This article originally appeared at the Huffington Post on March 11, 2014.

Last April, President Obama proposed cutting Social Security benefits in his budget request for fiscal year 2014 — the first time a sitting Democratic president has proposed cutting that party’s signature New Deal social insurance program.

But, as previously leaked, the president’s fiscal 2015 budget released last Tuesday dropped the previous budget’s proposed adoption of the “chained” Consumer Price Index (CPI) inflation measure, a slower-rising method for indexing cost-of-living adjustments to Social Security benefits.

This swinging of the chained CPI pendulum, however, had nothing to do with Social Security reform for the sake of extending trust fund solvency. And Chained CPI wasn’t so much a bargaining chip for a deal, as a talisman of Obama’s seriousness, intended to ward off criticism and expose opponents’ insincerity.

Beyond being highly controversial, as well as being bad policy, chained CPI was also akin to a unicorn let loose in the arena of the bipartisan deficit reduction “grand bargain” game. But the GOP could not do the work needed to catch it. And now it’s dead.

Washington’s newfound “Who killed chained CPI?” finger pointing should really reduce to “Who killed the grand bargain?” That question should have been answered — resoundingly — years ago, but was obfuscated by budgetary reporting that was too often laced with inappropriately editorialized deficit-reduction cheerleading.

After the GOP took back the House in January 2011, President Obama made it abundantly clear that he was willing to accept benefit cuts to Social Security and Medicare — but only in exchange for a (debatably) sizable chunk of new revenue, or “balanced” deficit reduction in Washington parlance.

But as chronicled by Matt Bai’s excellent New York Times Magazine account of 2011’s elusive grand bargain chase, the revenue “balancing” half of this equation was never really on the table. The Obama-Boehner framework, including chained CPI and an ill-advised plan to raise the Medicare retirement age, hinged on Boehner’s initial offer of $800 billion in revenue above current policy (over a decade).

But Boehner’s offer was only meant as a ceiling for revenue raised, and only if that revenue came from base-broadening, rate-lowering tax reform. Much, if not all of the revenue was to come only from controversial and suspect “dynamic scoring” of certain macroeconomic feedback effects ignored by convention — meaning not revenue by official budget scorekeeping. (Conservatives are enamored with dynamic scoring, rooted in hostility toward actual revenue-raising policies and blind faith in the supply side myth that lower tax rates are a powerful spur to growth.)

When word of a plan to raise $800 billion in new revenue got out, Boehner quickly had to put out the fires among his rank-and-file and in House leadership. House Majority Leader Eric Cantor made it clear that neither offer by President Obama — a small deal with $800 billion in revenue, or a larger deal with $1.2 trillion — would make it through their caucus, nor would any GOP counteroffer that included new revenue. Further, pursuing a grand bargain would cost Boehner his speakership — so Boehner stopped returning the president’s phone calls.

The grand bargain was never viable in light of recalcitrant GOP anti-tax orthodoxy. And the GOP’s overarching fiscal stance in the 113th Congress remains fundamentally unchanged from 2011 and the first incarnation of Rep. Paul Ryan’s House Budget Resolution.

But if the grand bargain indeed had been killed well before 2013, why did the administration propose cutting Social Security in last year’s budget, given the accompanying liabilities? With scant chance of implementation, the motivation was clearly tactical, not budgetary. Jonathan Chait surmised that the White House hoped to prove a seriousness that would be spurned by Republican leadership — not to sway voters, but to shift centrist pundits from invoking false equivalence to rightfully blaming GOP recalcitrance for the grand bargain impasse.

Over the course of the year, any lingering perception of Republican leadership’s reasonableness was belied by the October shutdown they initiated. December’s budget deal set topline appropriations through September 2015 and slightly eased blunt sequestration spending cuts, allegedly advancing politics past repeated budget stalemates, crisis governance, and grand bargain “fixes.” Whatever dwindling odds of a grand bargain remained a year ago should have been put to rest by all pundits.

And over the year, liberals swung from an overwhelmingly defensive stance against Social Security cuts to a growing coalition advocating expanding Social Security benefits. Again proposing Social Security cuts in the context of an asphyxiated grand bargain pursuit could only have served to polarize the Democratic Party — a reality deliberately shaped by its progressive wing.

Any half-competent negotiator knows that just because an offer was once on the table doesn’t mean it should remain on the table. With the grand bargain more widely understood to be dead, any tactical advantage to maintaining the administrations’ Social Security gambit in the budget had passed.

But the administration has tried to have this both ways — placating the Left while retaining a moral high ground in the grand bargain blame game, keeping chained CPI on the table. Note the language coming from a White House official:

The compromise embedded in last year’s Budget included policies like chained CPI. . . . Over the course of last year, Republicans consistently showed a lack of willingness to negotiate on a deficit reduction deal, refusing to identify even one unfair tax loophole they would be willing to close, despite the President’s willingness to put tough things on the table. The offer to Speaker Boehner remains on the table for whenever the Republicans decide they want to engage in a serious discussion about a balanced plan to deal with our long-term fiscal challenges that includes closing loopholes for the wealthiest Americans and corporations.

Chained CPI was not so much killed, as it was dead on arrival when proposed in last year’s budget. But as Danny Vinik notes in The New Republic, this year’s budget should not be confused for a lack of willingness by the administration to adopt chained CPI (or Medicare cuts, for that matter) if the GOP radically changed course.

The political advantage derived from building a sizable, diverse coalition advocating expanding Social Security and improving retirement security — which is considerable — remains fundamentally unaltered by the administration dropping chained CPI in this budget.

The administration has been burned by such have-your-cake-and-eat-it-too strategies–most notably the premature pivot from prioritizing economic recovery to trying to thread the needle between ad hoc stimulus and grand bargain austerity. That game proved far too nuanced and foolhardy in light of entrenched GOP obstructionism, and only fueled wrongheaded austerity and overly rapid deficit reduction.

If this budget is genuinely meant to be a hard (and overdue) pivot from austerity back to investment and job creation, the administration must make clear that it truly has abandoned both chained CPI and the grand bargain it symbolizes — in policy substance as well as rhetoric.


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