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Democrats Balk at 'Chained CPI' Provision in White House Entitlements Proposal

Democrats are balking at President Barack Obama’s latest offer to House Republicans to shift the way inflation is calculated.

The White House proposal presented a tough choice for Democrats, who have long criticized the new inflation measure as a thinly veiled attempt to reduce entitlement benefits for the poor and elderly.

Part of the broader White House offer on the fiscal cliff of tax and spending measures, the plan would apply the new inflation index, called “chained CPI,” to the Social Security Administration and the tax code.

Democrats sharply criticized the idea on Capitol Hill on Tuesday, but several said they hoped the White House could create a cushion to soften the impact on the neediest beneficiaries.

“I don’t like it at all,” said Sen. Sherrod Brown, D-Ohio, adding that his colleagues “overwhelmingly” agreed with him on the issue.

“I’m not going to draw any line in the sand,” said Sen. Benjamin L. Cardin, D-Md. “I’m going to fight hard to keep Social Security out of this.”

Sen. Jay Rockefeller, D-W.Va. said, “I won’t be happy about anything that happens to Social Security, Medicaid or Medicare.”

Still, Rockefeller said it didn’t mean he would vote against an ultimate deal.

Rep. Sander M. Levin of Michigan said his “strong preference” would be to leave chained CPI out of the deal. “I think there needs to be a further look at it and its potential impacts on the recipients,” he said. “As you know, it goes beyond Social Security. It covers veterans; it covers people with disabilities.”

There were no details in how the Obama administration might look to soften the impact, but officials said those plans could come late.

Sen. Ron Wyden, D-Ore., called the White House offer “fluid” and said he would reserve judgment until seeing more specifics.

“I want to see the details on the vulnerable,” he said. “That to me is kind of the threshold question in order to have the debate.”

White House Legislative Director Rob Nabors addressed Democratic senators about the White House offer, but Sen. Richard J. Durbin, D-Ill., said Nabors “didn’t get into specifics.”

Including the chained CPI in the offer represents a major concession by Obama, who had previously joined Hill Democrats in saying he would not accept any plan that reduced benefits to retirees. Boehner’s earlier offers both had a government-wide inflation change.

White House spokesman Jay Carney said Tuesday that the idea of shrinking the annual increase in payments came from Republicans and that Obama is trying to meet them halfway to get a broader deficit-reduction deal.

And, he said, the plan would have provisions that would hold the most vulnerable people harmless, although he had no details on how that would be accomplished.

Impact Spreads

According to the Congressional Budget Office, moving to the chained CPI would save $112 billion over 10 years by reducing the growth in Social Security benefits paid to retirees and people with work-related disabilities. Another $72 billion would come from new revenue because a lower inflation rate is likely to move many households more easily into higher tax brackets, which are pegged to inflation.

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