Andrew Harnik/AP Photo
Former Vice President Joe Biden speaks to a voter in Indianola, Iowa, on Saturday. At this appearance, he made a comment that sparked scrutiny into his record on Social Security.
The Democratic primary managed to get around to policy distinctions over the weekend, mostly by accident. For weeks, Bernie Sanders’s campaign has attempted to make an issue of Joe Biden’s longtime willingness to use Social Security as a bargaining chip (that would be the charitable way of putting it, instead of “advocating for cuts,” which is also an acceptable description). Biden has been ignoring Sanders’s bait, and without any challenge in a high-profile setting like a debate, he’s been allowed to skate past the issue, boosting his front-runner status.
But on Saturday, Biden responded to a voter in Iowa’s concern over his Social Security record by accusing the Sanders camp of creating a “doctored” video smearing him. This just isn’t true; the Sanders team has simply been flagging an excerpt of a speech Biden gave at the Brookings Institution in 2018, among other clips. Biden claims he was being sarcastic when appearing to agree with Paul Ryan’s desire to cut Social Security; the Sanders team reads it more literally. Left out of the controversy is the fact that, minutes later, Biden said Social Security “still needs adjustments,” which in the language of Washington is a euphemism for a balanced package of increased revenues and benefit cuts.
The charge of doctoring finally perked up the media antennae. It was a major unforced error for Biden, who could have just recited his plan for Social Security, which includes scrapping the payroll tax cap and boosting benefits slightly for the oldest seniors. (His plan is to the right of John Larson’s Social Security 2100 proposal, which includes a modest increase for all beneficiaries and has the support of virtually every House Democrat.) Instead, by invoking Sanders, he invited scrutiny into his own record, where the evidence is much clearer than one speech.
The story of chained CPI may be the most damning part of Biden’s record on Social Security.
That record includes a lunge at reducing future Social Security benefits while Biden served as vice president. While thankfully unsuccessful, this mistake continues to have damaging effects to this day. Republicans capitalized on the opening of this Pandora’s box to increase taxes on lower-class Americans and reduce assistance to the poor. And it set the stage for lower Social Security benefits as well. The story of chained CPI may be the most damning part of Biden’s record on Social Security.
Going back to 1984, Biden has expressed interest in deals that would cut Social Security. He proposed freezing Social Security spending and periodically highlighted that desire; he voted for a balanced-budget amendment even after failing to shield Social Security from it; and he demanded that Social Security be “put on the table” during his last presidential run. He associates himself with a crowd known for foregrounding deficit concerns and fully willing to make “tough choices” on earned benefits like Social Security. Bruce Reed, Biden’s vice presidential chief of staff from 2011 to 2013 and a top campaign aide, was executive director of the Bowles-Simpson commission, which pursued deficit reduction and proposed increases in the retirement age.
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As a coup de grace, in 2012 and 2013 then-Vice President Biden helped lead a publicly advocated scheme to reduce future Social Security benefits as part of a “grand bargain” with Republicans. This cut did not reflect any of President Obama’s campaign promises, but it became part of a negotiation while in office—precisely the fear that liberals have with Biden, that he will revert back to dealmaking with Republicans that sells out core Democratic principles.
Specifically, Obama-Biden sought to swap out the annual cost-of-living adjustment used to calculate benefits with the so-called “chained CPI,” which uses the concept of substitution. If the price of beef spikes, you could purchase lower-cost chicken instead to stay within your budget. This subsequently grows the inflation index more slowly than other government measures.
Of course, no real substitute exists for the main drivers of elderly people’s budgets, namely housing, medical care, and prescription drugs, all of which typically rise faster than inflation. You can’t really substitute ham for arthritis medication. There’s a specific inflation calculation for the elderly, which takes this cohort’s higher costs into account, but for some reason it’s not used for Social Security benefits.
The net effect of chained CPI would have been a Social Security benefit cut, which only makes sense if you think seniors get too sweet a deal with their $1,461 a month in average benefits. The average worker retiring at 65 would have seen a $650 reduction in benefits by age 75, and then $1,130 by age 85, according to economist Dean Baker of the Center for Economic and Policy Research. Calling this a “more accurate” calculation of inflation masks the end goal of reducing future benefits (by about $230 billion over a decade, according to 2013 figures) and saving money within the system.
Bob Woodward’s book The Price of Politics notes that Biden favored chained CPI as part of a grand bargain, and was at the center of negotiations on it with Republicans. We have the Tea Party to thank for it not happening; hard-right Republicans balked at the tax increases embedded in the deal. Eventually Obama came around to favoring expansion of Social Security, and Biden’s plan today reflects that.
But chained CPI didn’t go away.
Republicans and the Trump administration included it in the 2017 tax cuts. Tax brackets, the standard deduction, and the Earned Income Tax Credit all now are indexed using chained CPI, and it amounts to a regressive tax increase. If the inflation calculation rises more slowly, more salary gets pushed into a higher tax bracket, and deductions and tax credits erode as well. This will increase taxes by $128 billion over the first ten years, and $500 billion in the next ten. Since the wealthy are already in the highest tax bracket and don’t typically use the standard deduction, they’re unaffected.
With chained CPI in place for taxes, it led to an inevitable argument: If we have this “more accurate” inflation measure, which even a Democratic president supported, why not use it for everything? Indeed, the Trump administration next proposed to use chained CPI to calculate the federal poverty line last May. The poverty line sets eligibility for a host of programs, from Medicaid to food stamps to low-income heating assistance. And using chained CPI gradually reduces eligibility.
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Like a weed, chained CPI is infiltrating the federal government, acting as a stealth cut to public-assistance programs and a stealth increase to middle-class taxes. Worst of all, it creates a presumption that there’s a more accurate inflation measure, one that could be harmonized across the government. As Nancy Altman told the Prospect last year, the switch to chained CPI is “a step toward getting at the largest program that’s indexed [by inflation], and that’s Social Security.”
Obviously, Donald Trump is responsible for Donald Trump’s policies, and these ones on chained CPI alone are reason enough to toss him out in November. But I expect Republicans to take quiet, deceptive action to roll back assistance for the poor; I don’t expect Democrats to aid and abet them in this task.
Chained CPI only dates back to 2002. It was an obscure concept mostly favored by deficit hawks and conservative ideologues until the Obama administration elevated it. The Obama-Biden proposal gave chained CPI the legitimacy needed for future administrations to implement it. It was not benign, not just a pose to show how extreme Republicans were. It was not just an ephemeral trial balloon in one negotiation in 2013. It has had long-lasting consequences for millions of Americans. And the vice president of the administration that set the trip wire causing chained CPI’s growth should be held accountable for his actions.
