Policy: Economy

Bye-bye, chained CPI

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Politics,Beltway Confidential,Philip Klein,Economy,Chained CPI

Earlier today, the word on the Hill was that the big stumbling block to “fiscal cliff” negotiations was Republicans insisting on using a different measure of inflation (known as chained CPI)  so that Social Security benefits grow at a slower rate. President Obama had proposed making the change as part of a broader deal that would have also raised the debt limit and even touted the concession in an interview on NBC’s “Meet the Press” that aired Sunday morning. But Democrats weren’t willing to embrace the idea as part of a smaller deal and by the afternoon Republican Senators were backing off the idea. “Report that #GOP insisting on changes to (S)ocial (S)ecurity as part of #fiscalcliff false,” Sen. Marco Rubio tweeted, adding that “those changes are supported by @barackobama.”

The demise of the idea isn’t that surprising. Social Security is sacrosanct among Democrats and it was highly doubtful that any deal that included even modest changes to Social Security would have had a chance of passing with Democratic votes, especially in current negotiations in which Democrats know that they can get tax hikes without making any such concessions.

Though it may come up again as part of a debt ceiling fight, the demise of the chained CPI idea is a sad reminder of how difficult it will be to achieve any genuine entitlement reform. This is especially true of Social Security, which Rep. Paul Ryan’s House-passed budget didn’t touch even though it proposed big changes to Medicare and Medicaid.

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