In an effort that offers more symbolism than action, Senator Bob Corker has offered a bill that takes Barack Obama at his word on deficit control. The Dollar for Dollar Act raises the debt ceiling by $937 billion in exchange for exactly the same amount of savings in incremental reforms of entitlement programs (via Instapundit):
Sen. Bob Corker (R-Tenn.) introduced a bill Wednesday to trade nearly $1 trillion in entitlement savings for an equal hike in the debt ceiling.
Corker said the Dollar For Dollar Act would include $937 billion in savings from Medicare, Medicaid and Social Security, with an equivalent, dollar-for-dollar hike to the debt ceiling.
Corker said his plan is based on recommendations from the Bowles-Simpson Fiscal Commission and the Domenici-Rivlin Debt Reduction Task Force.
Why is this more symbolic than meaningful? At the moment, it’s slightly off-topic. The big issues being debated in the fiscal cliff negotiations are tax increases, and the budget cuts and sequestration fixes for which Republicans can trade them. Even Corker knows this will have to wait until February, as the GOP doesn’t want to discuss the debt ceiling until next year, since the US won’t hit the current debt limit for another couple of months.
Republicans want that leverage for broader entitlement reform than simply $94 billion a year. That amount of debt-ceiling increase won’t even get the US through one full budget cycle at the current level of deficits, and a $94 billion reduction will hardly impact it. Finally, the Senate won’t take up anything that doesn’t include tax hikes, which means that this bill will disappear off the calendar in a few days. Corker can reintroduce it in the next session of Congress, so it’s a basically a symbolic statement at this point in time.
That doesn’t mean it’s not worth keeping in mind, both on policy and on politics. Corker wisely takes the modest reforms he offers from two well-known, bipartisan deficit-reform efforts, and also increases eligibility age for Medicare and Social Security. Politically, it puts Obama on the spot with its “balanced” approach, although one has to point out that the savings are calculated over 10 years while the debt-ceiling hike takes place at once. If Republicans give way on taxes this year in order to keep the debt ceiling as leverage in February, this kind of proposal should form the core of a Republican strategy to force Obama to reform entitlement programs that actually drive the massive deficits and debt crises we now face.
Update: Corker’s proposal includes switching to chained CPI, a new measure of inflation that most deficit-reduction proposals use but has had little support thus far in Congress. National Journal has a good primer out this morning on chained CPI, and why it helps — and why its effectiveness is the core of its controversy:
Here’s how the new metric would save money: Social Security, federal pensions, and military and veterans’ benefits are indexed to rise each year with inflation; so are tax brackets, exemptions, deductions, and credits. But experts say the consumer price index the government currently uses overstates how rising prices affect household spending.
The Bureau of Labor Statistics has come up with a more accurate measure, which accounts for consumers’ tendency to switch to cheaper categories of products when prices rise. Rather than looking at a fixed set of goods—as the standard formula does—the new measure looks at how the set of goods changes, and then “chains” two consecutive months of consumption data together.
The chained CPI rises a little more slowly than the current measure. So if the chained CPI were used to calculate cost-of-living increases, it would mean smaller increases to Social Security checks each year. If the chained CPI were applied to the tax code, it would move taxpayers into higher tax brackets faster.
Opponents of the chained CPI say that it would unnecessarily cut Social Security and other benefit programs, burden the oldest and sickest Americans, and hit almost everyone with a tax increase. The deficit-reduction plans floating around Washington—such as the Simpson-Bowles plan—recommend that a switch to chained CPI involves additional protections for the most-vulnerable beneficiaries.
As one person at the end of the article notes with some despair, if we can’t even agree to lower the rate at which entitlement benefits increase, then how are we going to agree to the cuts necessary to solve the deficit crisis?