“Laying Out The Best Options”: The Progressive Case For The Chained Consumer Price Index
Liberals are going to have to decide if they’ll stick with the president if the plan he floated this week to cut Social Security benefits by switching to the so-called chained CPI becomes a reality, and it’s not an easy choice. Progressive pressure groups and lawmakers are furious with Obama for proposing the cuts, as I noted yesterday, but House Democratic Leader Nancy Pelosi said she’s confident that her caucus would ultimately support the plan if the president asks them too.
The case against moving to the chained CPI is easy to make: It represents a real cut to seniors’ Social Security benefits, which has so far been a non-starter. Even advocates of the switch acknowledge this. But since we may have to swallow it, it’s worth laying out the best progressive argument possible in favor of the chained CPI. We’re not saying it’s right, but it’s a case that should be made.
And the argument does exist. The Center for Budget and Policy Priorities, one of the most well-respected liberal think tanks on policy analysis, has endorsed the change. As has the Center for American Progress, Washington’s most powerful liberal think tank, which recommended the chained CPI in its comprehensive Social Security reform plan.
The key question is this: Do you believe Obama can get a deal without cutting anything from social safety entitlement programs, or is he going to have to do something? If you fall in the former camp, then the chained CPI is dead on arrival. But, if you think we’re going to have to cut entitlements at some point, then the chained CPI is probably the least bad option of a menu of bad possibilities, including raising the Medicare retirement age, which is the most likely alternative and would be far more harmful.
On its own, the chained CPI is unquestionably bad, but as part of a deal to raise taxes, extend unemployment benefits and do the other good things Obama wants to do, and if it includes major mitigating tweaks, it can be made almost palatable.
First of all, it’s important to note that the CPI formula doesn’t affect just Social Security. Rather, it appears in hundreds of different places on both the revenue and spending side of government. Almost every government retirement, disability and income-support program pays annual cost of living adjustments that are linked to the CPI. On the tax side, dozens of elements, from the standard deduction to limits on contributions to 401K plans to the earned income and child tax credits, are adjusted every year based on the CPI.
The whole point of the CPI is make sure benefits keep pace with inflation on the one hand, and to ensure that people are paying enough taxes as inflation changes on the other hand. So while the chained CPI cuts benefits, it also raises revenues in a way that’s palatable to Republicans. The change is estimated to save about $220 billion over 10 years, $72 billion of which would come from increased tax revenue.
Moreover, both CBPP and CAP, along with many independent economists, believe the chained CPI is a more accurate measure of inflation than the current index, called the CPI-W. The CPI is calculated by measuring price changes in a basket of 250 common consumer goods, but only the chained CPI takes into account that people shift their buying habits in response to price changes. Adjusting for that, the chained CPI grows about .3 percent slower than the current rate.
Liberals rightly note that this substitution effect isn’t really true for the very poor and very old, who spend a disproportionate amount of their income on non-substitutable goods like healthcare and housing. That’s why the only acceptable way to shift to the chained CPI is to include exemptions for some of the most vulnerable groups.
There are two major changes necessary. First, add a bump in benefits to the very old, who are more likely to have high healthcare bills and to have exhausted their savings that supplemented their Social Security income. Second, exempt Supplemental Security Income, which serves the poorest, disabled and blind but still often leaves people below the poverty line. SSI benefits should actually be increased, but that would require a different effort, so it should at the minimum be exempted from the CPI change.
Obama has indicated that he will demand these changes. The Simpson-Bowles and Rivlin-Domenici deficit reduction plans, which both included a move to the chained CPI, also included similar caveats. Nancy Pelosi said the changes would be included in a final deal: “The details of this are not all ironed out, but they all mitigate for helping the poorest and neediest in our society, whether they’re Supplemental Security Income recipients, whether they’re 80 and older or whether they’re truly needy in-between.”
With the changes, CBPP says, “we believe that the chained CPI is a reasonable component of a comprehensive package to put the budget on a sustainable course.”
But wait, aren’t there more progressive ways to change Social Security? Yes, but.
Dylan Matthews yesterday laid out three alternative ways to cut the plan that is far progressive in the economic sense and appealing to progressives in the political sense. Two of the plans are different ways to reduce benefits for the wealthy, while the third option would be to raise or eliminate the tax cap, which prevents any income over about $110,000 from being taxed. These plans would all save far more money than the chained CPI, and do it all by hurting only the rich, unlike the CPI change. Great, right?
There are two major political problems with either approach. The first is in the short term: Republicans will never support raising or eliminating the tax cap as it would be a huge tax increase. Even Democrats would have trouble embracing it, since it would mean raising taxes on people who make under $250,000 a year, whose taxes they’ve promised not to hike.
The second problem is in the long term. Social Security was designed to be not a welfare program but a social insurance program. You get out what you paid into it over many years of working, with only marginal changes to redistribute income downward. Making it a welfare program would undermine the programs long-term political strength.
This was a cornerstone of FDR’s vision for the plan. He had to defend the plan from attacks from the populist left, which called for more aggressive redistribution from general taxation. Some means testing may be possible without transforming the perception of the program into a welfare plan, but it’s a potentially dangerous precedent.
Perhaps the best argument against the chained CPI is that even if it is a more accurate measure of inflation, Congress should not cut benefits because it would be almost impossible to restore or raise them (which is probably what actually needs to happen) through a change in the benefit structure. This would require an enormous congressional fight and Republicans would almost surely kill it, so the current CPI should be preserved, the thinking goes. This is convincing. The only plausible response is a good government argument that the CPI should be used to calculate inflation, not monkey with benefits in a backdoor way.
To Paul Krugman, the plan put forward by Obama is barely acceptable, and anything more would be unacceptable, but he’s not convinced the chained CPI is an outright deal killer.
Since the chained CPI may become a reality, liberals should at least begin thinking critically about it, even if just to decide once again that it is unacceptable.
By: Alex Seitz-Wald, Salon, December 19, 2012
“A Transparent Public Relations Ploy”: Don’t Be Fooled, Walmart Hasn’t Changed Anything
In this week’s issue, we describe how Walmart has expanded gun sales—including military-style assault weapons—to half of its stores nationwide, and is the country’s biggest retailer of guns and ammunition in the country.
As our story was about to be published, Walmart removed a Bushmaster AR-15 style assault rifle, the same gun Adam Lanza used to carry out his attack on the Sandy Hook Elementary School, from its website. All of the other assault weapons remain. (See other examples here).
This is one of the most transparent public relations moves in relation to a dangerous product that I can recall—it was literally the least Walmart could do. To be clear, the store never actually sold the guns online. Rather, you can peruse Walmart’s gun inventory on its website, read customer reviews and product specifications and then find a Walmart near you that carries the item.
All Walmart did was remove that one gun, the one most likely to create a public relations problem, from a website where you couldn’t buy it anyway. But the Bushmaster remains on Walmart shelves—something the retail giant confirmed to MSNBC this afternoon, saying there is “no change” to its firearm sales.
Other retail chains, however, are making changes—though only slightly more substantial than Walmart’s URL adjustment. Dick’s Sporting Goods is “suspending” sales of some rifles in stores nationwide during “this time of national mourning,” and taking all guns out of stores located near Newtown, Connecticut. Cabela’s will stop selling AR-15s in Connecticut only.
If Walmart were to curtail weapons sales, however, it wouldn’t just hurt their bottom line. Freedom Group, one of the largest gun manufacturers in the country with $237.9 million in annual sales, said in its most recent financial statement that Walmart accounts for 13 percent of those sales alone, and warned investors of trouble should Walmart ever change its policy:
Our sales to Wal-Mart are generally not governed by a written long-term contract between the parties. In the event that Wal-Mart were to significantly reduce or terminate its purchases of firearms, ammunition and/or other products from us, our financial condition or results of operations and cash flows could be adversely affected.
Freedom Group was dumped today by its private equity owner, Cerberus Capital, following investor pressure. They’re in for more trouble if Walmart stops selling guns—but don’t look for that to happen anytime soon, based on how the retail giant has responded so far.
By: George Zornick, The Nation, December 18, 2012
“A Culture Of Violence”: The National Rifle Association Is The Problem
As a political consultant and Senate staffer, I have worked for a lot of office holders and candidates who were strong advocates of hunting and the Second Amendment.
For many years, I worked a lot in the West and in rural districts. I cut my share of ads with candidates out in the prairies or the mountains with their guns and dogs. I have also done ads for the Humane Society of the United States that excoriated practices such as bear-baiting, canned hunts, and trophy hunting, as well as ads on animal cruelty.
The defense of hunters was always used by the National Rifle Association as a cornerstone of their programs. They pushed gun safety and the proper care and use of guns; they conducted camps and taught people how to shoot.
But as their power and finances grew, a lot changed. More and more, we were urged to get guns to “protect ourselves” or to become a collector. Guns for guns’ sake. The technology got more and more sophisticated. Weapons could shoot more rapid-fire bullets and the bullets became more lethal. Cop killer bullets, some were called.
The NRA raised more and more money to attack politicians who argued for reasonable checks at gun shows or opposed carrying concealed weapons into schools or churches or community centers. You were either with them all the way or against them—no middle ground.
For the NRA, it became about expansion of gun sales and ammunition sales. Why were 300 million guns not enough? Why do we need assault rifles that can penetrate body armor? Why do we need to lift the restrictions on where guns can be carried?
Follow the money.
Last year, according to the Washington Post, gun sales topped $12 billion. The gun manufacturers collected nearly a billion in profit. There were nearly 6 million guns bought last year. Six million.
This is absurd.
This isn’t about hunting. This isn’t even about protection. This is about money.
The NRA answers to the gun manufacturers, the ammunition makers, but rarely to their members.
I don’t think we will see much at Friday’s NRA press conference: words about kids and families, some minor bromides thrown out. But they are the problem.
I have had it with groups like the NRA who must take a large share of the blame for the culture of violence that engulfs our country. More and better weapons are leading to larger and more devastating slaughters, more murders on our streets, more domestic arguments that turn deadly. Yes, guns kill people. More and more frequently we see their devastation. More and more we see lives and communities ruined. It is time to tell the money-men behind these weapons of mass destruction that enough is enough. It is time we became a civilized nation. It is time to take on the NRA and the gun manufacturers. And, maybe, just maybe, it is time for them to admit the truth and do something about it.
By: Peter Fenn, U. S. News and World Report, December 19, 2012
“Robert Bork’s Legacy”: The Prototype For Republican Entrenchment And Obstruction
Judge Robert Bork has died. But the tradition started by his failed 1987 nomination to the U.S. Supreme Court has sadly become entrenched.
Bork was a conservative hero and a threat to liberals. His nomination to the high court was thwarted not because of his intellectual fitness for the bench, but for his views and lower-court rulings on issues ranging from civil rights to abortion. In a famous address, the late Sen. Edward M. Kennedy warned of the specter of “Robert Bork’s America,” a world in which civil rights and women’s rights were imperiled.
Kennedy was not wrong in his assessment of Bork; nor was he wrong in opposing the nomination of a man who threatened to roll back hard-won advancements in social policy. The senator was criticized for politicizing a Supreme Court nomination, but the same charge could have been made against President Reagan for nominating someone with such a clearly conservative agenda. The trouble is that since then, an ideological witch-hunt has been imposed on a slew of nominees—even those for much less prestigious positions and nonlifetime appointments. The nomination of Donald Berwick, a widely respected physician and health policy maven, was stymied by Senate Republicans who said Berwick shouldn’t head the Centers for Medicare and Medicaid Services because he believed in some version of socialized medicine. The evidence for that was sketchy, based on comments Berwick made praising Britain’s National Health Service. In reality, conservatives just wanted to slow down the implementation of Obamacare while they fought it (unsuccessfully) in court.
Then there was Peter Diamond, who ultimately withdrew his nomination to the Federal Reserve amid threats of a filibuster by GOP Sen. Richard Shelby. Shelby expressed concerns that Diamond’s economic background was not the right sort for the Fed. The Nobel Prize committee had disagreed, awarding Diamond its prize in Economics.
Now, senators are sending subtle threats about putting a former colleague, Chuck Hagel, through the wringer if President Obama nominates him to be Defense Secretary. Hagel is a respected former Nebraska senator, a two-time Purple Heart winner, and was known as an expert on military affairs when he was in office. It’s also a gesture of bipartisanship for Obama to consider someone from the other party to be in his cabinet. But to some lawmakers, Hagel has not been sufficiently toady-like in his allegiance to Israel—actually, his allegiance to the Israeli lobby. The fact that Hagel served his own country in Vietnam and in the Senate seems to have taken a back seat.
Bork may well have been a poor addition to the Supreme Court. But thwarting nominations for the sake of frustrating a sitting president in the other party is the worst legacy his nomination has left.
By: Susan Milligan, U. S. News and World Report, December 19, 2012
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