Social Security: Taking reform off the table

last updated 8 January 2015

Say farewell to the dream of entitlement reform, said Jonathan Chait in NYMag.com. The White House announced last week that President Obama’s 2015 budget will not include a plan that Republicans support to reduce Social Security costs. That plan is a new way of calculating cost-of-living increases in monthly Social Security checks, known as “chained CPI,” and would save $162.5 billion over the next decade, according to the Congressional Budget Office. In previous “Grand Bargain” negotiations with congressional Republicans, Obama had offered to adopt chained CPI in return for Republican support for closing tax loopholes that benefit only the rich—thereby spreading the pain of deficit reduction. Republicans said no, because of their fanatical hatred of both Obama and tax increases of any kind. Since it’s now clear that Republicans “will never, ever, ever strike a fiscal deal with him,” Obama is pulling changes to Social Security off the table, as liberals exult and conservatives erupt in hypocritical “anguished wails.”

Politics aside, the president’s abandonment of chained CPI is “a huge disappointment,” said The Washington Post in an editorial. The proposal would be a major step toward budgetary sanity and “imposes only modest sacrifice on the vast majority of Americans.” Obama is being both “cynical and irresponsible,” said Kevin D. Williamson in NationalReview.com. Just consider how relatively painless this reform would be. For every $1,000 in benefits, Social Security recipients would get $3 less in future increases under chained CPI. That’s “a trivial amount of money for the individual,” but collectively, it would produce a major reduction in our deficit spending.

Who says it’s trivial? said Terry O’Neill in HuffingtonPost.com. When compounded year after year, chained CPI would make a big dent in cost-of-living increases. Women who spent much of their working years at home, caring for children, would be particularly hard-hit, since they often reach retirement years with smaller savings and no pensions. In effect, this “reform” could mean that a future 80-year-old retiree would lose roughly a week’s groceries every month. To head off “unsustainable” deficits in the future, though, everyone must make sacrifices, said Jon Healey in the Los Angeles Times. Sadly, “Washington simply isn’t capable of making the sort of compromises necessary.” Dreams of a Grand Bargain are dead, at least for this presidency.