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The Boston Globe

Opinion

TOM KEANE

Touching the third rail of politics

Democrats balk at a new formula for calculating Social Security

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Tea Partiers are accused of being the intransigent face of the right, the brook-no-compromise folks who’d rather accomplish nothing than give an inch on their principles. But the current dustup over President Obama’s new 2014 budget suggests the Tea Partiers have more than their fair share of counterparts on the left — with the Massachusetts congressional delegation prominent among them.

At issue is the president’s proposal to change the formula for calculating Social Security’s cost-of-living adjustments. Most of us are familiar with the Consumer Price Index — the CPI — which measures the price inflation of a “basket” of goods and services that people typically buy. The CPI is flawed, however. In the real world, it should be based not only on how much prices inflate but also on how we, as consumers, respond to that inflation. Thus, if the price of oranges goes up, I may decide to buy less expensive apples instead.

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That “substitution” effect is poorly captured by the traditional CPI, and the feds have developed an alternative — called “chained CPI” — they think is better. Under chained CPI, cost-of-living increases are generally lower than under the traditional CPI. That makes sense. In that switch to cheaper apples as the price of oranges rises, I’m still getting my federally recommended servings of fruit per day. But my overall cost of fruit wouldn’t increase.

The Obama administration argues that chained CPI is “more accurate,” and so the budget uses it instead of conventional CPI to figure future increases to Social Security. You might think this is common sense. Yet that change has provoked a political firestorm.

Obama and Republicans like chained CPI because, since it shows a slower rise in the cost of living, it will save money over time. But for Democrats and advocates like AARP, the inaccuracy of the conventional CPI is, in fact, its virtue. Because the CPI overstates the effect of inflation, each year’s cost-of-living adjustment is a real (that is, noninflationary) increase in benefits. The president now threatens to take that goodie away.

Doctrinaire progressives such as the Daily Kos, the Progressive Change Campaign Committee, and MoveOn.org are howling with anger. So too are Democrats in Congress. It’s “the first proposal by a Democratic president to start undoing the New Deal” says New York Representative Jerrold Nadler. “Chained CPI will pull people down,” adds Iowa Senator Tom Harkin.

The two Bay State Democrats battling to succeed John Kerry are also loudly opposed, portraying Obama as some hapless, witless tool of the right. “Tea Party Republicans may have pushed the president into many of these difficult decisions,” speculates Representative Edward Markey. Representative Stephen Lynch laments that “negotiations over taxes with the Republicans have forced [Obama] into a bad deal.” Meanwhile, in a posting on her website, Senator Elizabeth Warren says she “was shocked to hear that the president’s newest budget proposal would cut $100 billion in Social Security benefits.”

Overheated rhetoric notwithstanding, chained CPI doesn’t “cut” anyone’s Social Security. It just reduces future increases. Indeed, one would have thought Obama’s proposal far less draconian than other ideas, such as increasing the retirement age or means-testing Social Security. But those too, Democrats say, are off-limits: “We will vote against any and every cut to Medicare, Medicaid, or Social Security benefits” reads an open letter to Obama signed by more than 36 House Democrats. That raises the question: If not Social Security, then where do any future savings come from? The answers offered up are the usual nostrums: undefined “common-sense reforms” and requiring “the rich and giant corporations to pay their fair share.” In other words, from nowhere.

“If we’re serious about deficit reduction, then these reforms have to go hand in hand with reforming our tax code,” Obama told NPR. But Social Security has always been the so-called “third rail” of politics, and Democrats (and a fair number of Republicans) have pandered to crowds for years at the slightest hint of belt-tightening. That’s what makes Obama’s genuine leadership on the issue particularly courageous, while the behavior of progressives and Democrats particularly embarrassing.

The left delights in ripping into Tea Partiers for refusing to negotiate, claiming they’re betraying the nation by making America ungovernable. Et tu, Democrats?

Tom Keane can be reached at tomkeane@tomkeane.com

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