POLITICS
03/15/2013 12:11 pm ET Updated Mar 15, 2013

AFL-CIO Won't Back Deficit-Reduction Deal That Includes Chained CPI

WASHINGTON -- With the White House showing openness to cuts in Social Security, officials with the AFL-CIO labor federation said Friday that they would oppose any deficit-reduction deal that included the so-called "chained CPI" change to the entitlement program, even if that theoretical deal included new tax revenue.

"I don't see us supporting a deal that has chained CPI in it," said Bill Samuel, director of government affairs at the AFL-CIO, a close ally in Obama's reelection campaign. "It's a basic cut in benefits for seniors."

Moving to a "chained CPI" inflation index would alter the way cost-of-living adjustments are made for Social Security recipients, slowing increases and thereby reducing the benefits for senior citizens and the disabled. The switch has strong support among Republicans, while many Democrats, including the president, have shown their willingness to embrace chained CPI if it's paired with revenue.

But even if a "grand bargain" type deal were to include closing tax loopholes for the wealthy, AFL-CIO officials said the federation simply couldn't get on board with a package that ultimately reduced Social Security benefits.

"Chained CPI is the biggest dollar cut that anyone in Washington has put on the table in this discussion in a serious way," said Damon Silvers, the AFL-CIO's policy director. "It is clearly the one that would do the most broad-based harm to American families. It is structured in a particularly devious and pernicious way.

"It is not the sort of proposal that any Democrat who [supports] working people wants to be associated with," he added.

As lawmakers try to hammer out a deal to undo the $85 billion sequestration already underway, Obama met with Republican members of Congress on Thursday and reportedly showed his willingness to embrace chained CPI and cuts to Medicare. Later that same day, however, the president calmed Democrats by saying the Social Security cuts were unlikely, considering Republicans haven't budged on the issue of tax revenue -- something the president has said he'll demand in exchange for entitlement reforms.

"I’m not Charlie Brown with a football," Obama told chained CPI critic Rep. Keith Ellison (D-Minn.), co-chair of the Congressional Progressive Caucus, according to Politico. "I haven’t heard anything from Republicans on revenue, so Keith, you can relax."

The AFL-CIO has been among the loudest critics of proposed cuts to Social Security, Medicare or Medicaid as a means of deficit reduction. The labor federation has also called for the wholesale repeal of sequestration -- a highly unlikely scenario, even if few lawmakers seem to like sequestration itself -- arguing that such austerity will devastate a fragile economic recovery.

As for chained CPI, Silvers said the proposal represents the "deeply, deeply wrongheaded approach to economic policy" now being discussed in Washington.

"The cost of living adjustment is what makes Social Security a viable provider of economic security to both senior citizens and the disabled," Silvers said. "Inflation just eats away at people's incomes. People have fixed incomes and it just gets eaten away over time, and recipients get more vulnerable over time."

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