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TPM‘s Brian Beutler reports that President Obama and Speaker John Boehner are considering a deal that includes indexing Social Security benefits and tax rates to chained CPI, which has risen more slowly than overall inflation. The Center on Budget and Policy Priorities, a progressive think tank, have endorsed chained CPI under conditions like those in this deal. The deal would also include an increase to the debt limit, defusing Republican plans for what Paul Krugman has called Operation Rolling Tantrum. Might this be part of a good deal?
December 17, 2012 at 6:01 pm
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December 17, 2012 at 6:03 pm
According to both the Washington Post‘s Ezra Klein and the New York Times‘ Paul Krugman, the outlines of the deal look like this:
– Increased tax rates on incomes over about $400,000
– Increased tax revenue by limiting deductions to 28% of income (will almost exclusively impact incomes over $250,000)
– Extends the debt ceiling for a year
– Extends unemployment benefits
– Includes infrastructure spending
All of that is good, but the deal also:
– Indexes both Social Security benefits and tax rates to chained CPI, reportedly with protections for low-income seniors
– Allows the payroll tax cut to expire
As Dr. Krugman writes:
Dr. Krugman’s analysis applies what we discussed last week in revisiting Getting to Yes. Is this a wise agreement? Is it better than President Obama’s BATNA (Best Alternative to Negotiated Agreement)? That is not an easy question to answer, and that it’s so difficult to answer shows this isn’t an awful deal.
December 17, 2012 at 6:13 pm
Tied to an extension of unemployment benefits, I guess I would be a luke warm supporter and think that a deal that included raising the debt ceiling and getting us out of “Operation Rolling Tantrum” would be worth it.
I would not be happy and I guess that I want to know that the millionaires and billionaires and big corporations are also sacrificing proportionately. If they are not also sacrificing I be picking up my phone to protest loudly.
I’d also like this done so we can get to regulating gun safety.
December 17, 2012 at 6:26 pm
The CPI-E would be a better measure to use for Social Security recipients.
If you are going to mess with social security you should eleiminate the tax celling at the same time.
If you are into reducing debt you should include the Wall Street Trading and Speculators Tax Act (H.R. 3313, S. 1787), in the deal.
December 17, 2012 at 6:50 pm
The CPI-E is an experimental measure and, as the CBPP link notes, its use would even higher taxes (payroll or income) to sustain the Social Security trust fund. The CBPP set out conditions for supporting chained CPI, and President Obama seems to have demanded those conditions in the deal. That doesn’t make this a great deal, but it does make it a not-awful deal. Whether it’s better than the so-called fiscal cliff depends on how you weigh the costs and benefits.
December 17, 2012 at 7:01 pm
More sad news: Senator Daniel Inouye has died.