Several commentators have already applauded President Obama for not including a proposal to use the C-CPI-U (aka "chained CPI") price index for COLA adjustments of US Social Security payments, including Bruce Webb, Paul Krugman, and Dean Baker. Longtime Social Security defender Webb declares "we won," referring to those opposing cuts in future SS benefits. Krugman calls it "the end of BowlesSimpsonism." Dean focuses on a Washington Post (aka "WaPo") news story on the matter, finding it just falling all over its own face with silly claims and analysis. I am in complete accord with all of them on this matter, but want to note further the discombobulation and outright visceral anger in an unsigned editorial column today in WaPo that is certainly by Fred Hiatt, WaPo editorial page editor, and one of the most relentless and influential of Washington VSPs pushing for cutting future Social Security benefits in any way possible. It is because of him that the WaPo editorial page has housed several otherwise nominally liberal columnists who have pounded away over and over on this matter spouting his views, including Robert J. Samuelson and Ruth Marcus, none of these people exhibiting a shred of understanding how distorted and silly their position has been over time.
So, Hiatt's editorial is really seething. The subtitle, referring to Obama, is "His surrender on entitlements will make a bad situation worse." After noting his backing off from including the chained CPI proposal (which he still officially supports in principle), Hiatt intones that "This is a huge disappointment," this followed shortly by the claim that this will cost "$162.5 billion over the next decade." Somehow he fails to note that this amounts to about $16 billion per year, on the order of 3-4% of the US current budget deficit, in short, a drop in the bucket. But who cares, this is a matter of Hiatt not getting his way here, goshdarnit!
He continues that "Mr. Obama's rationale for taking the idea out of his budget was openly political," which is true, except that the actual economic case that the C-CPI-U is appropriate for being applied to old people has never been made and in fact does not exist, there being an experimental CPI for the elderly, a chained version of which would clearly be superior, but would raise payments rather than cut them, so must be rejected by the "screw the old people" crowd that Hiatt has been leading for so long. After noting that leftier Dems are pushing for benefit increases and also accepting that Republicans simply are not going to accept the tax increases on the wealthy that Obama had asked for in exchange for his past support of the C-CPI-U, Hiatt complains that facing possible loss of Dem control of the Senate in November, "Mr. Obama has apparently concluded that the expedient course is to bash Republicans rather than to resist bad policy ideas emanating from his own camp," failing to note that Obama is not supporting this benefit increase proposal by lefty Dems and completely ignoring that while Republicans claim never to support tax increases, they did so over a year ago in voting to undo the fica tax cuts that had been part of the stimulus package.
Prior to 2008 there was a case to made for BowlesSimpsonism in broad terms, some sorts of spending cuts to be traded off for some sorts of tax increases in order to reduce the large budget deficits that had emerged during the W. Bush presidency following the surpluses he inherited, thanks to his tax cuts for the wealthy plus wars in Afghanistan and Iraq, etc. Nothing ever came out of those commissions officially because at least some Republicans simply refused to sign onto any tax increases no matter what, even though later they were eager to make the regressive hike in fica taxes without batting an eyelash over their hypocrisy or being taken to task for this by practically anybody in the media, and certainly not Mr. Hiatt or his WaPo Social Security bashers.
However, even prior to the crash when all this whomping up and down about deficit reduction became ridiculous, these commentators, including Bowles and Simpson themselves, continued to tell horror stories about future growth in entitlements, which were ovewhelmingly due to projected increases in Medicare and Medicaid costs, but then say nothing about doing anything about them and focus in public commentary on Social Security, in effect making a political judgment that Republicans would be more willing to raise the regressive fica tax in exchange for cutting future benefits, despite this not being remotely a serious problem in and of itself, rather than doing anything about reining in future medical care cost increases.
The situation has totally changed on several fronts, but Hiatt and his gang of outraged remain stuck in that now ancient and irrelevant time. Amazingly enough, despite its flaws, Obama's ACA appears to have bent the curve of medical care cost increases, or at least that curve has bent, even if it is not entirely due to Obamacare, that horror of horrors. No mention of this in Hiatt's editorial, but this has completely undone the hysterical future stories about deficits, with this being the real reason BowlesSimpsonism is now dead as a doornail, on top of the reality that austerity in Europe has led to renewed recession so that Hiatt's pushes for more austerity are simply silly, despite all his self-righteous huffing and puffing.
Let me close by simply supporting that the most appropriate index be used for Social Security COLA adjustments, an argument that has simply disappeared in this flurry of political flying back and forth. Without doubt this would be the chained version of the experimental CPI for the elderly. Yes, it is true that chained indexes are more accurate than the unchained ones, but the one that should be used is the one that really measures cost-of-living changes for Social Security recipients. That would be this experimental one for the elderly. But consideration of it has never even been on the table.
As it is, maybe Hiatt and his pals will stop and look more carefully at their general push for cutting future benefits for Social Security recipients, now that the C-CPI-U verson of the chained index seems to have been removed from the table for now. If they are really worried about improving future SS budgets, let them call for raising the income cap on fica taxes, which would help alleviate the general income inequality situation we face, although at the moment we do not need any further moves to austerity. As it is, I have not seen any of them mentioning that idea, although Republicans have been keen on cutting benefits for better-off seniors, understanding that this would undermine political support for the program in the future. Even if we cannot seriously hope for greater sanity or even reasonableness on the part of these VSPs, at least for now it looks like their threat to damage future Social Security benefits has receded, and for that at least we can be thankful.