. I applaud the President for taking steps to start addressing the long run solvency issues of SS.

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    1. If every company in America had 2.8 $Trillon in US treasury bonds, would anyone be worried about their solvency? TWO.EIGHT $TRILLION is the amount currently owed to Social Security - backed up by that amount in Treasury Bonds.

      Any CongressPeople who are concerned about Social Security - Long Term- can simply raise the Social Security "cap"; U know, the tax law whereby only the 1st $110,100 of income is taxable; better yet, change the tax law to: All Income is subject to Social Security Taxes.

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    2. Anon - maybe you should read the Trustees report. It is more than just Congress who are worried. That $2.8 trillion isn't sitting in a lock-box somewhere, it needs to be financed.

      And as for your second point, I'd be willing to have all of my income be subject to the tax, but I bet you're going to tell me that I won't get double the benefit for double the contribution, as an example. You want me to contribute alot more without any additional benefit? What was the intention of Social Security when FDR started it - a forced savings insurance policy? Or a means to redistribute, ie a welfare program?

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  9. I'm wondering if the changes that President Obama has put forth regarding chained CPI does not directly relate to the situation of my Dad before he passed. He had a very healthy investment portfolio when he retired, along with an insurance policy that would cover his expenses should he need assisted living. He wondered if he could put off receiving his SS income until and unless he needed it, should he deplete his savings. To provide more for those truly in need seems a truly genius way of saving AND having it work the way it actually SHOULD.

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    1. If I was in your Dad's shoes, I would still want the benefits since I had been paying into it my whole life. Don't need the money right now? Ok, but I would still take it and donate it to the charity of my choice rather than let the government keep it and who knows what they do with it. But that is really a separate issue from CPI and what's the proper way to measure cost of living increases.

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  10. I'm willing to compromise on nearly EVERYTHING dear to me: gun responsibility, reproductive rights, Keystone XL and the environment, closing Guantanimo, my distaste for drones, etc. But I will NOT NOT NOT compromise on Social Security and Medicare.

    Does this make me hard left or an emoprog? I think not. Democrats have to stand for something. There's nothing wrong or professional left about standing up for programs with 70% approval with the public.

    I agree that Obama has done some good things. Yet he has never made it a secret, since 2009, that he wanted to cut Social Security and Medicare. And that's where I and other Democrats have to make a stand.

    If that makes me a Communist weirdo, then 70% of Americans are Communist weirdos. Sorry.

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