Obama’s Chained CPI Idea Is Bad

Ken AshfordEconomy & Jobs & Deficit, Obama & Administration, Obama Opposition, Social SecurityLeave a Comment

Obama, in attempting to show that he can "give" a little when it comes to cutting the deficits, is about to propose a thing called "chained CPI" when it comes to Social Security benefits.  Basically, it sets Social Security benefits to the inflation rate.

Bad. Bad. Bad.

For one thing, Social Security isn't in trouble.  It's well-funded for the next to decades.  It's not the problem when it comes to the debt.

Secondly, inflation for seniors is not the same as inflation for the country as a whole, and it is likely to be higher.  Why?  Because health care cost inflation is much larger than other areas of spending.  In other words, seniors have a different consumption basket than normal consumers.

But most importantly, it's not going to make the Republicans come to the table on tax increases.  These guys do no compromise, even when you make a compromising gesture to them.  In fact, I'll bet some Republicans are out there right now, preparing ads about how Obama wants to cut Social Security benefits to seniors.

Bad idea.