President Obama released his budget Wednesday, throwing Republicans a huge bone — a cut to the way the government calculates cost-of-living increases for Social Security benefits known as chained CPI. Many Republicans were unaware that Obama's been offering chained CPI for a while. It seems they were also unaware that Grover Norquist, conservatives' No. 1 anti-tax activist and an important GOP ally for decades, opposes chained CPI as a bad deal and a tax increase.
Republicans want cuts to entitlements — Social Security, Medicare, Medicaid. Obama wants tax increases. Obama offered House Speaker John Boehner this entitlement cut, chained CPI, during the fiscal cliff negotiations late last year. That deal fell through. But Obama never withdrew his endorsement of chained CPI. Lots of Republican lawmakers failed to notice this. In March, The Washington Post's Ezra Klein relayed this amusing anecdote with an anonymous veteran Republican lawmaker.
Would it matter, one reporter asked the veteran legislator, if the president were to put chained-CPI... on the table?
“Absolutely,” the legislator said. “That’s serious.”
Another reporter jumped in. “But it is on the table! They tell us three times a day that they want to do chained-CPI.”
“Who wants to do it?” said the legislator.
“The president,” replied the reporter.
“I’d love to see it,” laughed the legislator.
There are other examples of this. Now that Obama's budget is public, Republicans can no longer claim ignorance. But in demanding chained CPI, they seem to have missed their top tax philosopher has long thought it was a bad idea. In October 2010, Norquist said, "I'm not necessarily in favor of raising taxes or — on Social Security and cutting benefits. Both of those make your investment in Social Security as a taxpayer worse, a worse deal." In March 2012, Norquist's Americans for Tax Reform said of chained CPI, "While this reduces government spending on programs like Social Security, it also slows down the rate at which tax brackets and other tax provisions grow with inflation. Estimated additional tax increase: $89 billion over ten years." On Wednesday, ATR said:
The term [chained CPI] is a Beltway euphemism for measuring inflation at a different, slower pace. Many tax and budget items are indexed to inflation, so slowing inflation’s measured rate of growth has both spending cut and tax increase implications.
Norquist tweeted, "Chained CPI is a very large tax hike over time. Hence Democrat interest in same."