In what will probably be remembered as one of the most disgraceful moments of his administration, President Obama on April 10 proposed a budget that cuts Social Security and Medicare.
The Obama budget proposes to change the cost-of-living formula for Social Security – as well as military pensions and federal worker pensions – to something called the "chained CPI." CPI means consumer price index, but this change would "adjust" the cost of living formula on the assumption that, when the price of an item goes up, retirees will stop buying it and substitute something else, and so the price increase of the original item should be ignored.
As former Labor Secretary Robert Reich has pointed out, senior citizens spend 20 to 40 percent of their incomes on healthcare, "and they can't substitute lower-cost alternatives." Reich points out that even the current cost-of-living adjustment to Social Security does not adequately keep up with inflation in healthcare. The pro-labor Center for Economic and Policy Research (CEPR) calculates that the chained CPI would result in a .3 percent annual cut in retirees' benefits. (Watch a two-minute video of Secretary Reich explaining the fallacies and perils of chained CPI at this link.)
Obama's proposed budget also introduces "means testing" for Medicare, making it more costly for many higher-income seniors. The people who designed Social Security in the 1930s, and those who crafted Medicare in 1965, wisely avoided means testing. Both programs have been highly successful and popular as universal programs of social insurance that cover just about everyone. But from their inception, both Social Security and Medicare have had powerful political enemies on the right. And those opponents have long favored means testing as a way to turn Social Security and Medicare into less-popular welfare programs perceived as benefiting “only poor people.” Means testing, the opponents of Social Security and Medicare believe, could be a step toward eliminating them entirely.
"These proposed cuts are outrageous, and they violate President Obama's past promises," said UE General President Bruce Klipple. "We all need to let the White House and members of Congress know that any proposals to cut Social Security, Medicare and Medicaid – whether they come from Republicans or Democrats – are unacceptable to the working people of America." Other organizations representing workers and seniors expressed similar outrage. AFL-CIO President Richard Trumka called the president’s proposal “wrong and indefensible.”
Sen. Bernie Sanders (I-VT) has been leading the charge against the proposed cuts, mobilizing both concerned citizens and progressive Democrats in Congress to oppose the White House on this issue. On May 8 he brought together seniors, veterans organizations, Social Security advocacy organizations and other members of Congress for a Capitol summit meeting to protest proposed cuts in Social Security and disabled veterans’ benefits. “There are fair ways to reduce deficit but balancing the budget on the backs of the elderly, the sick, the children and the poor are not among them,” Sanders said.
Speaking at the summit, Sanders laid out the case against chained CPI:
“The chained CPI has been referred to by Republicans and some Democrats in Washington as a ‘minor tweak’ in benefits. But let’s be clear. For millions of seniors living on fixed incomes and disabled veterans, the chained CPI is not a minor tweak. It is a significant benefit cut that will make it harder for permanently disabled veterans and the elderly to make ends meet. Under the chained CPI, average 65 -year-old retirees would lose $658 a year in Social Security benefits by their 75th birthday; $1,147 by their 85th birthday; and $1,622 by their 95th birthday. The chained CPI would cut the benefits of more than 3.2 million disabled veterans in this country.”
THE PERILS OF BIPARTISANSHIP
President Obama’s proposal is the latest episode of his continuing obsession with bipartisanship, and his attempts to reach a “grand bargain” over the budget with Congressional Republicans. It came on the heels of the January “fiscal cliff” and the March 1 implementation of “sequestration” – across-the-board cuts in most federal programs. The so-called “Sequester” was itself the result of another ill-conceived compromise Obama made with the Republicans in August 2011, to resolve another crisis which the GOP had created by playing a game of chicken with the federal debt ceiling.
Obama now offers the Republicans cuts in Social Security and Medicare – programs he knows they’d love to cut – in an effort to get them to agree to a budget deal that ends sequestration. But so far, the Republicans aren’t budging. They seem happy to let the sequestration cuts continue to do their damage – with a few exceptions. Cutting programs for low-income children is fine with them, but when business travelers (and members of Congress) experienced flight delays in April because of sequestration cuts in air traffic control, Congress quickly reversed that set of cuts.
By offering to cut Social Security and Medicare, Obama has alienated many of his own supporters and seems no closer to a “grand bargain” with Republicans. But the move may backfire politically in another way. Even though Republicans are on record with plans to privatize Social Security and calls for far worse cuts than what Obama has proposed, the fact remains that chained CPI was included in a budget proposal by Obama, not the GOP. And some Republicans are already planning to use the chained CPI against Democrats in the 2014 election.
More serious than that may be the long-term damage. A Democratic president has now proposed damaging cuts to Social Security, one of his party’s greatest accomplishments of the past 100 years. That proposal is now on the record and on the table. Sooner or later, Republicans will take up the offer, or use it to negotiate even more cuts.
More than 100 members of Congress signed a letter to President Obama, pledging to vote against any budget that cuts Social Security and Medicare. You can call your members of Congress at the Capitol Hill Switchboard – (800) 839 - 5276 – and urge them to sign on as well. Make sure your member of Congress hears from you!
Click the article titles below for additional coverage from the UE News about Social Security, the attacks on it and the fight to defend it.
Don't Cut Social Security, Increase It
Phony Crisis - The Money is There
For Medicare, Means Testing Means Trouble
The People's Pension: The Struggle to Defend Social Security Since Reagan (Book Review)
A Young Person's Guide to Social Security