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Obama is finally learning - Chained CPI Edition

 
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Kuros



Joined: 27 Apr 2004

PostPosted: Thu Apr 11, 2013 6:06 pm    Post subject: Obama is finally learning - Chained CPI Edition Reply with quote

10 facts Obama does not want you to know about his Social Security budget proposals

Its a regressive tax hike. Moreover, Social Security cuts are unnecessary for deficit reduction. The social security program is projected to be largely solvent if nothing changes. Further, Social Security does not draw upon the same general revenues as does all other taxing and spending.

Quote:
3. And it�s a tax hike for everybody but the wealthy.

In fact, it�s a tax hike on all but the highest levels of income. The richest earnings won�t be affected because they�re already in the highest tax bracket.

Got it? So it�s a tax hike on everybody except the richest among us. (Actually, it�s a tax hike for them too, but only on their lower levels of income. The richer you are, the less you�ll see in a tax-rate increase.)

4. You could save much more money in other, better ways.

The White House has said the chained CPI will save $122 billion in benefits over ten years. Leaving aside the fact that Social Security doesn�t affect the deficit (which we�ll discuss shortly), here�s what isn�t being done:

Close capital gains loopholes: $174 billion.
End the Bush tax cuts at Obama�s original $250,000 level, rather than the compromise $400,000 number: $183 billion.
Cut overseas military bases by 20 percent: $200 billion.
Negotiate with drug companies: $220 billion.
Enact �Defense-friendly� Pentagon cuts: $519 billion.
End corporate tax loopholes (without being �revenue neutral,� as the President�s proposing): $1.24 trillion.
Enact a financial transaction tax on the folks who ruined our economy: $1.8 trillion.

Faced with those numbers, the chained-CPI benefit cut is � well, embarrassing.


Look at that. Obama decided to chip away at FDR's one undoubtedly successful legacy in order to save Wall Street from a financial tax and to avoid serious Pentagon cuts. Let us hope this boogie goes the way of Bush's plan to privatize social security.

You know a President has poor policy instincts when he decides to alter what works rather than address all which is wrong with our system.

Edit: Obama has dropped the chained CPI proposal from his 2015 model budget.


Last edited by Kuros on Thu Feb 20, 2014 4:03 pm; edited 1 time in total
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Unposter



Joined: 04 Jun 2006

PostPosted: Thu Apr 11, 2013 8:37 pm    Post subject: Reply with quote

Agreed. Obama's second term so far has been like his first debate - half-asleep. Even his first term looks better.

...sad.
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Ranman



Joined: 18 Aug 2012

PostPosted: Thu Apr 11, 2013 10:33 pm    Post subject: Reply with quote

Quote:
Agreed. Obama's second term so far has been like his first debate - half-asleep. Even his first term looks better.


As far as I'm concerned, this is year 13 of the Bush presidency. I haven't seen anything different from Bush, to be quite honest. More lip service, but a lot more inaction. Doesn't surprise though. Corporations and Wall Street funded his campaign. They're who he answers to.
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akcrono



Joined: 11 Mar 2010

PostPosted: Thu Apr 11, 2013 11:38 pm    Post subject: Reply with quote

There are two kinds of policy discussions people can have. The first is policy in an ideal world if one were dictator or had a supermajority and are free to implement any policy without resistance or repercussions. The second is a pragmatic policy discussion where one has to take into account all of the political forces at work in a system that prevents some good policy from being a political reality.

This thread (and many others) like to have the first discussion. This is not bad by itself, until one uses such a framework to critique someone who is tied to the second discussion because of their job (Obama). So, before the discussion goes any further, lets agree on some facts:
The GOP is the party interested in "entitlement reform".
The GOP has repeatedly asked for concessions from Obama such as the switch to CPI-U.
The GOP has not put forward any specific "entitlement reform" proposals of their own.
In previous budget proposals, neither the democrats nor Obama showed any interest in CPI-U.

Based on this evidence alone as well as many sources saying the GOP has been pursuing CPI-U it would be more reasonable to conclude that chained CPI was a concession that Obama made to republicans, rather than a change he would make in a perfect world.

I think Obama made a good call here. Not because CPI-U is good (it's objectively bad), but because it's a small change that could satisfy republicans, or at least demonstrate that he is willing to compromise. Both sides need to give something up in order to get what they want, and this seems less dangerous than a lot of the other demands republicans have made.

The downside is that now the republicans can go nuts saying that Obama is destroying social security.
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akcrono



Joined: 11 Mar 2010

PostPosted: Thu Apr 11, 2013 11:54 pm    Post subject: Reply with quote

Ranman wrote:
Quote:
Agreed. Obama's second term so far has been like his first debate - half-asleep. Even his first term looks better.


As far as I'm concerned, this is year 13 of the Bush presidency. I haven't seen anything different from Bush, to be quite honest. More lip service, but a lot more inaction. Doesn't surprise though. Corporations and Wall Street funded his campaign. They're who he answers to.


http://www.forbes.com/sites/nathanvardi/2012/11/07/with-obama-win-wall-street-is-a-big-election-loser/
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Kuros



Joined: 27 Apr 2004

PostPosted: Fri Apr 12, 2013 4:53 am    Post subject: Reply with quote

akcrono wrote:

I think Obama made a good call here. Not because CPI-U is good (it's objectively bad), but because it's a small change that could satisfy republicans, or at least demonstrate that he is willing to compromise. Both sides need to give something up in order to get what they want, and this seems less dangerous than a lot of the other demands republicans have made.


The seniors are the Republicans's base. That's why Republicans favor raising the retirement age for benefits in 30 years, because all those old voters will not be affected (it also happens to be better policy).

Quote:
The downside is that now the republicans can go nuts saying that Obama is destroying social security.


One Republican has called it a shocking attack on Seniors

You say CPI is objectively bad. You should start from there. Really. Your policy instincts are better than Obama's.

The rest of Obama's proposed budget is not terrible, although the lack of deep defense cuts continues to disappoint.
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bucheon bum



Joined: 16 Jan 2003
Location: DC area

PostPosted: Fri Apr 12, 2013 5:22 am    Post subject: Reply with quote

akcrono wrote:
Ranman wrote:
Quote:
Agreed. Obama's second term so far has been like his first debate - half-asleep. Even his first term looks better.


As far as I'm concerned, this is year 13 of the Bush presidency. I haven't seen anything different from Bush, to be quite honest. More lip service, but a lot more inaction. Doesn't surprise though. Corporations and Wall Street funded his campaign. They're who he answers to.


http://www.forbes.com/sites/nathanvardi/2012/11/07/with-obama-win-wall-street-is-a-big-election-loser/


That article didn't disprove Ranman's assertion whatsoever. They still gave him $13.7 million and the article notes Wall St. gave him a ton of money in 2008. It was just about Wall St. giving more money to Romney than Obama. Maybe I missed it, but I don't believe it mentioned policy whatsoever (beyond what Romney might have done).
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akcrono



Joined: 11 Mar 2010

PostPosted: Mon Apr 15, 2013 9:28 pm    Post subject: Reply with quote

Kuros wrote:

Quote:
The downside is that now the republicans can go nuts saying that Obama is destroying social security.


One Republican has called it a shocking attack on Seniors

You say CPI is objectively bad. You should start from there. Really. Your policy instincts are better than Obama's.

The rest of Obama's proposed budget is not terrible, although the lack of deep defense cuts continues to disappoint.

Again, I don't think Obama WANTS CPI-U, I think that's what he's willing to give up in a compromise.

Agreed on defense spending though.

bucheon bum wrote:

That article didn't disprove Ranman's assertion whatsoever. They still gave him $13.7 million and the article notes Wall St. gave him a ton of money in 2008. It was just about Wall St. giving more money to Romney than Obama. Maybe I missed it, but I don't believe it mentioned policy whatsoever (beyond what Romney might have done).


Politics isn't just about who gets money, it's about who gets more money. What they gave to Obama was change compared to Romney and everyone knows it. They picked a winner. Now they have nothing to threaten him with. They can't say "if you don't do what we ask, we'll give your opponent more in the next election". They already did that, and there will be no next election for Obama.

Romney is on record repeatedly promising to repeal current reforms with no alternatives to take their place.
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Ya-ta Boy



Joined: 16 Jan 2003
Location: Established in 1994

PostPosted: Tue Apr 16, 2013 6:41 am    Post subject: Reply with quote

Robert Shrum wrote:

Obama would shift the annual cost of living increases for Social Security to a new formula with the unfortunate name chained CPI. But the consequences for benefits are not draconian, or even substantialand as Ive argued before, the formula has been altered in the past. Its not sacrosanct, a matter of basic principle, even if the program is. Chained CPI would initially yield about $2 less a month in the average Social Security check. And as its effects multiplied, in 20 years, the difference would be $126approximately $2,100 instead of $2,200 a month.

Beyond that, the president of the Center on Budget and Policy Priorities Bob Greenstein,... pointed out that Obama was offering essential offsets to chained CPI: [His] budget includes a series of adjustments and protections for the very old and for people with low incomes... It should prevent an increase in the overall poverty rates among the very old.


Assuming those numbers are right, Obama's offer is reasonable since his ultimate goal is to get the conservatives to accept a tax increase.

As others have mentioned, much bigger 'defense' cuts are in order.
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akcrono



Joined: 11 Mar 2010

PostPosted: Wed Apr 17, 2013 4:11 am    Post subject: Reply with quote

Ya-ta Boy wrote:
Robert Shrum wrote:

Obama would shift the annual cost of living increases for Social Security to a new formula with the unfortunate name chained CPI. But the consequences for benefits are not draconian, or even substantialand as Ive argued before, the formula has been altered in the past. Its not sacrosanct, a matter of basic principle, even if the program is. Chained CPI would initially yield about $2 less a month in the average Social Security check. And as its effects multiplied, in 20 years, the difference would be $126approximately $2,100 instead of $2,200 a month.

Beyond that, the president of the Center on Budget and Policy Priorities Bob Greenstein,... pointed out that Obama was offering essential offsets to chained CPI: [His] budget includes a series of adjustments and protections for the very old and for people with low incomes... It should prevent an increase in the overall poverty rates among the very old.


Assuming those numbers are right, Obama's offer is reasonable since his ultimate goal is to get the conservatives to accept a tax increase.

As others have mentioned, much bigger 'defense' cuts are in order.


Excellent point, but CPI-U also increases taxes in lower brackets. I don't believe that's offset in his budget.
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Kuros



Joined: 27 Apr 2004

PostPosted: Sat May 04, 2013 6:29 am    Post subject: Reply with quote

Meet Joe Middle-of-the-Road

Joe Klein wrote:
It is well past time for political moderates to speak as forcefully as the snake-oil salesmen who are hijacking our democracy.

I include among the demagogues Democrats like Jim Dean--former governor Howard Dean's brother--who recently sent out a fundraising letter titled "Disgusted," which began with this subtle enjoinder: "President Obama's budget has left me absolutely disgusted." Really? Why? Because the President has called for very modest cuts in old-age entitlements. I also include both sides of the abortion debate, public employees' unions that won't change their work rules, the gun lobby--obviously--and its liberal doppelgnger, the civil-libertarian lobby. Innumerable other groups fester, waiting for the chance to raise funds off the paranoia of their supporters. The oil barons and financial wizards and labor unions all use the same maximalist tactics on their targeted politicians: If you oppose us, even a little bit, we'll slide the slippery slope toward socialism (or whatever)--and you will pay come election time.


The labor unions are bad like the financial wizards! Presumably, the labor unions hijack democracy with statements like this:

Chained CPI; Two Million Times No!

AFL-CIO wrote:
The 'Chained' CPI is a benefit cut to a program that does not contribute to the deficit. Do not barter it away in the name of deficit reduction. Stand strongly against all cuts to Social Security, Medicare and Medicaid.


No cuts to Social Security or the Medi-titlements. That's pretty maximalist! So it is also hijacking democracy, right?

Americans will pay for Social Security

Quote:
[A]bout eight in 10 Americans think it is critical to support Social Security even if it means that working Americans have to pay more in taxes. A slightly higher percentage of the 2,000 people surveyed said they think it's critical to save Social Security even if wealthy people have to pay more.


So nearly eight of 10 Americans oppose Social Security benefit cuts. As Big Labor explains:

Quote:
'Chained' CPI is a Social Security benefit cut, plain and simple. One of the key things that make Social Security a real provider of economic security is that it has a cost-of-living adjustment (COLA) that protects the value of benefits as time passes. 'Chained' CPI is a Washington trick to cut the COLA by changing the way inflation is calculated.


Even outlets like NRO, which support Social Security cuts, oppose the chained CPI policy.

Quote:
Yet while Social Security does need to be fixed, and lower benefits for middle and high earners should be a part of the equation, smaller COLAs weaken a feature of Social Security that actually works: The programs generous inflation adjustment counteracts the absence of inflation adjustment in private pensions. And unlike most reforms, which reduce benefits progressively meaning that the poorest pay the least and the wealthiest the most COLA reductions fall hardest on the oldest beneficiaries, who are most at risk of poverty. An 85-year-old is 66 percent more likely to be in poverty than a 65-year-old, but the chained CPI will cut the 65-year-olds by only 1 percent and the 85-year-olds benefits by 8 percent (since the 85-year-old will have 20 more years of having his payment shaved). Moreover, the chained CPI, like CPI-W, doesnt account for the fact that older retirees spend disproportionately on health care, a sector in which inflation is particularly high.

A better policy would peg COLAs to wage growth, which is around 1 percentage point faster than inflation, coupled with a lower initial retirement-benefit level to keep lifetime receipts the same. The lower starting benefit would dissuade workers from retiring too early. Higher benefits later in life would focus resources where the danger of poverty is greatest, as well as compensating for the fact that most nonSocial Security sources of retirement income arent inflation-indexed at all.

And despite reducing payouts to retirees, the chained CPI wouldnt come close to making Social Security financially sustainable. While policymakers have focused on health care, Social Securitys 75-year shortfall rose from $4.3 trillion in 2008 to $8.6 trillion in 2012. Adopting the chained CPI wouldnt even bring Social Securitys deficit back to 2008 levels. Social Security needs fundamental reforms if it is to become both solvent and effective for those who need it the most. And politics matter as well: Conservatives need to pay as much attention to making government programs work better as they do to making those programs smaller.


Chained CPI is a poor way to go about doing an unnecessary thing. Note NRO's implied opposition to the lower-income benefit cuts which chained CPI will bring about. Chained CPI a Joe Middle solution, and that's why Obama has embraced it.

Because Obama is bad at this.
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Kuros



Joined: 27 Apr 2004

PostPosted: Thu Feb 20, 2014 4:05 pm    Post subject: Reply with quote

Obama has shown improvement.

White House abandons Chained CPI

Quote:
A White House official said President Obama decided to release a budget that fully represents his "vision," rather than to continue to pursue a fiscal agreement, because Republicans have refused to engage in good-faith negotiations over the nation's top priorities.

"Last year, the administration took a detour from that path by embedding in the fiscal year 2014 budget a potential compromise that the president had offered to the Republican leadership just a few months prior to the budget release," the White House official said Thursday. But, "Republicans consistently showed a lack of willingness to negotiate on a deficit reduction deal, refusing to identify even one unfair tax loophole they would be willing to close, despite the president's willingness to put tough things on the table."

While that offer remains on the table, the official said, it will not be incorporated into the budget. This proposal comes after a relatively peaceful time in the capital's ongoing budget wars. Congress agreed to a two-year budget plan last year and bypassed another fight over the debt limit earlier this month.


Good decision, Obama.
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