Obama's Budget Garners Anger From All Sides

Nancy Cook
April 12, 2013

Roughly 24 hours after the White House released its budget, it was evident how alone President Obama stood with this particular fiscal blueprint.

On Capitol Hill, Republicans were quick to criticize the president by saying his budget did not go far enough on its tweaks to Medicare and other spending cuts—despite the fact that Obama proposed cutting Social Security benefits, unwinding the majority of sequestration’s cuts to defense, and doing corporate-tax reform without raising any additional revenue.

“I think the president made a step forward on entitlement reform in his budget, and I welcome that step forward with ‘chained CPI,’ ” said Rep. Dave Camp, R-Mich., and chairman of the House Ways & Means Committee. “I think that is the beginning of a potential discussion about how we make programs like Social Security and Medicare sustainable.”

Meanwhile, Democrats spent the day fuming. Many liberal members of Congress were furious about the so-called chained CPI provision of the president’s budget, which would change the cost-of-living calculation for federal benefits, including Social Security, and make them less generous.

In two hearings with Treasury Secretary Jacob Lew, lawmakers such as Rep. Xavier Becerra, D-Calif., and Sen. Ben Cardin, D-Md., let their displeasure be known. “I have some concerns, and that’s putting it mildly,” Cardin said.

Sen. Max Baucus, D-Mont., took the White House to task for proposing to reduce Social Security benefits instead of asking its wealthiest recipients to pay more: an idea proposed in deficit-reduction blueprints such as Domenici-Rivlin plan. “Cutting Montana seniors’ benefits without asking the wealthiest Americans to chip in to the Social Security trust fund isn’t right,” Baucus said. “Any reform of Social Security should be for the solvency of the program, not deficit reduction.”

The White House spent Thursday trying to appease both sides. Lew stressed in his two hearings on the Hill — his first appearances there as Treasury secretary — that the president put forth such cuts because the Republicans had indicated they were necessary ingredients to any budget deal, which the president still seeks.

Democrats were meant to be appeased by the provision within the president’s budget that chained CPI would not affect the most "vulnerable" populations. This means that chained CPI would not affect food-stamp benefits and children’s nutrition assistance; Pell grants; veterans’ pensions; and benefits for low-income seniors or disabled people on the supplemental security income program, according to the Office of Management and Budget.

OMB also proposed phasing in an additional uptick in benefits over 10 years for people age 76 or older or in their 15th year of collecting benefits. People could also receive an additional benefit boost, starting at age 95. These caveats are meant to protect the oldest and poorest Social Security recipients.

The only problem is that Social security is the lone source of income for roughly 25 percent of senior citizens, according to the left-leaning Center on Budget and Policy Priorities, and it provides the majority of cash income for close to two-thirds of elderly recipients. It’s unclear if all of these people would be protected or considered "vulnerable" under the president’s budget.

But even the promise of protections for low-income and older seniors did little to diminish the anger among the Democratic ranks of congressional members, labor unions, and the AARP. “The bottom line is that chained CPI is a cut. These protections do not correct that,” said Shaun O’Brien, the assistant policy director for health and retirement for the AFL-CIO. “We want to make sure this does not get brushed aside as a technical change.”

Looks like the budget wars are here to stay for now — with the latest skirmish being Democrats versus Democrats.