A Missed Opportunity on Reindexing Social Security
By David Henderson
The low point between the two men [President Obama and Senator Bernie Sanders] was a 2013 meeting with other Democratic senators. Obama had just put a chained Consumer Price Index in his budget, a proposal that would cut Social Security benefits by tying them to the rate of inflation. Many Senate Democrats were angry about it. But when they arrived for the meeting, it was Sanders who bubbled up, ripping into Obama for giving in to Republicans and not understanding the impact of the cuts.
This is from Edward-Isaac Dovere, “The Hidden History of Sanders’s Plot to Primary Obama,” Atlantic Monthly, February 19, 2020.
The article’s focus is the one implied by the title. I found that interesting as political commentary. But the part I found most interesting was the behind the scenes wrangling discussed in the above paragraph.
The 2017 tax cut bill changed the index for adjusting tax brackets from the CPI to the chained index, a move that will make the tax brackets rise more slowly with inflation than they had, thus slowly increasing tax revenues over time relative to the baseline. That could be argued to be a legitimate change because the chained index is more accurate. But I thought at the time that they should also include a provision to adjust Social Security benefits by the same chained index. That would have caused Social Security benefits to rise more slowly over time. That was a lost opportunity. I understand that it was lost because they probably couldn’t have passed the tax bill with the provision. [The reason has to do with an issue called reconciliation; with the provision I wanted, the Senate would probably have needed 60 votes in favor and there just weren’t enough Democrats who would go along with the bill as it was; this would have been an even heavier lift.] Still, it’s disappointing and it’s slightly heartening to see that Obama took the growing Social Security problem seriously enough to propose slightly reining it in.
Note: Dovere is correct but misleading in saying Obama’s proposal “would cut Social Security benefits by tying them to the rate of inflation.” It would have done so: that’s the part that’s correct. But the article could mislead readers into thinking that Social Security benefits were not tied to the rate of inflation. They already were and had been for a number of decades. Obama’s proposal would have tied Social Security benefits to a more accurate measure of inflation.