WASHINGTON -- The majority of Senate Democrats running for reelection in 2014, including three running in red states, have broken with President Barack Obama and are opposing his effort to cut Social Security benefits, imperiling the austerity project known as the "grand bargain."
In his most recent budget proposal, Obama included a measure to reduce the cost-of-living adjustment related to senior and veterans benefits as a compromise offer to Republicans. He had already put so-called chained CPI on the table during both debt ceiling and fiscal cliff negotiations with House Speaker John Boehner (R-Ohio), and defended his move this time by emphasizing it was a reform "championed by Republicans leaders in Congress" that would only be made in exchange for new tax revenues.
But Democrats have repeatedly relied on their defense of Medicare and Social Security during election years, and the 2014 crop of candidates are no different: Eight of the 14 Senate Democrats seeking reelection have come out against chained CPI.
Democratic Sens. Kay Hagan (N.C.), Mark Begich (Alaska) and Mark Pryor (Ark.), all running in states won by Republican Mitt Romney in 2012, have publicly opposed the president's effort, going so far as to co-sponsor a Senate resolution against chained CPI last week. Sens. Al Franken (D-Minn.), Jeff Merkley (D-Ore.), Jack Reed (D-R.I.) and Brian Schatz (D-Hawaii), running in bluer states, also co-sponsored the resolution.
"Adequate annual Cost of Living Adjustments are critical for the millions of Americans who rely on these benefits to make ends meet," Sen. Tom Harkin (D-Iowa), who introduced the resolution, said in a statement. "The truth is that the way we currently calculate COLAs is already inadequate to keep up with rising medical costs. The Chained CPI would take us even further in the wrong direction by directly cutting benefits for millions of Americans. This resolution expresses our steadfast opposition to doing so."
Other Senate Democrats up for reelection who didn't sign the resolution were still unfavorably disposed toward chained CPI. Sen. Jeanne Shaheen (D-N.H.) opposes the cost-of-living cut, her office confirmed to HuffPost, and has said Social Security should be off the table in debt talks.
Sen. Chris Coons (D-Del.) has been open to the chained CPI cut, but insisted a "circle of protection" must be established for the most vulnerable Americans.
Begich is taking the cause a step further, announcing two new bills last week aimed at protecting Social Security benefits. The first would eliminate the income cap for Social Security taxes. Currently, income above $113,700 is exempt from FICA taxes. Eliminating the cap would make the program solvent for the next 75 years with no additional reforms needed.
The second bill would push the cost-of-living argument in the opposite direction: Instead of reducing benefits for seniors, it would weight the inflation calculation to account for those products seniors buy disproportionately, such as health care.
Sen. Mary Landrieu (D-La.) has not co-sponsored the resolution, and a spokesperson for Landrieu declined to elaborate. Sen. Mark Warner (D-Va.) hasn't either. As a leading deficit hawk, Warner is a backer of the chained CPI proposal and faces little threat in his home state, where the former governor remains popular.
Opposition to chained CPI had typically been associated with progressive Democrats. That they are now being joined by conservative Democrats, who are thought to be more willing to find middle ground with Republicans on a budget deal, underscores how difficult it will be for Obama to cut Social Security.
"I think the Democratic opposition you have seen against CPI just says if Republicans want a grand deal and they want CPI, then they are going to have to produce votes," said a top Senate Democratic aide. "It isn't going to be 50 Dems and 10 Republicans, but rather something like 40-20 or 35-25."
Finding 20 or 25 Republicans who will support tax hikes is a tall order, however, especially without the buy-in of Senate Minority Leader Mitch McConnell (R-Ky.).
Internal Democratic surveys have found that chained CPI is the least popular entitlement reform of those addressed, according to a Democratic official who has reviewed the polling. Voters said they would raise taxes, lift the retirement age or attempt any other reform that pollsters have presented, rather than reduce the cost-of-living adjustment.
When Obama included the proposal in his fiscal year 2014 budget, progressive critics warned that not only was it bad policy, but it was bad politics and would hurt Democratic candidates, who would be associated with cutting Social Security. Hence last week's Senate resolution.
"It's only an association with our candidates if they agree with it," Guy Cecil, the head of the Democratic Senatorial Campaign Committee, told HuffPost. Washington "tend[s] to view races through the prism of what's happening at the White House, what's happening on the Senate floor and what the president is doing. Voters don't always process races that way, and that's why we try to draw these other contrasts out of the race in terms of their own personal history."
Cecil said that in general he advises Senate candidates not to blindly follow the president. "I think it's advantageous for us to run candidates that are true to what they believe and express that," he said. "The advice that we give to every single candidate is the same: When you agree with the president, you should say so; when you disagree with the president, you should say so; and you shouldn't be ham-handed about either one."
When the American people disagree with the president, it makes the decision easier. A HuffPost/YouGov poll conducted last December found that only 16 percent of Americans said the proposal to switch to chained CPI was a good idea, while 54 percent said it was a bad idea. The proposal was unpopular across the political spectrum, with 56 percent of Republicans, 67 percent of Democrats and 46 percent of independents saying they thought it was a bad idea.
Another December HuffPost/YouGov poll found that a 52 percent to 25 percent majority of Americans said proposals that would cut Social Security or Medicare benefits for future beneficiaries should not even be considered as part of a budget deal.
At the moment, Democratic operatives are counting on the improbability of Obama reaching a budget deal with Republicans. The two parties remain deeply divided on how to reduce the deficit, and there's every chance vulnerable Senate Democrats won't have to vote on a budget that includes chained CPI before the midterm election. And even if a deal were passed, operatives said they were confident Democrats wouldn't bear the brunt of public anger over entitlement cuts in 2014.
Obama has not given up hope of a deal. He followed up his recent high-profile dinner conversations with Senate Republicans by sending two of his senior aides to Capitol Hill to spell out in detail exactly what he was willing to offer to get a grand bargain -- one that would implement austerity by raising taxes and cutting spending.
The April 25 meeting involved roughly 20 Republican senators as well as White House Chief of Staff Denis McDonough and senior aide Rob Nabors, who is the White House's point man on congressional relations. Nabors and McDonough brought with them a PowerPoint presentation outlining what the president was willing to accept in a bipartisan deal.
"Basic message is, here is our plan. We put it on paper. Specifics. You don't like something or want to change something, then fine, but you have to come back to us with your specifics before we ask Senate Dems to sit down and engage," said a Democratic aide familiar with the briefing.
But much like their opponents, Republicans are also skeptical about the prospects of a deal. HuffPost asked Don Stewart, McConnell's spokesman, whether the briefing had led to anything productive. "Has the president dropped his demand for a massive tax hike?" Stewart responded.
Emily Swanson contributed reporting.
CORRECTION: This article has been edited to correct a quote from Sen. Chris Coons (D-Del.). Coons said a "circle of protection" must be established for vulnerable Americans.
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The U.S. incarcerates its citizens at a rate roughly <a href="http://www.parade.com/news/2009/03/why-we-must-fix-our-prisons.html" target="_hplink">five times higher than the global average</a>. We have about 5 percent of the world's population, but 25 percent of its prisoners, according to The Economist,. This status quo costs our local, state and federal governments a combined $68 billion a year -- all of which becomes a federal problem during recessions, when states look to Washington for fiscal relief. Over the standard 10-year budget window used in Congress, that's a $680 billion hit to the deficit. Solving longstanding prison problems -- releasing elderly convicts unlikely to commit crimes, offering treatment or counseling as an alternative to prison for non-violent offenders, slightly shortening the sentences of well-behaved inmates, and substituting probation for more jail-time -- would do wonders for government spending.
End Of The Drug War
The federal government spends more than <a href="http://www.cbsnews.com/8301-18563_162-20072096.html" target="_hplink">$15 billion a year</a> investigating and prosecuting the War on Drugs. That's $150 billion in Washington budget-speak, and it doesn't include the far higher costs of incarcerating millions of people for doing drugs. This money isn't getting the government the results it wants. As drug war budgets balloon, drug use escalates. Ending the Drug War offers the government two separate budget boons. In addition to saving all the money spending investigating, prosecuting and incarcerating drug offenders, Uncle Sam could actually regulate and tax drugs like marijuana, generating new revenue. Studies by pot legalization advocates indicate that fully legalizing weed in California would yield <a href="http://canorml.org/background/CA_legalization2.html" target="_hplink">up to $18 billion annually</a> for that state's government alone. For the feds, the benefits are even sweeter.
Let Medicare Negotiate With Big Pharma
The U.S. has <a href="http://www.reuters.com/article/2009/06/01/us-healthcare-costs-sb-idUSTRE5504Z320090601" target="_hplink">higher health care costs than any other country</a>. We spend over 15 percent of our total economic output each year on health care -- roughly 50 percent more than Canada, and double what the U.K. spends. Why? The American private health care system is inefficient, and the intellectual property rules involving medication in the U.S. can make prescription drugs much more expensive than in other countries. Medicare currently spends about $50 billion a year on prescription drugs. According to economist Dean Baker, <a href="http://www.cepr.net/documents/publications/intellectual_property_2004_09.pdf" target="_hplink">Americans spend roughly 10 times more than they need to</a> on prescription drugs as a result of our unique intellectual property standards. These savings for the government, of course, would come from the pockets of major pharmaceutical companies, currently among the most profitable corporations the world has ever known. They also exercise tremendous clout inside the Beltway. President Barack Obama even <a href="http://www.huffingtonpost.com/2012/09/02/barack-obama-politics_n_1847947.html" target="_hplink">guaranteed drug companies more restrictive -- and lucrative -- intellectual property standards</a> in order to garner their support for the Affordable Care Act.
Offshore Tax Havens
The U.S. Treasury Department estimates that it loses about <a href="http://www.ctj.org/pdf/stopact.pdf" target="_hplink">$100 billion a year</a> in revenue due to offshore tax haven abuses. Sen. Carl Levin (D-Mich.) has been pushing legislation for years to rein in this absurd tax maneuvering, but corporate lobbying on Capitol Hill has prevented the bill from becoming law.
Deprivatize Government Contract Work
In recent years, the federal government has privatized an enormous portion of public projects to government contractors. Over the past decade, the federal government's staffing has held steady, while the number of federal contractors has <a href="http://pogoarchives.org/m/co/igf/bad-business-report-only-2011.pdf" target="_hplink">increased by millions</a>. This outsourcing has resulted in much higher costs for the government than would be incurred by simply doing the work in-house. On average, contractors are paid <a href="http://pogoarchives.org/m/co/igf/bad-business-report-only-2011.pdf" target="_hplink">nearly double</a> what a comparable federal employee would receive for the same job, according to the Project On Government Oversight.
Print More Money
There's an old saying in economics: You have to print money to make money. <a href="http://www.huffingtonpost.com/2012/10/09/underwear-sales-growth-economy_n_1952214.html" target="_hplink">Okay, there's no such saying</a>. Nevertheless, the great boogeyman of many conservative economic doctrines -- inflation -- isn't such a bad idea during periods where much of the citizenry is drowning in debt. Inflation is by no means a perfect remedy: it's a stealth cut to workers' wages. But it also has many benefits that are often unacknowledged by the Washington intelligentsia. Inflation makes housing debt, student loan debt and any other private-sector debt more manageable. Today, when <a href="http://www.corelogic.com/about-us/researchtrends/asset_upload_file448_16434.pdf" target="_hplink">10.8 million</a> homes are underwater -- meaning borrowers owe banks than their houses are worth, moderate inflation could ease that debt burden. By effectively reducing monthly bills, moderate inflation could actually put more money in the pockets of these homeowners to spend elsewhere, thus stimulating the economy. Moderate inflation -- 5 percent or so -- could also help alleviate the <a href="http://www.cbsnews.com/8301-505145_162-57555780/student-loan-debt-nears-$1-trillion-is-it-the-new-subprime/" target="_hplink">$1 trillion</a> in student debt currently plaguing America's graduates. Make no mistake -- hyperinflation of 20 percent, 30 percent or more -- is bad. But the U.S. has ways to crush inflation when it gets out of hand, as proven by the Federal Reserve under then-Chairman Paul Volcker in the early-1980s.
Print Less Money
The government prints a <em>lot</em> of $1 bills. But it turns out that minting $1 coins is much, much cheaper. Over the course of 30 years, the government could save $4.4 billion by switching from dollar bills to dollar coins. Here's looking at you, <a href="http://www.usmint.gov/mint_programs/nativeamerican/" target="_hplink">Sacagawea</a>.
Immigration: Less Detention, More Ankle Bracelets
The government spends <a href="http://newamericamedia.org/2012/04/ice-slow-to-embrace-alternatives-to-immigrant-detention.php" target="_hplink"> $122 per person, per day</a> detaining immigrants who are considered safe and unlikely to commit crimes. The government has plenty of other options available to monitor such people, at a cost of as little as $15 per person. For the first 205 years of America's existence, there was no federal system for detaining immigrants. The process began in 1981.
Financial Speculation Tax
Wall Street loves to gamble. In good times, financial speculation is the source of tremendous profits in America's banking system, but when the bets go bad, the government picks up the tab, as evidenced by the epic bank bailouts of 2008 and 2009. Unfortunately, this speculation is difficult to define in legalistic terminology and even more difficult to police. One solution? By taxing every financial trade at the ultra-low rate of 0.25 percent, the U.S. government can impose a modest incentive against gambling for the sheer sake of gambling. If there's an immediate cost to placing a bet, a lot of traders will choose not to bet. What's more, this tax could raise about <a href="http://www.ips-dc.org/media/why_a_financial_transaction_tax" target="_hplink">$150 billion a year</a> for the federal government.
Taxing greenhouse gases would generate $80 billion a year right now, and up to $310 billion a year by 2050, <a href="http://www.brookings.edu/research/papers/2012/07/carbon-tax-mckibbin-morris-wilcoxen" target="_hplink">according to an analysis by the Brookings Institution</a>. It would also help avert catastrophic ecological and economic damage from climate change.