President Obama Social Security The Daily Banter

The President’s Social Security Plan is a Really, Really Bad Idea

My Monday column and the worst idea the president’s had in a long time:

Late last week, President Obama successfully incited new levels of fury from most of the same liberals who are generally infuriated with him in the first place by floating the truly stupid idea of linking Social Security cost-of-living-adjustments (COLAs) to something called “chained CPI” (chained consumer price index). And, frankly, he didn’t win any points with me either.

Briefly put, Social Security benefits are routinely hiked by a few percentage points each year based on inflation. Lately, those bumps have been scarce and more than a little weak, but adjustments based on chained CPI would be even weaker because the government would presume that as retail prices increase with inflation seniors will substitute lower-cost items. In other words, the government currently calculates benefits based on inflation, but with chained CPI, the government would calculate benefits based on an assumed consumer reaction to inflation (buying cheaper stuff). Consequently, Social Security benefits would be reduced to follow this assumption.

Yeah, it sucks. And the president, while attempting to play the role of the grown-up in the room and apparently taking responsible steps toward deficit reduction and Social Security salvation, is only managing to wrap his entire presidency around the big political third rail. It’s not as huge as George W. Bush’s second term embrace of Social Security tinkering, but it’s a bad move.

Not only is the idea a punitive one for seniors, but the president is also fueling a series of inside-DC myths. [continue reading here]