Why the Chained CPI Proposal is a Problem

There is a reasonable response to complaints about the inclusion of a bad Social Security policy in Obama’s budget proposal: namely, it comes with a condition (higher upper-class taxes) that Republicans clearly won’t accept.  And this is, in fact, true!   So what’s the problem?  Yglesias explains:

The White House is frustrated by the fact that lots of folks in the media don’t seem to see it the way I do and this budget is, among other things, part of a strategy to turn that around. But that’s a doomed strategy. The ways of bipartisanthink are mysterious and won’t be unraveled by any new proposals. To many people, the fact that a deal hasn’t been made is all the proof they need that both sides are equally at fault.

The risk here now is twofold. Inside the Beltway, Republicans can say “well, look, we disagree about taxes but why don’t we just do these entitlement reforms that even the president thinks we should do.” Meanwhile, outside the Beltway Republican candidates can run ads castigating Democrats for bankrupting the country so badly that they want to add Social Security cuts to the dastardly Medicare cuts they already implemented. Part of the point of the Senate Democrats’ budget was to stake out a position of easily defensible high ground. This seems like the White House wading into a much more exposed piece of territory.

Even if there’s no risk of the cuts happening in the short term, the politics don’t make any sense. Obama won’t get any more credit for pleasing the infinitesimally small Pain Caucus than he would for proposing a generic “deficit reduction” plan that properly leaves Social Security alone, and Republican intransigence can be guaranteed simply by including popular upper-class tax increases. When Republicans don’t take the deal, the Pain Caucus crowd will just blame Obama for failing to have the leadership to lead, with leadership. (As Chait says, whatever their initial praise “the BipartisanThinkers will eventually redefine Obama’s compromise position as Big Government liberalism and the center as the halfway point between that and Paul Ryan’s plan to kill and eat the poor.”) And then Republicans can run ads in low turnout midterm elections with an older-skewing electorate that accurately assert that Obama has proposed to cut Social Security. There’s just no upside here — it’s definitely bad politics and it creates needless risk of bad policy in the medium term.