We want to be very, very clear about the White House’s decision to cave to GOP demands cutting billions in Social Security benefits to the poor and middle-class – it simply doesn’t have to happen. There are many other ways the White House and Congress could find that same amount of deficit savings without targeting America’s poor and middle class. Instead, Democrats and Republicans appear ready to tell retirees earning an average $14,000 Social Security benefit they’ll have to live on less so that: someone making from $500,000 to $999,999 can keep their Bush tax cuts, and Pharma can keep charging Medicare higher prices for Part D drugs, the wealthy can keep their capital gains tax loop holes, and huge corporations can continue to dodge their corporate taxes.
The chained CPI would mean an immediate benefit cut of $130 per year for the typical 65-year old retiree and would grow exponentially to a $1,400 cut after 30 years of retirement. Contrary to the political spin, this chained CPI proposal isn’t a “tweak” or an “adjustment,” it’s designed to cut benefits and raises taxes, largely on the poor and middle class, totaling $208 billion over ten years. $112 billion of those benefits cuts come from Social Security alone with up to $24 billion coming from VA benefits and civilian and military retirement pay cuts.
Passing the chained CPI means Washington has made a very clear choice to force those who can least afford it to pay down the deficit…even though Social Security has not contributed one dime to the problem.
Richard Eskow provides a terrific rundown of the many other deficit options available in his post on Our Future: 8 Deficit Reducers that are more Ethical – and More Effective – than the Chained CPI. Here’s just a highlight but we recommend you read the entire post:
Close multiple loopholes in the capital gains law: $174.2 billion. (1.42x)
Lawmakers could save nearly one and a half times as much money as they’ll get from stripping seniors, the disabled, veterans, and children of their benefits – 1.42 times as much, to be precise – by closing capital gains loopholes.
They include the “carried interest” loophole, which taxes hedge fund managers’ service fees at the low “investors’” rate; the ‘blended rate,’ which taxes some quick derivatives trades as if they were long-term investments; the ability to ‘gift’ capital gains to avoid taxation; a dodge for bartering capital gains; and the ability to ‘defer’ gains to future years.
A more aggressive approach – eliminating the capital gains altogether – could yield more than $900 billion in savings, but that might affect middle-class families and seniors. By using the “chained CPI,” America’s seniors, vets, and disabled are taking a hit so that hedge fund managers can keep their loopholes.
(Source: Calculations based on figures cited by the Center for Budget and Policy Priorities.)
Refuse to compromise on the President’s $250,000 figure for increased taxation: $183 billion (1.5x)
The President’s initial tax plan – the one he and his party ran on, the one that voters endorsed – called for letting the Bush tax cuts expire for income above $250,000. That would bring in an estimated $366 billion in added revenue over the next ten years. Now, say reports, he and the Republicans will agree on a figure that’s “somewhere in the middle.”
If true, the deal’s deficit reduction impact will be reduced by $183 billion. That’s one and a half times as much as the “chained CPI” will take from seniors, the disabled, veterans, and their dependents. They’ll pay — so that people earning $250,000 and up don’t have to.
(Source: CBPP estimate, divided in half.)
Allow the government to negotiate with drug companies: $220 billion. (1.8x)
Current law specifically forbids the government from using its negotiating power to obtain lower rates for Medicare prescriptions – even though much of the research behind the drugs involved was performed at government expense.
If we allow the government to negotiate with drug companies, that will save an estimated $220 billion. That’s 1.8 times as much money as the “chained CPI” – and it comes from the drug companies, not vulnerable Americans.
(Source: Outterson and Kesselheim, Health Affairs.)
Eliminate corporate tax loopholes: $1.24 trillion (10x)
A 2007 Treasury Department report (prepared under President Bush) concluded that “corporate tax preferences” – that is, loopholes – resulted in lost revenue of $1,241,000,000,000 over a ten-year period.
That number looks pretty good – especially when it’s stacked up against the “chained CPI” figure of $122 billion.
If we can’t afford to honor our commitment to America’s veterans and their families, or to our seniors, or to the disabled, we sure can’t afford these corporate tax loopholes – excuse me, I meant “preferences.”
(Source: United States Department of the Treasury background paper.)