Obama’s Plan To Cut Social Security, Medicare and Veterans’ Benefits

by Don Azarias
May 16, 2013
Obviously motivated to overcome public perception of his lack of leadership in making compromise with Republican lawmakers, President Barack Obama is proposing a 2014 budget that provides for tax increases while reducing Social Security, Medicare and other government-sponsored safety net programs including veterans’ benefits.
Say what, Mr. President? You are reducing Social Security and Medicare benefits which are the lifeblood of retirees and the elderly including those veterans? Have you forgotten that they have paid their share into the system with their hard-earned money after spending the best years of their lives working to make a living? And now you also want to increase their taxes?
Like everyone else, I thought you care about the middle class and those poor people who are truly deserving of government assistance? It looks like your genuine concern for those poor people has evaporated, all of a sudden, for the sake of political expediency. How are you going to make good on your campaign promise to those special interest groups, who are now demanding paybacks in exchange for their votes that provided you with a second term in office?
While Republicans are having a field day for Obama’s sudden turnaround, Democrats and liberals are bashing him for having the dubious honor of being the first “Democratic president that has officially proposed to cut the Democratic Party’s signature New Deal program, Social Security.”
I’m confident that the readers will agree that Obama has no one else to blame but himself on this issue. He made it a habit of making a campaign promise of providing socialized health care and various government-sponsored programs to win votes only to find out later that the costs of those entitlements are unsustainable. Now, he is being forced to eat crow.
A key feature of Obama’s plan is a revised inflation adjustment called “chained CPI.” For the readers’ information, CPI stands for Consumer Price Index. This new formula would effectively curb annual increases in a broad swath of government programs but would have its biggest impact on Social Security. The plan would also include reductions in Medicare spending, much of it by targeting payments to health care providers and drug companies. The Medicare proposal also would require wealthier recipients to pay higher premiums or co-pays.
The plan, if ultimately legislated, could impact almost all Americans. The rich would see tax increases, the poor and the elderly would get smaller annual increases in their benefits, and middle income taxpayers would find themselves in higher tax brackets.
According to an analysis of Social Security data, once the change is fully phased in, Social Security benefits for a typical middle-income 65-year-old would be about $136 less a year. At age 75, annual benefits under the new index would be $560 less. At 85, the cut would be $984 a year.
The concept behind the chained CPI is that consumers substitute lower-priced alternatives for goods whose costs spike. So, for example, if the price of oranges goes too high for some consumers, they could buy alternatives like apples or strawberries if their prices were more affordable. This flexibility isn’t considered in the current system of gauging inflation, a calculation that determines how much benefits grow each year. Taking it into account means such benefits won’t grow by as much.
Advocates for the elderly say seniors pay a higher portion of their income for health care, where costs rise more quickly than inflation.
The White House has said the cost-of-living adjustments would include protections for “vulnerable” recipients but didn’t provide specifics on how it will be implemented. So what’s new? It’s another one of Obama’s promises.
As expected, the angry reactions from various retirees’ and seniors’ advocates were fast and furious.
“The president should drop these misguided cuts in benefits and focus instead on building support in Congress for investing in jobs,” AFL-CIO President Richard Trumka said in a statement.
AARP’s legislative policy director said Obama’s budget proposal, while not a surprise, was a disappointment. “The message seems to be that the president wants a deal and is willing to even sacrifice such important benefits as Social Security as part of that deal,” said David Certner. The seniors lobby argues that Social Security doesn’t belong in the budget talks because it isn’t contributing to the deficit and is separately financed with its own dedicated taxes.
Obama is also well aware that he would face stiff resistance from his allies in Congress. Sen. Bernie Sanders of Vermont, an independent who sides with Democrats, said he and Sen. Tom Harkin (D-Iowa), spoke out strongly against changes in calculating cost-of-living increases.
“It would make major cuts in Social Security benefits … and also very significant cuts for disabled veterans,” Sanders said in a telephone interview. “I do not believe that the American people want to balance the budget on the backs of disabled veterans or widows who lost their husbands in the wars in Iraq and Afghanistan.”
Obama has made repeated vows not to add to the tax burden of the middle class. He has made it a habit of saying that he wants to save the middle class though he seems ignorant of the fact that the middle class has always carried the tax burden in this country. It has always been the middle class that is being bled dry to pay for those unaffordable social service and other safety net programs like Medicaid and food stamps being espoused by Obama and the Democrats. Now he wants to cut Social Security and Medicare benefits to the elderly and war veterans. Isn’t that an asinine idea?
House Speaker John Boehner (R-Ohio), reminded Obama that House Republicans have made it perfectly clear that savings in entitlement programs should not be contingent on more tax increases.
“If the president believes these modest entitlement savings are needed to help shore up these programs, there’s no reason they should be held hostage for more tax hikes,” Boehner said. “That’s no way to lead and move the country forward.”
And, once again, it marks a full shift from Obama’s stand in 2008, when he was battling Republican Party nominee John McCain for the presidency.
We may recall the speech Obama made to AARP on Sept. 6, 2008, when he said: “John McCain’s campaign has suggested that the best answer for the growing pressures on Social Security might be to cut cost-of-living adjustments or raise the retirement age. Let me be clear: I will not do either.”
Yeah, right, Mr. President. It seems like you really enjoy eating crow.