Amid news reports that President Obama is considering a proposal from House Speaker John Boehner to slow the growth of Social Security payments over time as part of a broader budget deal to avoid the fiscal cliff, senior Democratic congressional aides are portraying the idea as a more palatable alternative to other benefit cuts Republicans have sought.
As part of a deal that would include higher taxes on top earners and an increase in the debt limit, Republicans are pushing a plan to index Social Security benefits and perhaps tax brackets to a slower-growing measure of inflation called chained CPI.
The plan would reduce Social Security spending by over $100 billion over 10 years by reducing cost of living adjustments, and potentially increase tax revenues by hastening taxpayers into higher tax brackets.
Though progressive advocates staunchly oppose the move to chained CPI, aides note that there is a broader consensus in the center-left and conservative policy communities for re-indexing Social Security benefits, particularly by comparison to raising the Medicare eligibility age — the GOP’s other, more controversial benefit cut proposal. For instance, the liberal leaning Center on Budget and Policy Priorities has conditionally endorsed the chained CPI proposal.
As such, Democrats will be less likely to support chained CPI unless it’s tied to certain conditions — including an extension of emergency unemployment benefits, and a guarantee that the benefit reduction be used to shore up the Social Security trust fund — not to reduce U.S. budget deficits.
The development comes after Boehner conceded that top tax rates will rise as part of any budget deal, and put negotiations between himself and Obama on a significantly sounder footing. However, aides caution that the two men have not reached agreement on every element of fiscal cliff negotiations.
