If This Is The Beginning, God Help Us At The End

Once again, President Obama has taken a rather strange path on the way to negotiating with Tea Party-drunk Republicans.

His latest budget proposal—which includes marrying Social Security to so-called “Chained CPI,” a way to measure inflation that pleases folks at the reactionary Heritage Foundation—may or may not make an acceptable compromise at the end of the budget process and the back-and-forth with the opposition party, but including Chained CPI as part of his initial proposal is no place to start.

And no one summed it up better than the incomparable Robert Reich:

Democrats invented Social Security and have been protecting it for almost 80 years. They shouldn’t be leading the charge against it.

That is exactly—exactly—right. As the former Secretary of Labor notes, Chained CPI is a “stingier” formula for calculating inflation adjustments to Social Security payments than even the current stingy formula. Reich also points out:

Social Security benefits are already meager for most recipients. The median income of Americans over 65 is less than $20,000 a year. Nearly 70 percent of them depend on Social Security for more than half of this. The average Social Security benefit is less than $15,000 a year.

Yet, at the start of budget negotiations with never-give-an-inch Republicans in Congress, a Democrat in the White House is proposing a formula for calculating adjustments to future Social Security payments that, again as Reich reminds us, Paul Ryan didn’t even include in his rayless and Randian budget. That is a weird and seemingly defeatist posture to take at the beginning of what will obviously be some difficult, if not nasty, budget negotiations.

Now, all that having been said, there may be a way to make Chained CPI work as a method to reduce future costs to the Social Security program, but that way must—must—include protection for those folks who, as Reich put it, get relatively “meager” benefits under the program.

Time will tell whether Obama’s relatively solid legacy will be tarnished by his rush to compromise with uncompromising Republicans, but he’s not exactly off to a good second-term start by offering Chained CPI at this point in the budget process.

But the press, always anxious to push the Republican Party’s false but widely believed the-debt-is-killing-us meme, will give the President much credit for pissing off liberals, and perhaps pissing off liberals is exactly why Obama’s budget has that stingier cost-of-living adjustment in it. He can now tell Republicans: “See, look how serious I am about entitlement reform and look at how much anger among my base I have created. Now, let’s dance.”

And Republicans, smelling blood, will say: “Dance? Why, sure, we’ll dance. Especially now that you’re dancing to our music.”

Oh, by the way. One of those Republicans who gets mostly undeserved credit for being “sensible” on budget issues, Senator Bob Corker of Tennessee, called President Obama’s budget plan,

A beginning point.

Yep, a “beginning” point. As this White House has done almost from the start, it begins in the middle and the rest, like the public option-less ObamaCare, is history.

Meanwhile, the economy continues not to produce enough jobs for Americans, wages are stagnant or declining, and wealth inequality is increasing. And just about the only talk about public policies that would help create jobs, increase wages, and narrow the gap between the rich and the poor, is coming from the left, those whom the President has, purposely or not, just pissed off with his Chained CPI proposal.

15 Comments

  1. Crimeny! Sometimes the President simultaneously puzzles me and pisses me off. I voted for him enthusiastically — twice, but find myself in Charlie Brown mode (“arghhhh”) with his willingness to give up captured ground in the war of Tea Party agression. My parents sold their home and moved into a wonderful retirement village almost six years ago. It’s a great place: great staff, great activities, great food, immaculately maintained, spacious. Dad died about 18 months ago, but Mom is doing fine, has lots of friends, and access to assistance on site, should she need it. While her SS income is better than the average, it is not keeping up with the rent/services increases at the retirement village. Not even close. The rental rate is growing at just about twice the rate of her SS increases. It’s insane. When they moved in there was a waiting list for this village. Now, it’s at about 85% occupancy because many of the residents have had to leave (some died, of course) because they can no longer afford the rates. So, Mr. President, let’s make it even tougher for these seniors.
    Really, Mr President? This is the best you’ve got?

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  2. Agreed, the chained CPI is a “stingier” formula, but I think the argument distracts from the root causes of poverty among seniors. I see those as:

    1. Human nature, in failing to save enough for retirement.
    2. Healthcare costs out of control.

    Fixing no. 1 is probably hopeless. Fixing no. 2, which Reich touts as the primary reason seniors need more income, would require the public option or something akin to it. Worrying about indexing adjustments in comparison is like fixing your shingles before the tsunami hits. Unfortunately, Tea Party opposition has (ironically) made “affordable healthcare” virtually impossible by denouncing publicly regulated healthcare. A Captain of a ship can’t effectively command if half the officers and chiefs publicly denounce his policies.

    All that said, I think Robert Reich is the clearest and sanest voice I’ve heard on society’s problems.

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  3. Duane,

    In the overall scheme of things, Social Security, as big as it is, pales in comparison to the massive financial mess our elected leaders in Washington have put us in over the last four decades. To get that perspective, check out David Stockman’s recent post (March 30th) in the New York Times:
    http://www.nytimes.com/2013/03/31/opinion/sunday/sundown-in-america.html?pagewanted=1&_r=2&ref=opinion&pagewanted=all&

    Stockman’s insightful observations into the fiscal plight of the nation should be required reading for all members of Congress and the Obama administration.

    We seem to be spiraling inexorably into an Orwellian world of capitalism unleashed, dancing to the dictates of the Ministry of Truth – War is Peace, Freedom is Slavery and Ignorance is Strength.

    I will now out and buy a case of Scotch.

    Herb

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    • @ Herb,

      I just finished reading the David Stockmen NYT piece you linked. Man, that’s depressing! I have to say that his piece supports my comment on this post, but of course his goes much farther. Skoal. (Cheers would hardly be appropriate.)

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  4. I so hope Obama does not start this compromise and bipartisan b.s. again, which is usually some kind of capitulation to Boehner or McConnell. After winning by such a margin in 2012, he should realize that this is counter to what voters want. I am tired of getting pissed off at my party and their constant backtracking on what the Democratic Party campaigned for, including “hands off” Social Security and Medicare and taxing the higher incomes at an equal rate that the so-called middle class is paying. I really thought that he was going to take a more combative stance against the tea party and radical right-wing Republicans, but this does not look promising.

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  5. ansonburlingame

     /  April 5, 2013

    To all,

    Chained CPI is a very small drop in a very large bucket, period. It will reduce the growth in SS funding requirements only slightly and slightly just won’t fix America’s financial problems.

    But Duane has a good point, given his experiences in negotiation as a union member. I would not “lead” with a concession, either, in such negotiations but would be ready to put it on the table, small as it is, but politically important, to get more from the other side in actual negotiations.

    Now Jim’s point on saving is a rational solution to prevent the issues experienced by the General. I UNDERSTAND General’s personal and family concerns and do not criticize them in any way. BUT we are talking about national policies that must focus on ALL Americans and a million anecdotes about the “poor”, at whatever stage of life, is, well only anecdotal evidence from one side of the problem. That problem, by the way and as you have heard me say time and again is we don’t have enough money to do all we want to do, period.

    There is one point in the Globe article explaining the Presidents’ “leaked” budget. Go check it out. Instead of just the “rich” being used to find money I saw one sentence talking about BOTH, the “rich and upper middle class”. Hmmm, some people call that “grade creep” or words to that effect.

    At some point we will hit the “stops” on taking from only the “rich” and start moving down the food chain. Maybe this is the first step. Pretty soon we may read about “taxing the middle class” as well as just the rich.

    But we can all rest assured that the “poor” will NEVER be called to do something more, like save a litlle money before retirement. Nope not in any Democrat administration, at least, needed or not!!!

    Anson

    PS: Jim, as far as a Captain being able to command a ship despite “public outcry”, well the “ole Navy”, like since Navies began going to sea did it all the time for a few millenia. But now RADM Gaouette at least may agree with you!!! Next time a CO does not like what an admiral tells him, well he can just “write a letter” and get off scot free!!!!

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    • You said, “we don’t have enough money to do all we want to do.” I agree — if what we want to do is make the rich even richer. That’s not what ALL of us want to do, however. When such a small percentage of the population is holding such a huge percentage of the nation’s wealth, what’s left over will not be enough to solve our problems. The solution is to reduce the percentage of wealth that has been funneled to the fat cats over the past 30 years. You have to be a total knucklehead not to see this clearly. You also have to lack any sense of reality to insist that the reason people are poor is that they don’t save enough money for retirement. Wait, I forgot who I was talking to…

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  6. For the sake of my dear mother, I need to clarify: she is not personally in any financial danger. She has other investment income. She and Dad were smart planners, wise investors and modest spenders, but she has many wonderful friends who are really starting to sweat: will they be able to afford the next rent increase?

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  7. ansonburlingame

     /  April 6, 2013

    Good news on that personal front General and I am glad to hear it, for your sake. It was also the “smart thing to do” long ago as well and your mother sure knows that. In some ways I am in “her boat” as well. Take away my SS and I am in a world of hurt at age 70 today.

    As for Brad. Stick it buddy and yep I know who I am talking to as well.

    HOW are we supposed to go about “redistributing money” in a democracy where all men are supposedly equal? We all have the right to pursue happiness for sure but no government right, in my view, to take anyone’s happiness away from them unless criminal gains are employed. To make them criminal you must “write a law” to define it. Now go figure out how to do that and then come back for an argument!!! But today you have to PROVE “Donald Trump”, like him or not did something criminal to become rich before we start “fleecing him” legally.

    When I say WE don’t have the money to “do all we want” I mean the collective WE, all Americans, lock, stock and barrel, collectively. Want more money? Produce it though hard work and value added, but don’t print it for sure.

    Anson

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    • HOW are we supposed to go about “redistributing money” in a democracy where all men are supposedly equal?

      Here’s my take on the answer. Government does it all the time and being a representative-democracy government, it is the logical entity for that function by default, all others being less qualified and more likely to do it poorly. As an example I submit the pay scales for both career active duty and retired military. They are really more arbitrary than they might seem because even though the pay scales are public when people first make a career commitment, they change radically with the winds of politics and of war. We knew that. Pay scales soared after the ’70’s when DOD transitioned from a draft-based Navy to an all-volunteer force and that was before you and I needed to commit, so we benefitted without anticipating it. Had that transition not happened, would we have abandoned our careers at mid-point? I doubt it.

      So what is military service worth? It’s not determined by competitive price but by subjective politics and by contentious political estimates of hard-to-predict military requirements. Same for Social Security, which was never meant to supply full support in old age, merely a minimum and arbitrary safety net. So what it should be is mostly a political question. The bottom line as I see it, as Duane often points out, is what kind of society do we want to live in? My choice is to have seniors (and retired Naval officers) living securely with pride and respect intact and Donald Trump paying extra, a lot extra, because he couldn’t have amassed his monopoly-game real-estate fortune without the little people and all the infrastructure (utilities, etc.) and market they supplied him in this great country. IMHO

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  8. ansonburlingame

     /  April 9, 2013

    Jim,

    A reasonable reply for sure. But of course my situation was a little different in making the decision to stay in the military. For sure it was not a money decision in any way, at least for me. Had it just been about money, then and in retirement, I would have bolted in a moment in the early 70’s when my obligated service was completed. I continued to serve for 23 years on active duty because of reasons totally unrelated to money.

    As to military salaries, essentially to me it seemed to be a supply and demand issue. My class (1965) was the first graduating class that was allowed to enter the nuclear program directly from graduation. All others had to serve at least two years in the fleet before being considered. So I had the brutal Rickover interview process imposed on me while still a midshipman and was “indoctrinated” as a “nuke” immediately after graduation. I never knew another way, based on actual experience to operate in the Navy.

    At the end of 4 years of service my nuclear classmates were leaving the Navy in droves, along with other classes ahead of us. A manpower crunch was looming with continuous sea duty tours being demanded, with no breaks to go ashore for a couple of years. Thus the Navy, with Congressional approval implemented the nuclear bonus program, a “pay to stay in the Navy for four more years” with considerable money paid up front. As a young officer beginning my department head tour as the Engineer Officer, I was the only officer in the wardroom receiving the bonus. CO, XO, and all other Dept heads were senior to me but I was suddenly much “richer” than they were. Not a “popular” spot to begin a three year tour of duty for sure.

    I was no better in any way than those men, yet I received a BIG check as a bonus simply because of supply, demand and the time that I graduated from college.

    As you know, Jim, serving in the nuclear power field in the Navy was not “pleasant”. Putting up with the demands of being a “nuke” was high stress work, all the time. And yes the pay scales for those men continuing to serve escalated, supply and demand, again and again, far faster than contemporaries serving in other parts of the Navy. By the time I was a junior Navy Captain serving in the Pentagon my paycheck was about 1/3 more than classmates serving in different fields in the Navy but at the same rank and time of service.

    Many thought that was “unfair”. But obviously Congress and the Navy thought the cost was required to retain the men to continue to serve, fair or not. But now, as you know, our retirement benefits are exactly the same based only on rank at retirement and time of service on active duty.

    Discussing the need today for such retirement benefits is a whole different subject as well. The issue is that decisions to pay US now were made decades ago for various reasons. What we must pay active duty soldiers and sailors today to keep the needed active duty roles in place is today’s argument, at least for arguments related to retirement pay issues, including HC during that probably and hopefully long retirement for those men, tomorrow.

    There are people (Janes Reaction being a prime example) that disparage my receipt of military retirement benefits today. She would try to put me in some “Donald Trump” category as a “rich fat cat” that does not deserve what I currently receive. I for sure disagree and if she or the federal government try to “fleece me” today, well……..!!! As for how we may “treat” future military retirees in terms of pay and benefit tomorrow, well that is a reasonable political debate for today. Ultimately, supply and demand, how to enlist and retain such men in the military today, will drive that discussion in large part I suspect. It is much cheaper to simply draft men to serve, not pay them competitive wages and benefits to do so. But that has huge problems too, the draft.

    To put a period to the above, what I received in pay and benefits, then and now today, was decided for reasons totally unrelated to give me a pleasant financial situation today. Those decisions were driven primarily for supply and demand back then and had nothing to do with some humanitarian concerns for me, then or later on.

    Anson

    PS: I see I used the phrase “men” only above. Obviously women are now part of that discussion today as well in terms of receit of retirement benefits from the military.

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    • @ Anson,

      I’m glad you reminded me of the nuclear bonus program – I had forgotten it. That was actually an exception to the point I was trying to make, that military pay, like Social Security pay, is more arbitrary than most people believe. (You seem to have completely misunderstood that point and still think it’s a “supply and demand” issue.) The bonus leveraged that basic principle of human psychology which gives exaggerated importance to differences over objective values, <a href="http://en.wikipedia.org/wiki/Abraham_Maslow#Hierarchy_of_Needs"a la Maslow.

      As for Jane Reaction (there’s no “s” on it), I have followed numerous comments of his and can not recall a single instance of disparagement, resentment or jealousy over your retirement pay from him. Maybe I missed it, but if not, you have provided yet another good example of a straw man argument.

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  9. ansonburlingame

     /  April 9, 2013

    Jim,

    I suspect you are telling me the nuclear bonous program was unwarrented. Something probably about fairness in that position, if that is your feeling, that nuclear bonouses should not have been paid. Well without it, we may well have been tying nuclear subs to the piers in the early 70s for lack of men to man them.

    To entice normal sailors to serve in that program you would, FIRST, have gotten rid of the interviews to be selected or lower those standards to “normal” navy expectations, which Rickover would NEVER have done. Nuclear power was too dangerous to do that. Second, nukes put up with more s……. throughout their careers, far more than most can imagine.

    Suggesting the “nukes should not be paid more” simply because they are nukes is like telling a union worker employeed to work in a radiation area routinely that he or she should not be paid more for doing so as well. Try that one on in a civilian labor negotiation in a nuclear occupation workforce!!!

    As for the d……. JR, however he, she or it spells the name, you just didn’t look a couple of years ago. She no longer launches at me personally any more, for reasons I do not know and don’t care either. But if I bothered to go back and do the research, well most of the terms, taken in context, would curl your toes, in glee or disdain, well I’m not sure.

    Anson

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    • No, I am not bashing the nuclear bonus program. I’m quite sure it was totally warranted, given what the Kindly Old Gentlemen demanded of you guys. I wouldn’t have done it for triple the bonus, given the effect on family. I wouldn’t have lasted 3 minutes in the interview.

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  10. ansonburlingame

     /  April 10, 2013

    One other point, if I may,

    The Kindly Old Gentleman, Rickover, refered to by Jim indeed set the standards for every officer that ever served in that navy nuclear program. And as long as he remained on active duty and in charge of that program, he personnaly interviewed EVERY candidate for intitial entry into that program. That was a monumental task for sure.

    For example, on the fateful day that I was interviewed, about 100 or so midshipmen from the Naval Academy were bussed to DC. All of us were put in one big room with nothing to do or read. Then one by one, we were called out for a series of interviews, three altogether, by members of Rickover’s staff. They were all about 45 minutes in length and highly technical.

    At the end of that process, that took about 2-3 hours for each individual, we were called in one at a time to met the KOG, Rickover. That single interview in my case lasted about 1 minute with Rickover screaming at me for various reasons. I thought for sure I had not made the cut, but later, after returning to USNA found out that I did. My guess is about 25 out of the initial 100 did so for that group of midshipmen.

    But all 100 will NEVER forget that long day, about 10-12 hours sitting on pins and needles and scared to death of what was to come down on each of us like a ton of bricks. And THAT was just the beginning of…….!!!

    BUT…… most of the demands on everyone, officer and enlisted, at least by the time that I entered the program, were placed on us by other officers, certainly not Rickover himself. In other words, he, somehow, was able to create his own “bureaucracy” within a larger one, the Navy, that did things that were, well, “unusual” for any bureaucracy.

    Any bureaucracy, a large group of men (in my day at least with no wormen involved) will always have some that seek to just “get by”. the Navy nuclear program was no different in that respect. The only difference was that the standards to “get by” were so HIGH, well you see the results today some 30 years after Rickover’s death.

    Oh that we could find a way to do that in public education, HC, you name it in today’s world.

    Anson

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