Obama Proposes Chained CPI
Obama to include Chained CPI in budget proposal. NYT: "President Obama next week will take the political risk of formally proposing cuts to Social Security and Medicare in his annual budget in an effort to demonstrate his willingness to compromise with Republicans and revive prospects for a long-term deficit-reduction deal ... Mr. Obama’s budgetwill propose a new inflation formula that would have the effect of reducing cost-of-living payments for Social Security benefits, though with financial protections for low-income and very old beneficiaries, administration officials said. The idea, known as chained C.P.I., has infuriated some Democrats and advocacy groups to Mr. Obama’s left, and they have already mobilized in opposition."
"President Obama Proposes a Bigger Hit to Seniors Than to the Rich" argues Dean Baker: "President Obama's proposal would reduce benefits by 0.3 percent for each year after a worker retires ... This cut would be a bigger hit to the typical retiree's income than President Obama's tax increases at the end of 2012 were to the typical person affected. A couple earning $500,000 a year would pay an additional 4.6 percentage points on income above $450,000. This would amount to $2,300 a year (4.6 percent of $50,000). That is less than 0.5 percent of their pre-tax income and around a 0.6 percent reduction in their after-tax income. By comparison, Social Security is about 70 percent of the income of a typical retiree. Since President Obama's proposal would lead to a 3 percent cut in Social Security benefits, it would reduce the income of the typical retiree by more than 2.0 percent, more than three times the size of the hit from the tax increase to the wealthy."
Budget Proposal Lays Out "Grand Bargain"
Budget would replace sequester with different mix of tax increases and spending cuts. W. Post: "The deficit, which is projected this year to be equal to 5.5 percent of the size of the economy, would shrink to 1.7 percent of the economy by 2023 ... The budget is more conservative than Obama’s earlier proposals, which called for $1.5 trillion in new taxes and fewer cuts to health and domestic spending programs. Obama is seeking to raise $580 billion in tax revenues by limiting deductions for the wealthy and closing loopholes for certain industries like oil and gas ... The budget would also slice $200 billion from already tight defense and domestic budgets. It would cut $400 billion from Medicare and other health programs by negotiating better prescription drug prices and asking wealthy seniors to pay more..."
Budget would fund expanded pre-K. W. Post: "Obama’s budget, for the fiscal year starting Oct. 1, would fund several new priorities, including the creation of a new program offering preschool to all four-year-olds from low- and moderate-income backgrounds and a significant new investment in brain research. Officials propose an increase in tobacco taxes to pay for the early childhood education initiative and would also seek to generate revenue by limiting how much wealthy individuals can accrue in their tax-retirement accounts."
Time to Spend, Not Cut
We need a bigger, not smaller, deficit, argues Dimitri B. Papadimitriou in LAT oped: "...those of us at the Levy Economics Institute — along with many other analysts and economists — have concluded that the deficit should be increased ... Our economic models clearly show that without increased government outlays we'll be unable to generate enough GDP growth to seriously attack unemployment. If we tried to balance the budget through tax hikes, our still-recovering economy would be hurt. That leaves a temporarily bigger deficit as an important option."
Too many haven't learned the lesson of the Great Depression, says NYT's Paul Krugman: "t turns out that the urge to purge — the urge to see depression as a necessary and somehow even desirable punishment for past sins, while inveighing against any attempt to mitigate suffering — is as strong as ever ... the fact is that these ranters have been wrong about everything, at every stage of the crisis, while the Keynesians have been mostly right. Remember how federal deficits were supposed to cause soaring interest rates? Never mind..."
More cabinet officials, congresspeople take voluntary pay cuts reports NYT.
Pressure on Obama to restore sequester cuts to cancer clinics. The Hill: "About 50 congressional offices, from both parties, have already offered to lobby the administration over cuts to cancer treatment clinics ... Cancer clinics, many of them in rural areas, have already begun turning away new Medicare patients because of unexpected sequestration cuts. Some clinics could be forced to close their doors altogether if the cuts are not reversed quickly..."
