Chained CPI COLA Cut Out of the President’s Latest Budget: Another Bit of Good News for Social Security
2014 is shaping up to be a much better year for Social Security than any in the recent past. People seem to finally be recognizing that Social Security is the one leg of the retirement stool that’s working well and providing genuine, much-needed retirement security. And they’re realizing that given this, kicking away at it doesn’t make a lot of sense.
Today provides another welcome bit of news in this regard, with the Obama administration announcing that the cut to the Social Security cost of living adjustment (COLA) that was in their fiscal 2014 budget proposal will not show up again this year.
This is good news. The oft-repeated claim that using the “chained” consumer price index for urban consumers (C-CPI-U) was simply a technical improvement to the Social Security COLA was always flat-wrong. Given that Social Security is the bedrock pillar of retirement income security for so many Americans, paring benefits back is a terrible idea.
Politically, this announcement amounts to yet another confirmation that the pursuit of a budget “Grand Bargain” is dead. Even the best versions of this bargain—near-term stimulus to boost the recovery combined with a mix of tax increases and cuts to Social Security, Medicare, and Medicaid to reduce projected long-run budget deficits—were pretty bad (after all, why would boosting recovery and lowering unemployment be something that only one party cared about and would have to sacrifice something else for?). But given that Republicans in Congress refused to accept stimulus (and instead have demanded, and gotten, extreme anti-stimulus in recent years) or any tax increases, this left only cuts to the social insurance programs that have provided the majority of income growth for low- and moderate-income households over the past generation. Even more bizarrely, these same Republicans refused to actually support any specific cut to these programs and would even attack the president for offering them.
In a nutshell, cuts to Social Security, including the adoption of the C-CPI-U to cut the COLA, are bad policy and bad politics. This makes dropping it from the president’s latest budget a wise move.
So, efforts to cut Social Security are in retreat. Even more hopefully, the case for expanding it has gone from something only liberal bloggers would dare write about to something that a handful of U.S. Senators have started discussing.
Yes, the public debate on Social Security looks to be getting a lot smarter these days, which is awfully welcome.