Chained CPI Only Acceptable As Part Of 'Balanced Package,' White House Says

04/07/2013 10:57 am ET | Updated Apr 10, 2013
  • Ryan Grim Washington Bureau Chief, The Huffington Post

WASHINGTON -- White House spokesman Dan Pfeiffer said Sunday that the administration would only implement the Social Security cuts included in its "compromise" budget under two conditions. First, Pfeiffer said on ABC's "This Week," it must be part of a "balanced package" that includes higher revenue and the closure of tax loopholes, and second, it must be coupled with protections for seniors.

The cut to Social Security would re-calculate the cost of living to reduce the income of beneficiaries going forward. Some economists argue that the measurement, known as chained CPI, is a more realistic way of accounting for inflation. They say that when the prices of a certain products rise, people buy different but equivalent products, and are therefore no worse off. The counterargument, of course, is that having less income simply makes people poorer. Meanwhile, health care and other costs that disproportionately affect the elderly continue to rise above the inflation rate, no matter how it's counted.

"This chained CPI that’s being referred to here, it is something the president will only accept on two conditions," he said. "One, it’s part of a balanced package that includes asking -- closing tax loopholes that benefit the wealthiest, and two, that it has protections for the most vulnerable, including the oldest seniors."

The president's move is meant to bring Republicans to the negotiating table in pursuit of a "grand bargain," a term used in Washington to refer to a deal that would reduce the deficit by cutting spending on social programs and raising taxes.

House Speaker John Boehner (R-Ohio) responded to the president's offer on Friday by suggesting that if he wants to cut Social Security, he should just go ahead and do it. “If the president believes these modest entitlement savings are needed to help shore up these programs, there is no reason they should be held hostage for more tax hikes. That’s no way to lead and move the country forward," he said in a statement.

GOP intransigence may be the best hope held by Social Security beneficiaries and future retirees. "If Speaker Boehner’s position, as he said it in that statement, remains his position, then we will not make progress, because what this president will not do is come in, right after getting reelected, and enact a Romney economic plan, which is what the Republicans in the House are proposing," said Pfeiffer.

Sen. Linsdsey Graham (R-S.C.) countered Boehner on NBC's "Meet the Press," saying that "the president's showing a little bit of leg here" by proposing cuts to Social Security. "He showed some leadership," Graham said. "That puts the burden on us."

Graham said that the cuts weren't deep enough, however, and that he'd like to see "four to five trillion" in cuts over a "30-year window." He also said he wanted to see the retirement age raised, a plan he referred to as "harmonizing the age for retirement."

CORRECTION: An earlier version of this story said that Obama was the first Democratic president to propose cuts to Social Security. A proposal from President Jimmy Carter in 1977 proposed indexing changes that effectively cut benefits for future retirees.

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