Weatherford Democrat

March 4, 2014

Yes, we want it; no, we don’t?


Weatherford Democrat

By DONNA BRAZILE

Maybe our media will finally start filtering the noise. 

President Obama will release his 2015 budget next week, and the Beltway babble has already fixated on defense spending and Social Security — and which is the “most unkindest cut of all.”

But there’s more to the budget than meets the sound bite. Does it really include defense cuts and entitlement growth?

To quote Fox News, “The president’s budget includes 215 proposals to cut spending, will raise $680 billion in new tax revenues and reduce future deficits by $600 billion over 10 years.” 

Despite news stories that President Obama is cutting defense spending, he actually is asking for more money. The president’s budget removes sequester cuts, which everyone agrees were harmful to our defense; thus, not counting savings from reorganization and cutting wasteful spending, Obama’s overall budget proposal, as Kevin Drum of Mother Jones points out, “is $115 billion more than the current sequester levels demanded by Republicans.”

When the president announced that the “chained CPI” proposal won’t be in his 2015 budget, we got the cliched hyperventilating that results whenever Obama’s name is mentioned. But there are sound economic — and political — reasons not to chain CPI. The CPI, or consumer price index, is a way to index spending and taxes — including Social Security benefits — to the rate of inflation. (Inflation, of course, is an economic term for the rise in prices over time.) 

There are two ways to calculate CPI: CPI-W, an index for urban wage earners and clerical workers; and chained CPI, an index for all urban workers. Social Security benefits “tick up” slower under chained CPI, adversely affecting the vulnerable and the elderly. The AARP opposes it. The organization points out that if chained CPI is implemented now, someone who retires at 62 will be losing the equivalent of a month’s Social Security per year by the time he or she is 92, as compared to current CPI levels. Chained CPI economically shackles retired citizens who depend on Social Security.

Media reporting has focused on the teeter-totter — the strong pushback by Congressional Democrats against including chained CPI in the budget again (it was proposed in 2013) or the Republican leaders’ charges that leaving chained CPI out shows the president isn’t serious about safety-net program (entitlements) reforms. When one goes up, the other goes down. And vice versa.

Budget debates get messy because the economics get complicated. The politics — the jostling for space on the showroom floor — make budget issues even harder to explain, and to understand.

Still, the president had sound economic reasons not to switch to the chained CPI in his budget: It would hurt seniors and the disabled. He also had sound political reasons. 

When Obama prepared his budget last year, Republican leaders pushed hard for him to include chained CPI. And he did. But then House Budget Committee Chairman Paul Ryan, R-Wis., left chained CPI out of his own Republican budget. He left out Social Security cost savings altogether, and had fewer Medicare savings over the following 10 years than the Obama budget.

More importantly, Rep. Greg Walden, R-Ore., who is chairman of the National Republican Congressional Committee (a campaign operation for House Republicans), savaged Obama for “trying to balance the budget on the backs of seniors.”  Walden called Obama’s chained CPI inclusion “a shocking attack on seniors,” and indicated Republicans would attack Democratic incumbents over it. He and other Republicans also showcased that their own (Ryan) budget failed to include chained CPI, the money-saver that slows the growth of benefits.

House Speaker John Boehner, of course, distanced himself from Walden’s remarks. But still, after pressuring Obama to include chained CPI in the budget, Republicans left it out of theirs. Republican challengers were bent on using Obama’s chained CPI to position themselves as defenders of Social Security beneficiaries. It was to be a major issue in 2014.

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Donna Brazile is a senior Democratic strategist, a political commentator and contributor to CNN and ABC News, and a contributing columnist to Ms. Magazine and O, the Oprah Magazine.