So here we go again. House Dem Van Hollen says possible cuts to entitlements on the table. [View all]

[madfloridian]

He does say they won't happen unless the Republicans agree to raise new revenue by closing some tax loopholes. That would be nice to close some loopholes that allow the rich to get richer, but Medicare and Social Security should NOT be on the table.

Senior Democrat pushes firm line in U.S. budget talks

The article title is misleading, I think. He is not holding firm on entitlements. I wonder just what the Democrats will agree upon to make that deal.

Maryland Representative Chris Van Hollen, the ranking Democrat on the House Budget Committee, told the Reuters Washington Summit that he would be willing to consider some changes to big entitlement programs such as Medicare, the health insurance program for those 65 and older.

But Van Hollen said Republicans must drop their opposition to raising new revenue by closing various tax loopholes.

....Van Hollen said he would be open to finding savings in Medicare in ways that focus on giving care providers incentives to cut costs. He said he would want to avoid changes that reduce the benefits that Americans receive.

One idea that would be a tough sell with Democrats is a change in the way that cost-of-living increases are calculated in Social Security. The change would be made by adopting a less-generous gauge of inflation, known as the "chained Consumer Price Index," or chained CPI.

So Chained CPI is still on the table it seems.

Chained CPI is stealth cut to Social Security benefits. Not acceptable.

The Center for Economic Policy Research (CEPR) has published a brief on one of the proposed changes to Social Security under the “fiscal cliff” deal – this one known as the “Chained CPI.” The Chained CPI is a bit complex, but here’s the bottom line: it would cut benefits for Social Security recipients by shrinking annual cost-of-living adjustments.

CEPR calculates that it would equal a 3% benefit cut over 10 years, a 6% benefit cut over 20 years, and 9% after 30 years. For the average worker retiring at age 65, this would mean a cut of about $650 each year by age 75 and a cut of roughly $1,130 each year at age 85. This is especially significant given 3-out-of-5 seniors rely on Social Security for more than half of their income.

Some argue the Chained CPI is a more accurate calculation of inflation, but this is not the case for seniors. As we reported in an earlier post, seniors tend to spend more money on health insurance, hospitals, prescription drugs, and nursing care – expenses that are not taken into account by the current CPI calculation. The Bureau of Labor Statistics, which manages the CPI indices, has created an experimental index called the CPI-Elderly, which more accurately reflects the costs faced by seniors. The CPI-Elderly shows a rate of inflation about 0.3% higher than the current CPI calculation.

CEPR also reports the Chained CPI amount to a stealth tax increase on all Americans, but especially those at middle and lower incomes: “For example, workers with incomes between $10,000 and $20,000 would experience an increased tax burden of 14.5 percent, while those with incomes over $1,000,000 would just see an increase of 0.1 percent.”

It is not acceptable to put programs for seniors on the table.