Topics: Barack Obama

Social Security would grow under Obama 'cuts'

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Photo - Moment of Truth Project graph.
Moment of Truth Project graph.
Politics,Paul Bedard,Washington Secrets,Barack Obama,Fiscal Policy,Social Security,Entitlements

Several programs, notably Social Security, which the White House said would be "cut" under President Obama's fiscal 2014 budget which he's finally unveiling next week would actually grow at close to the currently projected rates, according to experts.

Instead of the "cuts" heralded in headlines today, the president's budget writers are seizing on a formula that simply tweaks the rate of growth. While it could still significantly reduce the projected 10-year budget deficit, it won't cut anything from what seniors, veterans, students and others who rely on the programs get.

In fact, one Senate analysis reveals that the Obama "cut" will lower slightly the growth of Social Security benefits over the next 10 years to 5.9 percent from 6.1 percent.

Ditto for reports on the "cuts" to Medicare. The plan is to reduce future payments in the program to doctors and hospitals, though wealthier recipients might see higher premiums.

Reports today said that the president plans to switch how inflation is measured to account for cost of living increase to something called a "chained Consumer Price Index," which many feel more accurately figures inflation.

The nonpartisan Moment of Truth Project headed by Democrats Erskine Bowles and Alice Rivlin and Republican Alan Simpson issued a report just last month that said the chained C.P.I. won't cut spending, but instead will limit future growth.

"Since 2000, the chained C.P.I. has, on average, been 0.25 to 0.3 percentage points lower per year than the standard C.P.I. measures. Though this difference is small on average, it compounds over time; depending on which index you use, prices have either increased by 34 percent or 29 percent (chained C.P.I.) between 2000 and 2011. Over a longer time frame, this difference would become even more pronounced," their report said.

More bluntly, their report quoted Robert Greenstein of the Center for Budget and Policy Priorities, who said: "This change should not be regarded as a benefit cut or a tax increase. It should be regarded more as a technical change to achieve Congress's stated goal of keeping pace with inflation in as accurate a way as possible."

Plus, Obama would include financial protections for the poor and elderly, so they would be guaranteed from seeing any decreases.

Among the program spending increased tied to the C.P.I are Social Security, Obamacare, veterans benefits, Pell Grants, and taxes such as the alternative minimum tax.

The conservative think tank Heritage Foundation said the change is needed, though agree that it isn't a "cut." Alison Fraser, director of Heritage's Thomas A. Roe Institute for Economic Policy Studies, told Secrets, " I'm actually pleased the president is proposing this - at least for the spending side of the budget. But unsurprisingly, we see Social Security's stalwart defenders, the ones who deny Social Security has any problems despite the incontrovertible facts, are squawking that this will be a cut in benefits. No. By its very definition, using any inflation measure to calculate benefit increases is not a cut. This change would merely slow the growth in benefit increases and put them more in line with inflation experienced by those on the programs."

Still, in Washington, Democrats view reductions in future growth as cuts and are on record as being against the president's plan. They also oppose it because some Republicans have embraced it, which the president hopes is a big enough bone that the GOP will agree to his tax hikes in the budget.

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