Based on news reports last month, one of the few item that Republicans and Democrats on the deficit supercommittee could agree upon involved rejiggering the government’s inflation calculation to produce a lower inflation rate and, as a result, less inflation-linked spending in the future, not the least of which would be social security cost of living adjustments. But, what once looked like a slam dunk seems to be getting more complicated rather quickly as seniors are now organizing to oppose this move as reported by the Fiscal Times.
The senior lobby AARP’s latest television barrage is just part of the larger grass roots campaign that was launched recently by an array of senior citizen and public interest groups aimed at beating back any attempt by members of the Super Committee to change the cost-of-living adjustment factor for Social Security. Shifting to a less generous measure of inflation would cut $112 billion or about 7 percent from projected beneficiary payouts over the next decade.
The proposal — popular with many policy analysts as a more accurate portrayal of consumer prices — remains one of the most attractive revenue raising measures in some politicians’ and deficit-cutters’ playbooks. Beyond cutting Social Security costs, it would reduce future claims in a wide range of government programs that benefit mostly the poor, including Head Start, school lunch programs, and home heating assistance. It would also raise $72 billion in new tax revenue by slowing upward adjustments in income tax brackets, thus throwing more taxpayers into higher brackets.
While Democrats on the committee are staying mum on the issue, the grassroots campaign by key elements of their political base has made it extremely difficult for them to embrace the proposal. Last week, thousands of demonstrators marched on the Boston office of Sen. John Kerry, D-Mass., demanding he reject cuts in Social Security and other social programs. “Though we don’t have armies of corporate lobbyists, we have passionate people who belong to all political parties, including independents, who don’t want to see their benefits cut,” said Joshua Rosenblum, a spokesman for Social Security Works, which helped organize the demonstrations.
This should be a pretty interesting ten days between now and the time the supercommittee’s plan is due on Capitol Hill on the day before Thanksgiving. By all accounts, their chances of producing any kind of agreement are less than 50-50 and financial markets now seem to be sniffing this out, reacting in advance of any August-style U.S. budget deficit debate.