Explaining the Pure Cruelty of Obama's Gimmick, "Chained CPI" in Simple Language


So, the White House says they want to cut Social Security Insurance payments over time, using a tricky little technique called the “chained CPI.” Instead of actually measuring real inflation, this particular “consumer price index” is “chained” to consumer’s behavior.  They call it “hedonic and quality adjustments” to make it sound scientific. 

Here’s how it works: If the price of beef goes up, and some people start eating cheaper chicken instead, then instead of measuring actual inflation (as reflected by the rising cost of meats), the Chained CPI measures the behavior of moving from beef to cheaper chicken and lowers the cost-of-living adjustment. 
If more and more seniors can’t afford chicken and move to cheaper cat-food, then the “chained CPI” adjusts Social Security Insurance payments – and millions of disabled vets’ payments that are tied to Social Security  – so that they can now afford cheaper brands of cat food. Republicans love this idea.
As I’ve pointed out here and here, back in the mid-1970s, Republican strategist Jude Wanniski, in an article titled “Taxes and a Two Santa Theory,” correctly pointed out that the American people loved Social Security, brought to America by Democrats and continually defended by Democrats.  And Republicans had always played the role of Scrooge, saying, “Things like Social Security are not legitimate functions of government.  Old-age poverty should be fixed by churches, and retirement income should be handled by Wall Street.”
The Democrats, Wanniski pointed out, were essentially the Social Security Santa Claus, giving Americans what they wanted, even though Americans were also, themselves, gladly paying for that very same Social Security. So the job for Republicans was twofold. First, to become Santa Claus themselves.  Because being the Social Security Santa was already taken, they should, Wanniski proposed, become the “tax-cut” Santa Claus. Tax cuts for everybody!  Especially rich people! And the second really big job was to get Democrats to shoot their own Santa Claus – especially Social Security. 
The problem for Republicans was that Social Security was so popular – it literally saves lives every day, and has since 1936 – that even Republicans wanted some of the glow. And, even more problematic for Republicans,  Social Security has nothing whatsoever to do with the budget deficit, and – as it’s now set – is totally solvent for at least the next twenty years.  And it will remain solvent forever, with the very small tweak of just lifting the payroll cap so millionaires pay the same percentage into it as people working at Wal-Mart. Even Ronald Reagan, in an rare moment of candor, pointed this out.
That bears repeating. You could cut Social Security all you want. You could even end Social Security altogether. And it wouldn’t reduce the budget deficit by a single penny.  Social Security is a completely self-funded, self-contained program – and it’s sitting on a surplus of over $2.6 trillion.
But it’s the signature program that makes the American people think of the Democrats as Santa Claus.  And the number one priority of the Republican strategists is to get a Democratic President to take a shot at Santa Claus. Since FDR brought us Social Security not one single Democratic president has ever, in the history of the republic, suggested shooting or even nicking the Social Security Santa Claus.  Until Obama.
And what’s particularly astounding about this is how effective this White House has been at getting supposedly progressive commentators and journalists to jump on board.  As Laura Gottesdiener points out at AlterNet a number have responded positively to this week’s Democratic Party conference call on messaging this, and are actually trying to say, basically, “It’s not such a big cut. Not a big deal. No droids in this car!”
It’s nice to be thought of as an insider.  It’s cool to get invited to the right parties.  And it’s an adrenalin rush to be invited to the White House for an off-the-record briefing or conference call. I can tell you all those things from personal experience. But all those things said, it’s crazy for a Democratic president to shoot the Democrats’ number one Santa Claus program, and it’s crazy for progressives to try to pretend it’s something else.
If Obama goes along with a “chained CPI,” he will be the first Democratic President in the history of the Party to have actually cut Social Security.  Even though it doesn’t do a thing – nothing! – to reduce the budget deficit. And, as we saw with Bill Clinton “reforming” welfare, once the Republicans can corner a Democratic president into shooting a Democratic Santa Claus, the Republicans can finish the job through the death of a thousand paper cuts over the next decade and in the states, and everybody just remembers that it was a Democratic President who started it.
President Obama has brought into his negotiations with Republicans an offer to cut more out of Social Security than he would cut out of the bloated Pentagon budget.  So he’s supporting the Republican’s Santa Claus and shooting the Democrat’s Santa Claus. And, like with Clinton and welfare, this will just be the beginning, once the first cut is made.  Eventually, the bloody carcass of Social Security will be swept up by right-wing cons like Peterson, Simpson, and Bowles, and handed over with a bow and a ribbon to the billionaires on Wall Street.
If President Obama is still pushing a “chained CPI” on December 21st, then maybe the Mayans were right. It is the end of the world as we know it. Or at least the end of the Democratic Party as we knew it.

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