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Obama’s budget worries Social Security defenders

Fear ‘chain’ to consumer price index would reduce benefits

As President Obama prepares to submit his 2014 budget next week, his left flank is warning him to keep his hands off entitlement programs.

Mr. Obama is under pressure to try to reduce the deficit and has already signaled he will call for tax increases — but liberal groups say they're afraid he'll also embrace changes to Social Security or Medicare that, the advocates say, will mean benefits won't grow as generously as they'd like to see.

Speaking on behalf of MoveOn.org, Robert Reich, former labor secretary under President Bill Clinton, said Thursday that the Obama administration should not change the way that the annual cost-of-living adjustments are calculated for Social Security beneficiaries.

He warned that a move from the standard to "chained" consumer price index would reduce future payments to seniors and future retirees — making it harder for them to keep up with rising costs of health care.

"Social Security is not driving the deficit, therefore it should not be part of reforms aimed at cutting the deficit," Mr. Reich said. "The chained CPI, deceptively portrayed as a reasonable cost of living adjustment, is a cut to Social Security that would hurt seniors."

Mr. Obama is poised to roll out his spending plan for the next fiscal year on Wednesday — sounding the starting gun in another round of budget negotiations between the White House and congressional leaders.

House Republicans laid down their marker last month, passing a plan written by 2012 vice presidential nominee Rep. Paul Ryan that will "balance" the budget in a decade.

Senate Democrats also passed a budget that relies on lower spending and higher taxes. That budget would see the government still running annual deficits in excess of $500 billion in 10 years.

Neither of the plans lay out specific proposals for improving the long-term solvency of Social Security, which the program's trustees say will only be able to pay out about 75 percent of benefits in 2033.

For his part, Mr. Obama has not indicated whether the chained CPI will be part of his spending plan, but MoveOn.org, AARP and other groups are unnerved by the idea that the Democrat could use Social Security as a bargaining chip in his fiscal talks with House Republicans, as he has done in the past.

Dan Pfeiffer, White House communications director, said this week the president is open to the change as part of a broader deal with Republicans — as long as the changes are tied to additional protections for the older and low-income seniors in the program.

House Minority Leader Nancy Pelosi, California Democrat, also has said that she does not see chained CPI as a cut in benefits.

But David Certner, director of legislative policy for AARP, said in a video posted on the group's website that moving to a chained CPI would amount to a $127 billion cut in benefits over the next 10 years.

"Basically anybody receiving Social Security or veterans' benefits would be hurt by the chained CPI," Mr. Certner said. "We are talking about retirees, widows, children, people with disabilities, and retired and disabled veterans. It affects people now and well into the future."

In a separate video posted on the MoveOn.org website, Mr. Reich said Social Security is "flush for at least two decades," and said the best way to keep it solvent is to lift the ceiling on income subject to Social Security taxes, which now is $113,700.

"Why are Democrats even suggesting that the inflation adjustment should be reduced?" Mr. Reich says in the two-minute video. "Republicans aren't asking for it. Not even Paul Ryan's draconian budget includes it. Democrats invented Social Security and have been protecting it for almost 80 years. They shouldn't be leading the charge against it. Call your member of Congress and tell them no chained CPI. Hands off Social Security."

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