Obama offers Chained CPI (plus master list of “benefit cuts”)

UPDATE: And Obama has offered up Chained CPI — cuts to Social Security benefits — to Boehner, according to a number of news sources. Here’s the Washington Post:

President Barack Obama has agreed to curtail future cost-of-living increases for recipients of Social Security and softened his demand for higher taxes at upper income levels as part of accelerating talks with House Speaker John Boehner to avoid a “fiscal cliff,” people familiar with the talks said Monday.

Speaking a few hours after Obama and Boehner met at the White House, these people said the president was now seeking higher tax rates beginning at incomes over $400,000 for couples, down from the $250,000 level that was a cornerstone of his successful campaign for re-election.

Just as predicted. Check out that new tax ceiling as well. Just enough taxes to count as a win — if you’re not looking — and a knife in the back of the safety net. No doubt about it — this is a benefit cut. See below; more as the story evolves.
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The Obama-Boehner Fiscal Shakedown Cruise (“fiscal cliff negotiation” in the words of the wise) is coming to a thrilling conclusion. I’ll have the schedule for the end-of-year sellout in a separate post. It’s a tight one.

Here I want to lay down a marker, a definition of what’s meant by “benefit cut” to one of the big three social insurance programs the Democrats have, until lately, been so proud of.

Mr. Obama, this is the Hands Off List. Feel free to clip and save it. An attack against one of these — any one of these — is an attack on social insurance in America. Hands off!

When the fox comes to the hen house, don’t guard the doors separately

What’s been happening with the social insurance programs has a lot in common with the fox-and-hen house problem, especially if the hen house has more than one door.

The lame-duck foxes keep circling the benefits hen house. First they try Door A — raising the Social Security retirement age. The hens put up a squawk and the farmer (you) shows up with a baseball bat and fire in his eyes. So the foxes retreat.

fox_320px-Sunny_FoxThen they try Door B — cuts to the cost-of-living adjustment (COLA) — cleverly disguised as revenue enhancement. The farmer shows up again, and the foxes retreat, again. The foxes circle back, and try Door C — raising the Medicare eligibility age — but that gets beaten back as well (nice going, folks).

But the foxes are still out there, and the farmer is making a lot of separate trips to deal with their forays. What the farmer needs is a fence that treats all the doors the same — they’re all inaccessible, all shut, all fence in.

We need the same — a list of all the hens and all the ways to get at them. Anything attack on on part of the list is an attack on the whole list. Each item stands for the rest. An attack on any item is a knife in the back of seniors and recipients.

What are we protecting?

We’re protecting three social insurance programs. These are:

■ Social Security
■ Medicare
■ Medicaid

What are we protecting them from? Anything that:

■ Reduces benefits
■ Turns the program from insurance to welfare (which only the “deserving” have access to)

How are these programs being threatened?

As near as I can tell, these are the threats. Note to foxes — this is the hands-off list. Each of these seven items is a benefit cut:

Social Security
1. Raising the retirement age
2. Chained CPI instead of current COLA
3. Means-testing benefits

Medicare
4. Raising the eligibility age
5. Increasing Part B premiums
6. Increasing “cost-sharing”

Medicaid
7. Shifting costs to the states by any means, such as “federal blended rate,” etc.

And that’s the list — seven items. Mr. President, hands off. Mr. Speaker, hands off.

The detail on these attacks

Here’s the detail on each of these benefit attacks — what it is and why it’s wrong.

Social Security

  1. Raising the retirement age and the “earliest eligibility age”. Right now you can retire with some benefits at 62 and full benefits at 67. Simpson-Bowles, the Obama-appointed Catfood people, want to raise the full age to 69 and the early eligibility age to 64.

Daniel Marans, who works at SocialSecurityWorks.org, reminds me via email:

Raising the full age two years amounts to a 13 percent across-the-board cut from what you are currently scheduled to get at whatever age you claim benefits. It is also the most regressive, discriminatory option against the non-rich.

  1. Using “Chained CPI” to change the COLA adjustment. The COLA adjustment is already horribly low. Making it lower is unconscionable. Marans again:

CPI would devastate long-time disabled and late old-age Social Security beneficiaries—including current beneficiaries—cutting benefits for a worker claiming at age 65 by $653 a year at age 75, $1,139 a year at age 85, and $1,611 a year at age 95. It whacks veterans and the indigent disabled on SSI too. And of course, the tax increases it imposes are especially regressive.

  1. Mean-testing — reducing earned benefits for the “wealthy.”

There are two problems with this. First, you’d have to cut benefits for people earning less than $50,000 per year to get any real savings. And second, converting Social Security to welfare is Goal One of the kill-it crowd, ’cause you know what we do to welfare in this country, don’t you? We kill it. More here.

Medicare

  1. Raising the eligibility age to 67. Horrible idea. Marans again:

This is a disastrous policy that would put 435,000 of 65- and 66-year-olds out on the street without insurance, and jack up out-of-pocket costs for everybody, eroding Social Security benefits by proxy.

Plus it will kill people. Actual humans, thousands of them.

  1. Increasing the Part B premiums. This is a bad idea on two counts.

Right now, the government subsidizes Medicare Part B premiums, according to an income-adjusted sliding scale. Income-adjusted premium support is already a form of means-testing — as noted above, a very bad idea. Changing this scale would be even worse, since half of Medicare beneficiaries had incomes below $22,000 a year in 2010.

  1. Increasing cost-sharing. This means paying less out of Medicare’s pocket for treatment, making you pay more. Gouging the elderly to save a view federal bucks. This is the opposite of what the program was designed to do.

Medicaid

  1. Shifting costs to the states. Anything that saves federal dollars by making states pay more will hurt recipients. Period.

The most recent proposal came in 2011 with Obama’s proposal of a “federal blended rate” for state reimbursement for Medicaid and CHIP (Children’s Health Insurance Program — yep, saving money on the backs of children). The detail is here, but there’s a bottom line.

Medicaid isn’t sexy. It’s wonky from the first sentence. It’s easier to cut since it looks from the outside the most like welfare — you know, it goes to poor people and all.

But it’s a cut, it will likely cause needless deaths, and it needs to be ring-fenced like the rest of these vulnerabilities — these doors through which the “deficit hawks” will use to get at the chickens. Medicaid may be the last of the hens at risk — our foxy friends will go after bigger, more symbolic prize first. But if they have to, they’ll take the scalp they can get, and that may be Medicaid.

Today’s bottom line

Obama will try (in my view) to give something away that you need and want. It’s the design of the deal. What Obama gives away will be something from this list. In exchange for your pain, he’ll let a bunch of billionaires off the hook for the big tax increase he gets by doing nothing (39.6%) — the plan is to settle for a smaller increase (37% or less is my guess), just so he has something to wave in front of you.

Which lamb will Obama sacrifice? Which hen will he toss to the foxes? Watch that “chained CPI” proposal. It’s got foxy eyes all over it these days.

Chained CPI is one of the Social Security attacks. Barack Obama, the Man Who Shot Social Security — in the back. (Please, prove me wrong, sir.)

GP

To follow or send links: @Gaius_Publius


Gaius Publius is a professional writer living on the West Coast of the United States.

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