Nancy Pelosi Says Social Security Cut Proposed By Obama Would 'Strengthen' Program

12/19/2012 07:02 pm ET | Updated Dec 20, 2012

WASHINGTON -- Congressional Democrats, led by House Minority Leader Nancy Pelosi (Calif.), signaled greater willingness on Wednesday to cut Social Security benefits, with the party now considering a change to the way inflation is calculated for recipients.

Pelosi told reporters on Capitol Hill that a cut proposed by President Barack Obama in the fiscal cliff negotiations would in fact "strengthen" the program, echoing the claims often made by Republicans about entitlement programs they want to slash.

Her remarks come a day after she said that liberals in Congress who are unhappy with Obama's concession to the GOP would nevertheless support them.

The cut involves swapping out the traditional method for calculating cost of living increases, based on the current standard for measuring inflation, for something called a chained CPI, or chained Consumer Price Index.

The chained CPI works by assuming that when the price of a product, such as beef, gets too high, consumers don't keep paying the higher prices. Instead, the model predicts they will switch to something cheaper, such as chicken, keeping their cost of living lower and leading to a lower rate of inflation, as measured by the chained CPI. The lower rate of inflation would mean a downward adjustment in cost of living, and thus stingier benefits.

The cuts would start small, but wind up costing beneficiaries thousands of dollars over time, which is why Democrats have traditionally fought the idea.

But Pelosi wrapped both her arms around it Wednesday, insisting she does not regard it as a "cut."

"No, I don’t," she told reporters. "I consider it a strengthening of Social Security, but that’s neither here nor there."

"There’s no use even discussing that because we don’t even know if we have plan," she continued. "And if the savings that the Republicans are talking about is $300 billion, then the cuts to be made on the other side are far lower. And that’s how we see it. But it is interesting to see that even with the concessions on cuts and, what you just described, the chained CPI and things like that -– the president put on the table what everybody has been discussing for quite a long time. And once again, as he did 18 months ago, the speaker walked away. The speaker walked away. There’s an attempt to try to put it at the president’s doorstep, which is completely ridiculous. In fact, some would say, 'befuddling.'"

Earlier in her press conference Wednesday, however, Pelosi seemed to be expressing opposition to the concession. "I’ve said to the members: 'express yourselves,' you know, 'speak out against,' because I’m not thrilled with the president’s proposal, I mean, it is what it is in order to save the day," she said. "But that doesn’t mean that we’ll all identify with every aspect of it. So, they go forth with my blessing."

She also noted that Obama’s plan protects low-income individuals from the Social Security changes, which should quell some of the concerns among Democrats.

Pelosi, in being open to the inflation calculation concession, has some liberal company. Bob Greenstein of the Center on Budget and Policy Priorities has written on behalf of it, and notes that the Center for American Progress, as well as the late Bob Ball, a revered defender of Social Security, have also put forward plans that included it.

She's also far from the only Democrat sending confused signals, decrying Obama's proposal while remaining open to it.

Sen. Tom Harkin (D-Iowa), a longtime defender of Social Security, said Wednesday his support depends on how the proposal is packaged. "A chained CPI that's attached to Social Security, for example, that does not protect lower income, those that are just barely above the minimum in terms of what they're making in Social Security would not be something that I could support," Harkin said. He continued that such a measure should not be part of the current fiscal cliff discussion.

But later is another matter.

"You want to talk about chained CPI, we'll do that later when we talk about the solvency of Social Security," Harkin said.

Others used similarly strong, but vague, language. Sen. Sherrod Brown (D-Ohio) told reporters Tuesday regarding members discussing the chained CPI: "They shouldn't be." But he also added that he didn't know if he'd vote against it. "I'd vote on a whole package," he said. "I very much don't like that [chained CPI]."

Sen. Carl Levin (D-Mich.) said, "It'd be a problem for Democrats," and added that his vote would depend on the overall package.

"I think chained CPI needs to be considered on its own merits," Levin said. "I prefer not. I think we need to look at how it would be implemented. There needs to be considerably more work done. My strong preference is that it not be included."

Pelosi's reasoning on Social Security focuses on the costs of the program. Logically, a way to strengthen it even further would be to cut it much deeper. It's no coincidence that Rep. Paul Ryan (R-Wis.), who takes that argument to its logical extreme, also employs the term "strengthen" when talking about his plan, which slashes Medicare spending. While weakening a program to strengthen it may seem at first to be wholly counterintuitive, it begins to make sense from a different perspective. For beneficiaries, the program is weaker, as it pays out less. But for taxpayers, it's stronger, because the program can meet its obligations for a longer period of time without taxes being raised. The extra costs are borne instead by seniors.

That logic, however, is only ever applied to entitlement programs that have their own revenue streams. Nobody would attempt to argue that the military was strengthened by cutting its budget, or that education was strengthened by slashing funding for it.

Social Security was created in the 1930s to combat elderly poverty. It worked: Giving money to older Americans made them less poor. Shrinking benefits would correspondingly lower their standards of living.

Members of the Congressional Progressive Caucus stood by their opposition Wednesday, pointing to a letter signed last week by 102 Democrats that demanded the chained CPI be kept out of any deals.

“Reducing cost of living adjustments is a Social Security benefit cut," said Rep. Charlie Rangel (D-N.Y.), one of the CPC members. "Any deal that cuts Social Security, Medicare or Medicaid benefits is unacceptable and I will oppose it.”

Ryan Grim and Arthur Delaney contributed reporting.

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