Obama's Social Security benefits cut proposal

Peter Coy in Why 'Chained CPI' Rattles the Elderly (and Soon to Be) Bloomberg Businessweek 04/10/2013 explains why the adjustment President Obama just proposed would mean real and significant decreases in Social Security benefits, including for existing recipients. The proposed adjustment would also decrease veterans benefits and also has the effect of increasing taxes on beneficiaries.

Obama's plan for Social Security: Let Grandma eat catfood

Coy writes:

It’s presented as a technical, politically neutral fix, but make no mistake: The Obama administration's proposal to change the basis for Social Security raises to "chained CPI" is all about saving money by slowing the growth rate of benefits. ...

The federal government ties Social Security benefits to measured inflation. Chained CPI gives a lower measure of inflation. So using it would result in slower benefit growth. It’s that simple.

And he is explicit about how the government's own figures for inflation for the elderly is actually higher than for general inflation and how Obama's proposed Social Security benefit cuts would make the adjustments even more inadequate:

Right now, Social Security benefits are tied to CPI-W, the second bar from the right. It’s the CPI for urban wage earners and clerical workers. In other words, to calculate benefits for retirees, the government uses a measure of the inflation felt by working people. Go figure. It’s more generous than chained CPI but still below the government’s estimate of actual inflation for the elderly.

What Obama is proposing is a real cut in Social Security benefits that also affects existing recipients.

It's a really, really bad idea.

Jon Walker addresses what it means politically in Obama Tries to Make Every False GOP Attack True FDL 04/11/2013:

What I find most ironic about President Obama’s budget is that in trying to find "common ground", he became the caricature Republicans created about him. Throughout most of Obama’s first term Republicans attacked him based on what were two false premises.

The first was that Obama raised taxes on the middle class. Republicans would sometimes point to the individual mandate or minor tax changes to justify this broad claim but it was not really true until now.

The other much bigger attack was that Obama was out to hurt seniors. This was the core of the 2010 GOP campaign. They tried to spin cost reductions in Medicare as actual cuts to Medicare benefits. Republicans even falsely claimed Obamacare had "death panels" or was some attempt to pull the plug on grandma.

After years of asking regular Democrats to help refute what were baseless attacks, Obama has gone out of his way to be some kind of Republican self-fulfilling prophecy.

What.A.Disaster.

Tags: austerity economics, barack obama, grand bargain, social security