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.