A Huge Mistake For President Obama

Readers of this blog will know that I was very disappointed when President Obama offered to give the Republicans what they want, by going to a cost-of-living raise for Social Security and Veterans' benefits using the "chained CPI" instead of the real rate of inflation. The "chained CPI" is a much stingier way to figure the rise in inflation, and it will cost seniors and veterans a bit of buying power for every year it is in effect.

There are those who say the difference is small and should be accepted (and have chastised those of us who oppose it). But if you are one of those who depend on Social Security (where the average benefit is only $1000 a month, and many get even less) or a small Veterans' benefit check, then you can't afford to lose even a few dollars in buying power -- and the effect of several years of this loss can be devastating. The problem is that those making the laws have lots of money and don't realize the hardship they would be imposing on millions of Americans with this loss of a "few dollars" each year.

A fellow Texas blogger has now given his opinion of this proposed move to a chained CPI, and I think he's right on target. Manifesto Joe, over at Manifesto Joe's Texas Blues, says the president has made a huge mistake with this proposal. He says:

I've taken a lot of time to weigh the pros and cons of President Obama's proposal for a "chained CPI" to bring about cuts in Social Security, etc. I've read a piece in defense of it, from the Democratic perspective. And, of course, it's not hard to find plenty of excoriations from the left.

I've decided that my sentiments are more with the left. I can appreciate that Obama is a practitioner of "real politics," but he's already tried that with the Republicans for over four years. They've made clear that they're not interested in actually governing.

Obama now stands on the verge of his worst mistake -- not just of his presidency, but of his entire political career. He is about to alienate his core constituency in one more desperate bid to "compromise."

Social Security is indeed a different program than the one created during the New Deal in 1935. Participation isn't voluntary, and demands on the system are far greater. But it has mostly done what it was intended to do. The poverty rate among elderly Americans was once around 50%. Thanks to a compulsory pension system, it's now down to about 10%.

I understand why Obama is trying, one last time I hope, to compromise here. He hasn't been able to get Republicans who still control the U.S. House to sit down at the table and give something up on their "no new taxes" (i.e., no new taxes on big corporations and the super-rich) pledges. New revenue is clearly needed, and two-thirds of big corporations are paying no federal income taxes. In addition, super-billionaire Warren Buffett has acknowledged that he pays a lower percentage of his income in federal personal income tax than does his secretary. And he's far from alone among the richest elite.

Something clearly has to give. But Obama is giving first, as usual. As former Labor Secretary Robert Reich phrased it, "The president throws things on the table before the Republicans have even sat down for dinner."

House Democratic Leader Nancy Pelosi has strong misgivings about the president's strategy. The general feeling among Democrats was expressed well by U.S. Rep. Rush Holt of New Jersey: "If he's trying to do it to show he is forthcoming as a negotiator, then why doesn't he wait until he gets to the negotiating table? There's a lot of talk about the fact that politically this is not a winner. Our brand is the party that brought you Social Security."

In America, this is the day of the locust. I spent 27 weeks unemployed just recently, and for a long time was falling through the cracks. Oh, there are plenty of part-time, temporary and contract jobs, if you want them. Having a lot of medical ailments, I don't have the option of taking jobs that don't offer health insurance. And Social Security is a cornerstone of my someday retirement. It's not an option for me, and I've been paying into the system since I was a teenager.

And the same big corporations that are offering these feces-paying jobs with no benefits are the ones getting by paying little or nothing in corporate income tax. Oh, the rates are comparatively high -- for those who don't have tax attorneys good enough to get them out of paying. It just came out that Facebook not only isn't paying any income tax for 2012, on profits of $1 billion, they may actually get a refund worth nearly $430 million.

I've understood why Obama has done much of what he's done in a game of political hardball with Republicans. But as many times as he's felt their spikes, it's time to start digging his in and saying no. Otherwise, he unwisely risks his core Democratic constituency, and it should be clear by now that nothing's going to get done anyway. The Republicans, who are interested only in power, not in governing, are already trying to score political points by turning up their noses at this idea.

The president needs to abandon the idea of the "chained" Consumer Price Index now, while he still can. Then he should take his case directly to the American people. It's been estimated that U.S. senior citizens could lose as much as $112 billion over 10 years if this idea floats. If they know the facts, they'll certainly say no.