This week, I discussed the chained CPI proposal of indexing government spending and taxing, including determining the cost-of-living-adjustment increases for Social Security. For holding the simple common sense view that a slightly smaller increase is not a "cut" (except in the same sense that each year lived longer is an "increase" in benefits) I earned some accolades from The Moment of Truth Project (founded by Simpson and Bowles of the Presidential Fiscal Commission), and very nasty piece of mention calling me a "mentally unstable Obot"
@davidkaib I'm surprised @joetrippi would cite a mentally-unstable O-bot as an authority on Social Security & Chained CPI, but here we arePerhaps that came out of someone commenting on the fact that I have been open and out about having mental health issues about a decade ago, which I was proud to get treated. Isn't it nice to be a "progressive" and be able to make fun of mental health?
— brmull (@brmull) December 22, 2012
Be that as it may, today's discussion is really about something else. It's about rank hypocrisy among the radicals who are hopping mad at the president for offering the chained CPI method of adjusting government spending and revenues as part of the fiscal cliff negotiations. Their position essentially is this: if a slightly smaller COLA increase has to be part of a deal to avoid or end the fiscal cliff, then we should simply go over the fiscal cliff. That it isn't worth it to take that small adjustment to COLA increases because it will hurt the most vulnerable the worst.
Since they are willing to trade the fiscal cliff to maintain a status quo on Social Security's COLA increases, let's see the actual price they are willing to pay.
The big picture: economy and unemployment.
If we go over, and stay over the cliff, here is what happens to the economy - according to CBO's projections (via Jaren Bernstein's blog):
And the unemployment rate?
See how it goes up in CBO's estimation in 2013? Yep.
So, it is entirely accurate to say that those who reject the Chained CPI deal even as a possible compromise measure to avoid or end the fiscal cliff are actively (if not knowingly) advocating for an economic crash, and rising unemployment next year. This might not be their preferred outcome (as the chained CPI is probably not the president's), but they are willing to let this happen simply to protect a 0.3 percentage point adjustment in the cost of living in Social Security. I mean sure, a contracting economy and rising unemployment will also likely affect the lifetime earnings of the most vulnerable the most, thereby reducing their base benefits when they do become eligible for Social Security, as well as reduce the life of the Social Security trust fund by collecting less in payroll taxes, but why would self-proclaimed defenders of Social Security concern themselves with such minutia?
Even beyond the significantly disproportionate burden the poor are likely to suffer in cliff-driven recession, there are other specific things that will rob the most vulnerable in our society should we be unable to find a solution to this cliff.
Expiration of extended unemployment benefits:
Talk about the most vulnerable. Two million people will run out of unemployment benefits in less than 10 days. Another million Americans will lose benefits early next year. That is 3 million people who will have lost their benefits, and for way too many of them, this is the last thread they are hanging on by. Right now. Who is going to tell a grandmother in Maryland that we are going to risk taking away food from her and her grandchild just so we can prevent the menace of "chained CPI?" Perhaps one of you "fighters" would like to step forward?
End of working class tax credits and expanded tax credits:
Off the cliff, on the other side, awaits these for our working class:
- Reduction of child tax credit from $1,000 per child to $500 per child.
- The earned income tax credit would be reduced for larger families and married couples with low income.
The American Recovery and Reinvestment Tax Act of 2009 (ARRA) increased the EITC wage subsidy rate from 40 percent to 45 percent for families with three or more children and increased the start of the credit phaseout range for married couples filing joint tax returns to $5,000 more than that for single workers, up from $3,000 under previous law.Here's a short English translation of that: in 2012, a married couple will qualify for the EITC as long as they have income at or below $18,740 if they have no children (for couples with children, amounts are higher). Post cliff, they will only qualify if their joint income is below $16,740.
- Elimination of the 10% income tax bracket, instantly increasing their tax rate by 50% (to the 15% marginal rate). That means individuals making less than roughly $9,000 a year will pay an extra $450 in federal income taxes, and couples making less than roughly $18,000 will pay an extra $900.
- Increasing middle class taxes by about $2,000 per family.
- Children, young people and education cuts. Some things are protected under sequestration; others are not. Should the fiscal cliff become a reality we would have to live with, it would mean 96,000 less children would benefit from head start, and 80,000 less would lose child care and development services. Special education funding and funding for disadvantaged students would be reduced by over $1 billion each. Don't suppose that could reduce the lifetime earning potential of these children, thereby reducing their social security benefits, hmm?
But that is not all. Beyond clamoring to go past the fiscal cliff for some sort of a perverted political "win," there is this gem:
The ones excoriating Obama over chained CPI are largely the same crowd that tried to kill health reform from the Left.
This is especially important because a key argument for those who oppose the Chained CPI under any circumstances is that seniors' expenses aren't like that of the rest of the population, and that their largest increases in "cost of living" come from increasing medical costs. Beyond the hold harmless provision of the Medicare Part B premiums that prevents Medicare premiums from going up any more than Social Security's COLA increase for most seniors, the president's health care reform achieved key victories to address exactly this challenge:
- The Affordable Care Act eliminates copays for preventive services in Medicare. This alone would make up for any smaller increase in COLA. We would be talking about a senior's Social Security payment increasing to $1027 from $1000 under chained CPI (as opposed to $1030 under current CPI calculations), but if said senior makes a single visit to the doctor's office for a checkup, that in and of itself would make up that $3.
- The Affordable Care Act bridges the prescription drug coverage gap in Medicare Part D. Right now, there is a 50% drug discount for seniors falling into the "donut hole" (could be a definition for 'hardest hit'). When fully implemented, the ACA will eliminate all disparities in coverage in these cases. Hardest hit for medical costs? Once again taken care of.
- The Affordable Care Act expands Medicaid to all individuals up to 138% of the federal poverty line (the average line for seniors to qualify right now is 79% of FPL). The expanded benefit criteria should, once again, take care of those who are the most vulnerable, beginning in 2014.
These purported defenders who are giving us excuses of the chained CPI hitting the most vulnerable the hardest - despite the fact that the president's plan could build in a minimum benefit and a boost for the oldest - are using the poorest as exactly that, an excuse. Because they are perfectly comfortable sacrificing critical programs and benefits for the most vulnerable right now in order to protect an ideological position. They are willing to - and did - oppose policy that would help most the people they purport to be so concerned about.
I would love to have a conversation about the social safety net as a whole, and my belief that we need to expand, not contract it. But we cannot have that discussion honestly as long as ideologues are unwilling to concede that President Obama is the president who expanded the social safety net the most since LBJ (and maybe since FDR). We cannot have that discussion honestly until they are willing to deal with political and Congressional realities. And we cannot have that discussion so long as the poor and the most vulnerable are used as a shield for these ideologues.