Barack Obama is working overtime to secure his legacy — a legacy of debt. In his new budget proposal, the president is reneging on an earlier offer to slightly change the formula under which Social Security cost-of-living adjustments (COLA) are made, which would have shaved around a quarter-trillion dollars or so off the mounting national debt and added a few tens of billions in new spending to boot.
Which is to say, President Obama is working to secure a gigantic tax increase on your children.
Under current practice, Social Security benefits are raised in proportion to the Consumer Price Index; under the “chained CPI” model, they would still rise, albeit at a slower rate, one that arguably more accurately represents actual changes in the cost of living. (Chained CPI assumes some substitution on the part of consumers as prices change — e.g., if orange juice prices rise, people switch to grapefruit juice.) Even the AARP, which opposes COLA reform as doggedly as it opposes most sensible fiscal reforms, calculates that the change would amount to about $3 on every $1,000 in benefits Social Security recipients enjoy — a trivial amount of money for the individual but one that adds up overall: Changing to chained CPI would knock some $230 billion, possibly more, off the debt the country is expected to accrue in coming years.
Reverting to his habitual class-warfare style, the president now says that it would be unfair to move forward with a proposal that he endorsed just last year — unless he secures another nice fat tax increase to go with it.
The change may still happen. What the president is doing here is simply working to preemptively strengthen his bargaining hand as he goes into budget negotiations with Congress, particularly with the Republican-controlled House. He is taking COLA reform off the table for the moment in order to have the opportunity to put it back on in the future in exchange for one of his own political priorities.
Given the state of the national balance sheet, this is a cynical and irresponsible maneuver. There are very few meaningful long-term debt-reduction proposals that can wrench a compromise from both parties in Congress and the White House. COLA reform would not cut one measly dollar from anybody’s Social Security check but only reduce the rate at which those checks grow in the future. President Obama has been known to accuse his opponents in the legislative branch of operating a “Do Nothing” Congress, but here he is personally ensuring that something that needs doing is going to be a lot more difficult to do.
The Social Security trustees estimate that the program’s current unfunded liabilities amount to more than $23 trillion — about one and a half times the GDP of the United States, or about 30 percent of the annual economic output of human civilization. That is just the unfunded portion of a single entitlement program in one country. Playing politics with the reform of Social Security is like watching a tsunami rolling toward our shores and insisting that someone bring you a cappuccino before you sound the alarm — and then sending the cappuccino back for having the wrong proportion of foam to milk. John Boehner’s spokesman is exactly right: “This reaffirms what has become all too apparent: The president has no interest in doing anything, even modest, to address our looming debt crisis.”
The Democrats’ economic agenda is now strictly punitive. In the debate over raising the minimum wage, the Congressional Budget Office has weighed in with an estimate that the move would throw hundreds of thousands of low-income Americans out of work. The Democrats’ response? That it’s worth it. If we want to increase the purchasing power of low-income people, there are many ways to do that without adding to unemployment, but that is not what this is about. This is about the progressives’ demand for a show of force: Business is going to do business how they say, or else. The tax increases the president is seeking will not do nearly as much to stabilize our long-term finances as entitlement reform would, but the president wants to raise taxes on higher earners as a moral matter rather than as an economic one. Never mind if it ultimately undermines our public finances — if it feels good, do it.
And if it feels bad for your political enemies, do it twice.
— Kevin D. Williamson is a roving correspondent for National Review.