President Obama's budget proposal to be unveiled next week will include cuts to Social Security and Medicare, according to media reports Friday morning.
The most controversial element of Obama’s proposal is the inclusion of “chained CPI,” the adjustment that would over time reduce cost-of-living increases to Social Security and other federal benefit programs — effectively, a cut to Social Security benefits by tying them to inflation. He also calls for $9 billion in new tax revenue by setting limits on “tax-preferred retirement accounts for millionaires and billionaires.”
Switching to a chained CPI "is not a minor tweak, as its proponents contend," Sen. Bernie Sanders (I-Vt.), founder of the Defending Social Security Caucus, stated on Friday. It represents a real cut in benefits, as many progressives have pointed out.
And as liberal blogger Digby noted, Obama has the dubious honor of being the first "Democratic president [that] has officially proposed to cut the Democratic Party’s signature New Deal program, Social Security."
In a statement on Tuesday, Sanders offered a reminder that "In 2008, candidate Barack Obama told the American people that he would not cut Social Security."
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The President's marketing strategy will be to say that Obama had to do this because it was necessary to get a deal with Congressional Republicans to raise taxes.
But from the point of view of the interests of the 99%, there is no urgency or benefit to getting a deal to raise taxes if Social Security cuts are the price of doing so. Raising taxes, even raising taxes on the 1%, isn't an intrinsic good. Raising taxes on the 1% is a good thing if it enables the government to do good things and avoid doing bad things. Raising taxes on the 1% is a bad thing if it enables the government to do bad things and avoid doing good things.
If there is no "grand bargain," then under the sequester, the Pentagon budget will be cut and Social Security benefits will be protected. If there is a "grand bargain" - a "Grand Betrayal" - Social Security benefits will be cut and the Pentagon budget will be protected. Thus, to be only a little bit crude, the "grand bargain" is about cutting Social Security to protect the Pentagon budget. Raising taxes on the 1% as part of a deal to cut Social Security and veterans' benefits and protect the Pentagon budget for wars and useless military junk is a bad deal for the 99%.
"If Obama is serious about dealing with our deficit he would not cut Social Security – which has not added one penny to the deficit," stated Sanders. "Instead, he would support legislation that ends the absurdity of one out of four profitable corporations paying nothing in federal income taxes. He would also help us close the offshore tax haven loopholes that enable large corporations and the wealthy to avoid paying $100 billion a year in federal taxes."