President Obama’s proposed switch to chained-CPI is primarily a Social Security benefit cut and a middle class tax increase. Most importantly, it also an elaborate con. It is a con on the American people that Obama feels the media will allow and/or help him pull off.
It is not a technical improvement. I’ve heard very few economists and basically no one in the administration argue that Chained-CPI is a more accurate measure of inflation. The best proof that Obama actually believes it is a worse measure of inflation is Obama considering it a give to Republicans who want entitlement cuts. If this was really about our official inflation measurements being substantially off there would be real move to fix it as a stand alone action.
This is a benefit cut and a tax increase in a weak disguise. Chained-CPI is a particularly stupid cut to Social Security. It mainly hits the oldest retirees, who are most likely to exhaust private savings and least able to hold part time jobs. It is also an unusually regressive tax increase that hits the middle class the hardest.
The only reason Obama is proposing to cut benefits and raise taxes in this particularly stupid way, is because he believes the media will not do its job. Instead of reporting this simply as a benefit cut and a middle class tax increase the media will continue to muddy the waters on chained-CPI. Either by failing to even mention it as a middle tax increase or confusing the matter with complicated “on one hand and on the other hand” explanations.
To a degree it has worked. The CNN headline only said that Obama would propose “changes” to Social Security. Even among articles that called chained-CPI a Social Security cut, very few pointed out it was also a regressive middle class tax increase.
If the more headlines instead read “Obama wants to break a core campaign pledge against middle class taxes” or “Obama tries to entice Republicans with regressive middle class tax increase” that would significantly reduce the chance of any grand bargain.
So Obama has decided to try to govern by conning. The potential result is not only Obama succeeding in getting the Social Security cut and middle class tax increase voters overwhelmingly oppose, but these changes would be executed in a very poorly designed way.
This is not leadership. This is a cynic deception. Obama should at least have the decency to be honest about what he is trying to force on the American people against their clear wishes.
Photo by SalFalko released under Creative Commons License