Punitive Economics

The Democrats now seek only to punish.

Barack Obama is working overtime to secure his legacy — a legacy of debt. In his new budget proposal, the president is reneging on an earlier offer to slightly change the formula under which Social Security cost-of-living adjustments (COLA) are made, which would have shaved around a quarter-trillion dollars or so off the mounting national debt and added a few tens of billions in new spending to boot.

Which is to say, President Obama is working to secure a gigantic tax increase on your children.

Under current practice, Social Security benefits are raised in proportion to the Consumer Price Index; under the “chained CPI” model, they would still rise, albeit at a slower rate, one that arguably more accurately represents actual changes in the cost of living. (Chained CPI assumes some substitution on the part of consumers as prices change — e.g., if orange juice prices rise, people switch to grapefruit juice.) Even the AARP, which opposes COLA reform as doggedly as it opposes most sensible fiscal reforms, calculates that the change would amount to about $3 on every $1,000 in benefits Social Security recipients enjoy — a trivial amount of money for the individual but one that adds up overall: Changing to chained CPI would knock some $230 billion, possibly more, off the debt the country is expected to accrue in coming years.

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