Just FYI, White House National Economic Council director Gene Sperling said today on his Reddit chat that the president really prefers the Chained CPI and that it's not just an inducement to get the Republicans on board with the Grand Bargain.
This may sound obvious, since it's been clear from before the inauguration that the administration wants to "reform" the so-called entitlements. But Sperling made it clear today that they believe in this on the merits:
The cost of living question relates to how the government measures inflation. Today, we use a measure of inflation called the “CPI” or consumer price index. An alternative would be to switch to what is known as the superlative or “chained” CPI. The superlative CPI makes two technical corrections to the standard CPI: it accounts for consumers’ ability to substitute between goods in response to changes in relative prices and accounts for biases arising from small samples. Most experts agree that the Superlative CPI provides a more accurate measure of the average change in the cost of living than the standard CPI.
The President would prefer to have this adjustment in the context of a larger Social Security reform, but he has said to Speaker Boehner that if it is part of a larger agreement that would include tax reform that would raise revenue by cutting loopholes and expenditures from the most well off, that he would be willing to agree to it because in divided government, if we’re going to make progress, we have to be willing to compromise. One important note: any agreement to make this change to the CPI must include a dedication of a portion of the savings to protections for low-income Americans, certain veterans, and older Social Security beneficiaries. Our current offer which reduces the deficit by $230 billion over the next 10 years includes those protections.
I guess that's one of the "opportunities" the president said today that he believes the Republicans are missing out on by refusing his Grand Bargain.
You know, I have never understood the logic that says changing to this new cost of living formula more accurately reflects the real cost of living, but don't worry we will fix the part where it hurts the poor, veterans and really old people. The "real" cost of living should be the real cost of living, no? If it isn't a cut, why would these people be hurt?
The fact is that Social Security is already inadequate for millions and millions of people, and not just the poorest of the poor and veterans. And the losses of the past decade have taken their toll on many more millions who are about to go into the system. For reasons that I cannot completely understand, they want to make it worse. There's just no other way to think about this.
Update: By the way, it was Congressman Alan Grayson who asked the question, "Why it is good policy to reduce the cost of living calculation for Social Security and veterans benefits?" He didn't exactly answer why, but he sure agreed that they think it's good policy.
Rep. Alan Grayson, D-Fla., joins John Fugelsang on “Viewpoint” to weigh in on news that President Obama told Senate Democrats he was open to considering cuts to such federal programs as Social Security and Medicare. “I take no pleasure in saying this because the president is my president — I voted for him twice and he’s the leader of my party — but on this regard the president is wrong,” Grayson says.
Grayson also shares his thoughts on the Congressional budget battle. “This terrible preoccupation with austerity, with deficits, with debt is mistaken,” Grayson says. “The government has never been able to borrow at such low rates for my entire lifetime, in fact, going back 100 years, the government’s never been able to borrow at 2 percent before — that’s what the rates are these days — and that just shows you that there is no fiscal crisis. … We’ve simply given in to the Republican mindset of crises.”