Here's
potentially good news, following Minority Leader Nancy Pelosi's meeting with President Obama Friday.
WASHINGTON -(Dow Jones)- Minority Leader Nancy Pelosi (D., Calif.) reassured angry House Democrats that a proposal to change a key measure of inflation linked to Social Security was not likely to be part of a debt ceiling deal, lawmakers said Friday.
Pelosi calmed Democrats upset over a proposal to change how the Consumer Price Index is calculated that would curb Social Security benefits, dimming the prospects of an idea once floated as an area of bipartisan support.
"She basically reassured the group that there's no way it's going to happen," said Rep. Barney Frank (D., Mass.), following a Friday afternoon meeting of House Democrats in the basement of the Capitol building. "After this, I do not think reducing the CPI in any way is a viable option."
Let's hope so, because a Chained CPI might not be considered a Social Security cut by some of the debt ceiling negotiators, but by any other name it's still a cut.
Social Security benefit cuts may be a bridge too far for House Minority Leader Nancy Pelosi (D-CA). But what if Republicans and Democrats alike just agreed to refer to a benefit cut by another name.
That's how key negotiators have decided to treat one policy proposal, popular in Washington, that would simultaneously raise tax revenues and reduce Social Security benefits....
Experts say the new index (the so-called Chained Consumer Price Index) is a more realistic metric for measuring inflation's impact on peoples' behavior. But the fact remains that if the change goes through as part of a grand bargain to lower deficits and raise the debt limit, retirees will receive less money each month than they're currently promised.
And if you think Democrats are playing dumb because they want a deal, think again. They're some of the biggest supporters of this plan.
"We make the determinations right now for benefits based upon CPIU," Rep. Jim Clyburn (D-SC), one of the Dems' principal debt limit negotiators. He's referring to the current index the government uses to calculate Social Security's Cost of Living Adjustment. And that's what they're talking about changing. "Now the question is will some other look at CPI make sense? And I think that it makes sense to look at it all to see what is an accurate account, a better way to determine benefits. I certainly wouldn't walk away from that kind of discussion."
Now that's not all Democrats, however much Clyburn might love the idea. All indications are that Pelosi and the majority of the caucus are opposed, which hopefully will be enough of a bloc to kill this proposal. The cuts can be described as minimal, a few cents from every check, but as they compound, they become devastating.
In a recent brief, the National Women's Law Center, which opposes reducing the Social Security COLA, turned similar numbers from an earlier SSA memo into a handy chart.
Over the course of a retirement, that can add up to many thousands of dollars.
The Chained CPI takes into account how consumers change their behavior when prices rise. Say the price of beef goes up, people buy more pork or chicken. Or when heating fuel prices rise, and people just turn down the heat and put on another sweater. For seniors, on extremely fixed incomes who might already have foregone beef and heating fuel, further behavior changes will be hard to make. And as Atrios points out, neither formula, this one or the one currently in use "actually looks at what old people consume which is, you know, health care." If anything, seniors should be getting bigger COLAs in this economy.