Cuts to Social Security? What Obama is proposing.
In an effort to reach a bipartisan agreement to reduce federal deficits, President Obama is backing a change in the inflation formula used to calculate adjustments in Social Security benefits.
President Obama is embracing some controversial entitlement reforms in an effort to reach a bipartisan agreement to reduce federal deficits.Skip to next paragraph
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Most politically combustible: He’s backing the idea of changing the inflation formula used to calculate annual adjustments in Social Security benefits, in a manner that would save federal dollars and be less generous to seniors.
That’s the word that emerged Friday about the president’s budget proposal, which is set to be released on April 10.
The Social Security idea, called the chained consumer price index or "chained CPI," isn't new. Obama has floated it before, as have bipartisan groups seeking ways to curb a risky buildup of national debt.
Economists say using the new formula might mean Social Security checks would go up by about 0.3 percentage points less per year.
It sounds like a little, but the latest news sparked immediate and vigorous push-back from groups seeking to hold the line against entitlement cuts.
“The American people are overwhelmingly opposed to cutting Social Security benefits, and if Democrats don't want to go down in history as the party that destroyed one of the greatest social programs of all time, they need to stand up and unambiguously reject the president's proposed cuts,” said Becky Bond of CREDO, a progressive political action group, in a statement by e-mail Friday.
Sen. Jeff Merkley (D) of Oregon pounced on the idea in a comment via Twitter: “The formula we use to adjust cost-of-living changes for seniors needs to reflect the real costs they face, not the budgetary fantasies of D.C.,” he said.
"The offer that the president made to Speaker Boehner and which is incorporated in the president's budget is not the president's ideal approach to our budget challenges, but it is a serious compromise proposition that demonstrates that he wants to get things done," Mr. Carney said. He added that Obama "believes that we in Washington ought to do the business of the American people by coming together and finding common ground."
So, what is this “chained CPI” idea all about, and would it gut Social Security or help make the program solvent for future generations?
Here’s a primer on the debate:
Since 2002, the US Bureau of Labor Statistics, which measures official inflation using its consumer price index (CPI), has released an alternative inflation calculation called the chained CPI.
The alternative measure tends to find smaller changes in consumer prices, because it contains extra adjustments for the way consumers might substitute one good or service for another.