Social Security changes challenge Democrats

Liberals do not like it, but recalculating the cost-of-living adjustments in Social Security benefits is part of the talks over the year-end “fiscal cliff” and may become to Democrats what raising taxes is to Republicans: a powder keg.

Averting a cliff dive next week may well depend on the parties stomaching both possibilities.

When Georgia Democrats talk about Social Security, they sound a lot like their Republican colleagues talking about tax rates.

“It’s certainly not something that is acceptable to me,” Rep. Hank Johnson, a DeKalb County Democrat, said last week when asked about “chained CPI.”

The term refers to changing how inflation is calculated, affecting a slew of policies including Social Security benefits and marginal tax rates. The government currently uses the consumer price index, based on a fixed set of goods. A “chained” consumer price index takes into account the fact that people are likely to substitute more expensive goods for cheaper ones as prices shift, and many economists argue it is a more effective measure of inflation.

And in a town looking for ways to save money, it’s a bonanza: The Committee for a Responsible Federal Budget, a group pushing the chained CPI as part of a budget deal that follows the Bowles-Simpson fiscal commission’s outline, estimates the switch would save $236 billion over the next decade if implemented in 2014.

But much of that money comes out of the pockets of senior citizens by shaving their benefit increases. Even if this is “fairer,” many Democrats object to any serious tinkering with the sacrosanct, FDR-era program. They argue that any savings ought to go to the fast-draining Social Security trust fund rather than deficit reduction.

Johnson said both the Congressional Black Caucus and Congressional Progressive Caucus oppose chained CPI. Atlanta Democratic Rep. John Lewis issued a statement this week complaining that “some are using Social Security as a carrot to get a deal.”

That “some” reportedly includes President Barack Obama, though Lewis was not naming names. Obama is reported to have floated the idea during last year’s debt-ceiling standoff with House Speaker John Boehner, and it has re-emerged this time as a way to wring savings from entitlement programs.

The two remained far from a deal as the weekend arrived, after the House Republican rejection of Boehner’s plan to allow taxes to rise on income over $1 million, which he had figured could give the GOP some leverage. The blowup – coming in dramatic fashion after Boehner prayed aloud “to accept the things I cannot change,” then told his members to go home for Christmas – put a spotlight on the Republicans’ intransigence against even a modest tax increase.

While many Democrats seem to be drawing a red line around Social Security and liberal groups are vowing to hold their feet to the fire Grover Norquist-style, some Democrats are leaving wiggle room.

Atlanta Democratic Rep. David Scott said he was “very much against messing with Social Security or Medicare” but was noncommittal when asked directly if he would refuse to vote for a deal that included chained CPI. “I’m not going to tell you absolutely categorically no because I’ve got to weigh that against (what the) damage will be if this is what it takes for us to avoid the cliff,” he said.

House Minority Leader Nancy Pelosi said last week that she feels chained CPI “strengthens” Social Security, offering a window into the thinking of a woman who has proven to be more effective at vote-whipping than Boehner.

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