The Democratic Party Eats Itself

Eric Laursen Apr 30, 2013

When Barack Obama sent Congress his proposed annual budget on April 10, he became the first Democratic president to advocate cutting Social Security benefits. It was a momentous turning point for the Democratic Party, now controlled by a business and professional elite convinced that to survive as a brand, the party must serve as executioner of the social contract that created that brand to begin with.

But the story actually began earlier this year, when the Obama administration and congressional Democrats agreed to a deal that rescued the vast majority of the Bush tax cuts from imminent expiration and made them permanent. In return, they got a temporary extension of unemployment benefits, a two-month delay of sequestration and extension of child care and tuition tax credits. All quite nice, but small potatoes and nothing that Washington couldn't easily scuttle at some point in the near future.

The Republicans, by contrast, got something of inestimable value, something they had been fighting for a decade to consummate. Crucially, only nine of the 77 members of the House Progressive Caucus voted against the bill, encouraging the White House that it could go further and making clear to voters from working households that their ability to hold their alleged champions in line is fading.

Now, it's happening again, via the president's budget. This time, the deal is for another $680 billion in revenues over 10 years, to be accomplished by limiting tax breaks. This is calculated to please Washington-Wall Street deficit hawks by raising Obama's 10-year deficit reduction total to $4.3 trillion. One ingredient is especially troubling — the "chained CPI," a revised Consumer Price Index that would be used to calculate annual cost-of-living adjustments to Social Security, Medicare and other federal programs.

Touted as a mere "technical correction" that would make benefits increases smaller but more accurate, in reality the chained CPI would begin the transition of Social Security from an earned benefit with broad public support to a welfare-type program that's far more vulnerable to future cuts.


Politically, the stakes are incredibly high. By beginning the process of redefining Social Security downward, the White House is proposing, quite literally, to surrender the Democratic Party's birthright — its stewardship of Social Security, the capstone of the New Deal and the foundation of working Americans' party loyalty, or what remains of it.

The president's budget doesn't even prescribe a 50/50 split between spending cuts and tax increases — it's severely skewed toward spending cuts, and would worsen the cumulative effects of the last couple of years of Democratic budget concessions rather than easing them. According to Dean Baker's analysis at the Center for Economic and Policy Research, the hit that the typical retiree would take from the application of the chained CPI would amount to 3 percent of their benefits over time, or some 2 percent of their total income, which is about 70 percent accounted for by Social Security. By contrast, the tax hikes included in the fiscal cliff deal would cost couples making a cushy $500,000 a year or more only 0.6 percent of their after-tax income.

On balance, then, Obama is calling for a greater sacrifice from those who can least afford it than from those who've spent the last dozen years benefiting from a Bush-era tax-advantage windfall. This is not just unfair, it's playing with human lives. Social Security keeps some 21 million American out of poverty every year, but many of them eke out an existence just this side of destitution. One-third of Social Security recipients rely on the benefits it pays for 90% of their income, and even a few hundred dollars less per year — the "modest" reductions touted by the chained CPI's supporters — could result in malnutrition or homelessness.

The chained CPI erodes the principle that Social Security should provide an adequate income for the elderly. From now on, this will be something not to be honored, but finessed — a game that Washington today is all too prepared to play. As's Blake Zeff reminds us,

The first cut to popular, essential programs is always the most difficult; once it's been done, and that toe is in the water, there's the concern that future reductions could be more easily achieved. That's why the symbolism of a Democratic president attaching his name to — and owning — the cuts is so controversial and worrying for liberals. How hard would it be for Republicans to push future cuts through, when this is now a mainstream Democratic policy?


Happily, chances are that Obama's attack on Social Security will go nowhere this year. Congressional Republicans are too savvy to risk their political capital on a comparatively small reduction in the program that could be used against them in the mid-term elections. They also enjoy the sight of Obama going it alone in a reckless attack on his own party's foundations — former Democratic National Committee chair Howard Dean, who was instrumental in building the voter base that put Obama in the presidency in 2008, has mused openly that the White House budget might drive him out of the party.

But Obama has laid down a marker that other elite Democrats will pick up in the not-too-distant future. For those who want to end the three-decade political siege of Social Security and Medicare, expand them to meet the needs of a changing economy, and put government back in the business of breaking down racial, class, wealth, and gender barriers, the challenge isn't to persuade Obama to be more progressive, or even to elect progressive candidates. It's to reverse a long-term trend in government that goes back 40 years and that has proceeded regardless of the party in power.

The creation of Social Security was made possible in the 1930s by the existence of a political left that was actively engaged with the issue of retirement security. The Townsend movement for a guaranteed income for the over-65s, Huey Long's Share Our Wealth movement, not to mention lively communist and socialist movements with grassroots followings, were coming up with their own ideas, making it far easier for Washington to see social insurance for what it was — a middle-of-the-road response to the demand for some form of collective support against the innate violence of capitalism.

If Social Security is going to be saved from the chained CPI and any number of other destructive gimmicks, the tool that does the job will not be lawmakers' ability to forge creative compromises, but the power of our imaginations to conceive of something better — something that puts a scare into those lawmakers. As Che Guevara said, "Be reasonable. Demand the impossible." Otherwise, all we'll ever get is another bad deal.

Eric Laursen is author of The People's Pension: The Struggle to Defend Social Security Since Reagan (AK Press). An earlier version of this article originally appeared at


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