Chained CPI: A direct attack on middle class and working class people

Instead of cuts and tax hikes on working people, elderly and veterans, it is time for “higher taxes on the wealthy”.

"We pay for Social Security all of our lives, through the regressive payroll tax, and most Americans know this even if some of us have been tricked into believing that Social Security contributes to the overall deficit," says author [AP]

Barack Obama “prefers” it. Nancy Pelosi is willing to consider it. The AARP, organised labour, and progressive Democrats in and out of elected office are entirely opposed. 

It is “Chained CPI”, the new favourite bit of jargon being tossed around in very serious policy circles as a possible bargaining chip in a budget Grand Bargain. The consumer price index (CPI) is a measure of inflation that is used to calculate cost-of-living-increases for programmes like Social Security. The “chained CPI” is a different method of calculation that presumes that when the price of one product goes up, people will simply buy something cheaper. Using this formula to calculate Social Security, veterans’ benefits, and other programmes (including, for instance, Pell grants that help lower-income students afford college) would amount to a cut in benefits

Republicans and many Democrats – including, apparently, the President – want to do it. They want to establish the wildly popular New Deal social safety net as part of the problem and they want to cut it. And this little scheme sounds enough like not cutting benefits that the objective press is able to pretend that it is just a technocratic adjustment, really, instead of what it is. (It is also a stealth tax increase.)

Yet Obama’s economic adviser Gene Sperling noted in a Reddit discussion last week that “protections” from the cuts would be necessary for “low-income Americans, certain veterans, and older Social Security beneficiaries”. If we need to protect people from it, how is it good policy? 

Chained CPI is a particularly nasty kind of politics. What it actually does is change the adjustments for cost of living according to “behaviour”. As Thom Hartmann writes: 

“If the price of beef goes up, and some people start eating cheaper chicken instead, then instead of measuring actual inflation (as reflected by the rising cost of meats), the Chained CPI measures the behaviour of moving from beef to cheaper chicken and lowers the cost-of-living adjustment.” 

In other words, screw what you want to eat, what you like. You’re buying the cheap stuff.

Austerity politics

This is tied to a particular kind of personal austerity politics that the Right loves and too many liberals accept, a kind of asceticism that they push on the elderly and lower-income people in a convoluted way rather than just straight-up cutting their monthly allowance. And yet it is a trap – if you adjust to the cheap stuff, you get your benefits cut, so then you have to adjust more to cheaper stuff, and then they cut you again. The cuts aggregate, meaning people who rely on Social Security longer (more women, for instance) get hit harder. 

Of course the obvious next question is, what if people do not want to eat chicken instead of beef? What if grandma wants a steak? We are supposed to assume that desire is simply off the table; for people living on government programmes, you forfeit your right to prefer the tastier food, the pleasure of a well-cooked steak or fresh vegetables from the farm stand, or god forbid a night out at the neighbourhood restaurant. Nope, subsistence level is good enough for you! You want that steak, you should have planned ahead and saved for your retirement! 

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Desire is for the wealthy, this line of thinking goes. The rest of us only get to want as long as we have earned it, as long as our sweat and blood stain every dollar we spend on oysters or steaks or heirloom tomatoes or wine. The poor do not get to want nice things – if they have nice things, they are not really poor, and they must be cheating us out of our hard-earned money. The poor should be like Fantine from this winter’s film adaptation of Les Miserables, selling everything they have, even their teeth and hair, to prove their desperation before they are worthy of the bare minimum. Just buy the chicken. Look grateful. 

Chained CPI is another way to dictate what choices people on benefits can make; for all the lip service paid to freedom and liberty, American politicians do not seem to like the freedom and choice involved when people are given a check and allowed to prioritise what they like. They prefer, instead, the virtues of sacrifice, the willingness to live on less and less in service of some greater good (like “debt reduction” or “keeping the company in business“). The idea that freedom includes the freedom to want more is off the table. 

This is why the people who want to end them refer to social safety net programmes as “entitlements”, because the very word conjures up the image of people who are mooching off the rest of us, feeling entitled to our money without having worked for it. From welfare queens to hipsters on food stamps, we are used to having people demonised for daring to want nice things while relying on government assistance. How many times have you read some columnist ranting about poor people who have big-screen TVs or even microwaves

Cuts and tax hikes

Yet this is the perfect opportunity to push back on this kind of talk, because Social Security is different – we pay for it all of our lives, through the regressive payroll tax, and most Americans know this even if some of us have been tricked into believing that Social Security contributes to the overall deficit. People do feel “entitled” to their Social Security – there is no equivalent stigma for living on Social Security to the ones that come along with, say, Temporary Assistance for Needy Families or SNAP (food stamps).

And so we should start here, then, and say yes, grandma should have steak (or organic kale, or whatever the heck grandma likes best). That she should not suffer weaselly cuts to her monthly income based on the idea that she can just adjust to chicken, or cat food, or whatever costs the least at the neighbourhood grocery. That grandma does not have to continually refine her expectations downward for the rest of her life if she does not want to.

Some politicians agree; Rep Alan Grayson and Rep Mark Takano put out a letter, now signed by many members of Congress, saying they would vote against any and every cut to Social Security or Medicare. Senator Bernie Sanders called it an “economic, moral disaster” and Senator Sherrod Brown, who had proposed legislation last year that would have increased, not cut, cost of living adjustments for seniors, called chained CPI “a direct attack on middle class and working class voters”. Instead of cuts and tax hikes on working people, people with disabilities, the elderly and veterans, they argue, it is time for higher taxes on the wealthy.

Perhaps we could start with raising the cap on payroll taxes?

And then maybe we can go on and argue for better Social Security benefits, for expanded, not just extended, unemployment, for a welfare state that actually works for most people, for the right of every person to want a delicious meal, to feel they deserve it. 

Sarah Jaffe is an independent journalist, a rabblerouser and contributor to Truthout, AlterNet, The Nation, Jacobin and others.

Follow her on Twitter: @sarahljaffe