The fraud of the “Chained CPI”
Social Security retirement and disability pensions, along with veterans’ benefits, have a cost of living allowance (COLA) which increases the amount of the benefit to compensate for price inflation. This COLA was already tampered with more than two decades ago, during the George H. W. Bush administration. At that time, Bush economist Michael Boskin partly disabled the COLA to make it understate the real rate of inflation. Now, Obama proposes another adjustment to make the pension increases fall even farther behind the real rate of inflation. The Obama budget calls this trickery the “Chained CPI” or “Superlative CPI,” and plans to use it to gouge $130 billion from the most defenseless elements of American society over the coming decade, with the amount of looting increasing as time goes on. With the Chained CPI, the Social Security benefit would “wither on the vine” until it was virtually worthless, as Newt Gingrich once proposed to do to Medicare.
This senseless destruction can be counted on to increase, rather than decrease, the federal budget deficit. Social Security payments to retirees are an important built-in stabilizer of the US economy, exercising a strong countercyclical effect as they shore up consumer demand. Although such payments cannot generate a true recovery, they can help prevent the depression from getting worse. Take them away or cut them, and economic conditions can only deteriorate.
According to the Huffington Post, “Switching to the Chained CPI immediately would have a more significant impact on the retirement income of seniors than the ending the Bush-era tax cuts would have on the after-tax income of the wealthiest 2 percent of households. For the average worker retiring at age 65, this would mean a cut of about $650 each year by age 75 and a cut of roughly $1,130 each year at age 85.”
Obama’s brutal $1.1 trillion looting of medicare
Obama is also demanding an additional $400 billion worth of cuts to Medicare and other government health programs. These cuts would come on top of the $700 billion in cuts already enacted under the cover of Obamacare, making a total of $1.1 trillion in Medicare cuts over the coming decade. The Obama White House continues to claim that this colossal sum is being extracted only from hospitals, doctors, laboratories, medical equipment manufacturers, and other providers, supposedly with no reduction in the value of the average benefit. Obama’s backers like to pretend that these enormous cuts are simply reducing the sweetheart giveaway to big pharmaceutical manufacturers embodied by Bush the younger in his design of Medicare Part D, the prescription drug benefit. But Obama’s cuts have gone far beyond this. Obama’s cuts have already driven many doctors to refuse additional Medicare patients, and to drop the ones they already have. Smaller hospitals and laboratories are going out of business. Some students see medical school as a bad career choice.
Obama would also means-test Medicare, meaning that a senior receiving an income of $85,000 per year in retirement would see his or her Medicare monthly premium rise from $146.90 to $168. This is a recipe for destroying Medicare, since American history shows that programs generally considered as beneficial only for the poor do not command sufficient political support to survive. Obama would also increase co-pays and co-insurance, meaning the part of medical costs which the individual beneficiary is required to pay.
The Washington Post, MSNBC, and the rest of the corrupt US liberal media have tried to whitewash Obama’s cuts as “savings,” “reforms,” and “bipartisan compromise.” This reflects the prevailing hypocrisy in US ruling circles that demanding savage austerity against the poor and defenseless represents maturity, seriousness, and even courage.
Obama received mild praise from reactionary Republican House Speaker John Boehner, who has long demanded genocidal cuts and privatization for America’s social insurance programs. Responding to Obama’s budget, Boehner grudgingly conceded that Obama deserves some credit for offering what he called incremental entitlement reforms. But, noting that Obama also wants further increases in taxes on the wealthy, Boehner added that Obama must not “hold hostage” these entitlement cuts in an attempt to get more revenue from the wealthy. Ironically, the best hope of preventing Obama from savaging Social Security and Medicare is the stubborn resistance of the reactionary GOP to any more revenue drawn from the rich. Obama needs further tax hikes on the wealthy, however miniscule and symbolic, as a fig leaf to give him political cover as he brutally assaults entitlement beneficiaries.
Right-wing democrat Pelosi says Chained CPI not a cut
Ominously, Democratic House Minority Leader Nancy Pelosi of San Francisco, who hides her right wing substance behind a façade of support for ultra-left lifestyles, has said that she does not consider chained CPI to be a benefit cut. In other words, Pelosi is eager to lie in this service of Obama and his Wall Street backers.
Some thirty-seven Democratic members of the House of Representatives have sent a letter to Obama promising to “vote against any and every cut to Medicare, Medicaid, or Social Security benefits -- including raising the retirement age or cutting the cost of living adjustments that our constituents earned and need.” So far, so good. But this group represents less than half of the 80-member Progressive Caucus, theoretically the strongest supporters of these entitlements. There is also the question of how hard these Democrats are willing to fight the Obama machine.
The newly elected Senator Elizabeth Warren from Massachusetts said she was “shocked” at Obama’s proposal. If so, she was not listening to his speeches, even during last fall’s presidential campaign. Warren’s statement said she was “shocked to hear that the President's newest budget proposal would cut $100 billion in Social Security benefits. Our Social Security system is critical to protecting middle class families, and we cannot allow it to be dismantled inch by inch.” As if to answer the lies of Pelosi, Warren correctly pointed out that “chained CPI is just a fancy way to say cut benefits for seniors, the permanently disabled, and orphans…. Two-thirds of seniors rely on Social Security for most of their income; one-third rely on it for at least 90% of their income…. We can't chip away at America's middle class and break the promise we make to our seniors.” But nowhere in her statement did Warren pledge to use every means at her disposal, including holds and a filibuster, to stop cuts in the economic rights of Americans.
Democratic Senator Sheldon Whitehouse of Rhode Island rejected Obama’s proposal, noting that “the so-called ‘chained CPI’ proposal included in President Obama’s budget is nothing more than a benefit cut disguised behind technical jargon.” Democratic Senator Tom Harkin of Iowa is also opposed, noting that “cutting Social Security is a bridge too far. It's an unnecessary attack on a critical program that, by law, is unable to add to the deficit." Democratic Senator Bernie Sanders of Vermont is one of Obama’s most outspoken critics, stating that he is “terribly disappointed and will do everything in my power to block President Obama’s proposal to cut benefits for Social Security recipients through a chained consumer price index. As chairman of the Senate Committee on Veterans’ Affairs, I also am especially concerned about the impact this change would have on disabled veterans and their survivors." But none of these statements said anything explicit about the obvious need to filibuster Obama’s proposed cuts.
Criticism from the Keynesian economics professor Paul Krugman of the New York Times was surprisingly muted. Former Clinton Labor Secretary and economist Robert Reich recorded a useful attack on the Chained CPI for MoveOn.org, the left liberal pressure group historically associated with financier George Soros. Reich noted that Social Security is legally separate from the federal budget, and therefore should not be included in haggling over deficits and debt. Cutting the Social Security benefit will not do anything to reduce the overall federal deficit.
Anti-austerity demonstration at the White House
An anti-austerity demonstration held in front of the White House on Tuesday, April 9 allows us to gauge the opposition against Obama by progressives and others on the left wing of the Democratic Party. The occasion was the delivery to the White House of a petition bearing 2.3 million signatures gathered by several organizations in strong opposition to any cuts. This petition reads in part: “President Obama, do not propose Social Security and Medicare benefit cuts in your budget. It’s wrong and it’s not what we voted for. We will fight to kill any bill in Congress that includes cuts to these benefits.” One of the petition’s main backers is Social Security Works, a group which claims one million members. Their speaker pointed out that the COLA is already too stingy, and that recipients of reminded every year that they are being unfairly treated.
Among those present was also the Progressive Change Campaign Committee (PCCC), billing itself as the Bold Progressives, and claiming about a million members. Their website features a statement from outspoken Democratic Congressman Alan Grayson of Florida demanding that Obama not cut Medicare, Medicaid, and Social Security.
Obama’s austerity plan seen as “shameful”
Democracy for America, the group founded by 2004 presidential candidate Howard Dean, was represented at the rally by Jim Dean, the former candidate’s brother. Jim Dean condemned the Obama proposal as “shameful,” and pledged that his group would subject any Democratic member of Congress voting in favor of entitlement cuts to the full rigors of a primary challenge. “The era of triangulation is over,” said Dean, referring to Bill Clinton’s notorious practice of positioning himself halfway between congressional Republicans and congressional Democrats in order to advance his own agenda, often at the expense of the American people.
Neil Sroka, another spokesman for Democracy for America, told Business Insider that Obama’s cuts are “slap in the face to Democrats who knock on doors and volunteer for campaigns. "It hits at the very foundation of what it means to be a Democrat, and you're going to see primary challenges emerge. Any Democrat who votes to cut Social Security and Medicare is not a progressive Democrat, and they should be prepared to feel the ire of the progressive base," said Sroka.
Max Richtman of the National Committee to Preserve Social Security and Medicare condemned Obama’s proposal as “malarkey,” and was indignant that the White House spin machine was trying to sell entitlement cuts under the label of the “Superlative CPI.” He urged voters to call their congressman and register their anger. A spokeswoman for the National Organization for Women noted that “Obama is destroying the Democratic brand,” and promised that women voters hit especially hard by entitlement cuts would “remember in November,” voting austerity supporters out of office.
The most comprehensive opposition to Obama’s cuts came from the United Front against Austerity (UFAA). The UFAA is adamantly opposed to any and all austerity cuts. But this group is also prepared to show exactly how the revenue to stabilize the federal budget can be procured. The UFAA is providing key leadership of the effort to impose a 1% Wall Street Sales Tax on all financial transactions, including stocks, bonds, exchange traded derivatives, and over-the-counter derivatives. Such a Wall Street Sales Tax, a more powerful version of taxes already being collected in France, Italy, and Hungary, could procure as much as $1 trillion of additional revenue for the federal government and the states in its first year, depending on how much speculation persisted. The UFAA delegation and slogans at the demonstration were included in the live streaming which showed up on various progressive websites.
The Campaign for America’s Future was there to condemn austerity. MoveOn.org, which claims 8 million members, estimated that under the Chained CPI, an 80-year old woman would lose 3 months’ worth of food purchases every year. “Any Democrat supporting these cuts is asking for a primary challenge,” said their spokesman. StrengthenSocialSecurity.org, the Campaign for America’s Future, and the Alliance of Retired Americans also came out in opposition to Obama’s cuts, often noting that the existing COLA is already too low.
Obama’s gun control ploy acts as cover for cuts
These organizations are very right to fight back against entitlement cuts. However, two caveats are necessary. These organizations on the left wing of the Democratic Party are much weaker in financial terms than their Tea Party counterparts on the Republican extreme right. George Soros, the financial angel of the leftists, appears to be much less generous than the arch-reactionary Koch brothers who notoriously fund the Tea Party fanatics. In addition, many of the progressives are also dividing their efforts between supporting Obama’s demagogic gun control campaign and opposing Obama on entitlement cuts. They choose to ignore the fact that, while gun violence kills thousands, cuts to the social safety net threaten hundreds of thousands and ultimately even millions of lives.
A precursor to Obama’s current attack on the entitlements can be found in the second term of Bill Clinton. At that time, Clinton schemed with the reactionary Republican House Speaker Newt Gingrich to carry out a similar looting operation. Clinton, like Obama, planned to betray and dump the Democratic activist base which had gotten him re-elected in favor of a dirty deal with Gingrich’s Republican caucus. As described in the recent book The Pact, Clinton was hoping to rely on the right wing New Democrats of the Democratic Leadership Council faction to which he and Gore belonged. This monstrous project was, however, aborted when Clinton’s involvement with Monica Lewinsky exploded into a national scandal in 1998. The cowardly New Democrats immediately deserted Clinton, while the populist and New Deal Democrats chose to stand and fight. Clinton could see that, if he persisted in his treacherous attack on the entitlements, he would antagonize his only remaining base, and therefore backed off to avoid removal from office. Today, a modern equivalent of the Monica Lewinsky scandal against Obama would be a godsend.
Obama breaks campaign promises on model of Wilson
Obama’s current treachery recalls that of Woodrow Wilson, who ran for president in 1916 with a promise to keep the United States out of World War I in Europe. Shortly after his inauguration, he demanded a declaration of war against Germany from the Congress. By thus reneging on his main election promise, Wilson condemned the Democratic Party to minority status for a dozen years. By blatantly violating the centerpiece of his 2012 reelection campaign, Obama, who pledged to protect entitlements, is repeating this tragedy of betrayal.
Obama and his faction evidently see the Democratic Party as a loose confederation of ethno-cultural and lifestyle groups, each one practicing its own version of identity politics. This proposition reflects the multicultural orthodoxy currently prevalent in the party. But this is a total misconception. The only way that the Democrats can actually win national elections is by posing as the defenders of the main New Deal, New Frontier, and Great Society reforms associated with Presidents Roosevelt, Kennedy, and Johnson. If this pledge is jettisoned, the identity politics vote will never be enough to allow the Democratic Party to win the White House. This is the danger which Obama is now courting.
The fight over cutting the traditional Democratic Party entitlements will once again expose the dualism between Wall Street Democrats (Obama, Schumer, Durbin, Pelosi, and others) and those tending however confusedly more towards New Deal or populist ideas, such as Elizabeth Warren, Sherrod Brown, Marcy Kaptur, Peter Defazio, and others. There are really two distinct political parties coexisting under the Democratic label. If the Republican Party were to collapse to its natural status as a party of racists, bigots, and reactionaries in the South, the intermountain west, and rural districts, the Democratic Party could be expected to fracture into two separate political entities along the fault line currently being revealed.
But this more promising scenario cannot occur if Obama’s reckless attack on the entitlements collapses the Democratic Party first and leaves the Republicans still intact. In that case, the Republicans are likely to control the Congress in 2014, and the White House in 2016. Once elected, they will create a permanent austerity dictatorship, packing the Supreme Court, crushing the unions, instituting second-class non-voting status for immigrants, and further restricting the franchise for blacks, youth, students, the elderly, and the poor in order to stay in power despite their intrinsic demographic weakness, which is guaranteed to get worse over time.
In short, Obama’s attack on entitlements has appalling implications for the US population, and it also promises to send that the political future of the United States into a tragic abyss. It is therefore imperative to mobilize now against this cruel and stupid policy.
Last Wednesday, April 10, marked a day of infamy for the Obama administration and an ominous watershed in contemporary American history.
On that day, Obama sent to Congress his proposal for the Fiscal Year 2014 US federal budget containing crippling cuts in both medicare and social security, the two mainstays of the remaining US social safety net.
For the first time since the passage of the Social Security Act of 1935, a democratic president has dared to launch a frontal attack on the most important economic rights of the American people, the fruits of centuries of political and labor struggles.
Social security and medicare are widely regarded by the American middle class as benefits which have been earned and paid for by a lifetime of contributions, These are social insurance policies which belong to beneficiaries and are their personal property as much as their homes and other possessions. They are considered as sacred promises. Support for keeping these programs intact, and not cutting them under any pretext, is generally in the range of 75% to 80% in public opinion polling. A poll just released by the American Association of Retired Persons (AARP) found that, among likely voters aged 50 and over, 91% of Democrats and 80% of Republicans are totally opposed to the device for chiseling Social Security known as the Chained CPI.
Since public approval for Medicare and Social Security is so overwhelming, it is widely assumed that, if these programs can be successfully attacked by Wall Street, then no other economic right or entitlement currently enjoyed by the American people can be considered safe.
Since 1935, Social Security has been regarded as the “third rail” of American politics - meaning that any politician seeking to loot, cut, or otherwise tamper with this program was sure to be voted out of office. At the start of his second term in 2005, President George W. Bush announced that he was prepared to expand a significant part of his political capital in order to privatize Social Security. Despite Republican control of the entire federal government (including the presidency and both houses of Congress) between 2005 and 2007, Bush suffered ignominious defeat in this effort.
Obama promised in his initial 2008 campaign that he would not cut Social Security. That promise is now worth nothing. Obama’s demand is for sacrifices by the old, the sick, the needy, the handicapped, disabled war veterans, amputees, widows, and orphans, while Wall Street fat cats and hedge funds like GE pay nothing. Studies have shown that retired women rely more on Social Security, since they earn less during their working lives. Poor people and black people also need these pensions more than the more affluent demographics do. Any person of good will can see that Obama’s policy is both mendacious and morally insane. But this is the reality of the “Grand Bargain” with reactionary Republicans sought by the White House. And, as Senator Sanders has pointed out, fully one fourth of US corporations (including many on Wall Street) pay ZERO federal corporate income tax.