By Patrick Martin
The cuts in Social Security and other critical social programs proposed Tuesday by the Obama White House as part of negotiations with House Speaker John Boehner over the so-called “fiscal cliff” mark a watershed in US social policy.
Obama has publicly proposed to cut future benefits for Social Security recipients, underlining the bipartisan agreement that the working class and the elderly, not Wall Street or the super-rich, must pay for the crisis of American capitalism.
According to press reports Tuesday, the White House counter-offer to Boehner calls for reducing future cost-of-living increases in Social Security benefits by adopting an inflation index that is deliberately distorted to underestimate the amounts that the elderly will have to pay for the essentials of life. The new inflation index, called a “chained” Consumer Price Index, will cut as much as $225 billion in spending over the next 10 years, half of that from Social Security recipients and the rest from the pensions of retired federal workers and other benefit payments.
There are other reactionary features of the White House proposal: limiting the expiration of the Bush-era tax cuts to families with incomes above $400,000 a year, up from the longstanding Obama position of $250,000; allowing the partial payroll tax holiday to expire, effectively imposing a two percent tax on the wages of every American worker; and maintaining the 20 percent rate on dividend income, which goes overwhelmingly to the wealthy, instead of allowing it to rise to 39.6 percent as provided for in current law.