Liberal Democrats say chained CPI is a deficit deal breaker – almost

A deficit-reduction deal that includes cost-of-living cuts for Social Security beneficiaries could cost Democrats the support of House liberals who might be needed to pass the bill, a number of lawmakers warned Thursday.

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But the liberal Democrats stopped just short of saying they'd vote against a deal that included a move to the so-called chained consumer-price-index (CPI), a concession President Obama offered to Republicans this week.

"It is conceivable that you could have a package that is so attractive in so many other ways that you might swallow it. But here's the problem: There are going to have to be compromises [by liberals] in other areas," Rep. Barney Frank (D-Mass.) told reporters at the Capitol. "And what we're saying is this one, for many of us, is a deal-breaker — or close to a deal-breaker — by itself."

Frank characterized the inclusion of the chained CPI provision as "a pretty heavy burden" for Democrats that "substantially reduce[s] the chances of an agreement." 

Rep. Peter DeFazio (D-Ore) was even more terse. He warned it is better to go over the cliff on Dec. 31 rather than reach an agreement that includes the Social Security cuts. DeFazio said the current CPI, though imperfect, is better than the chained CPI. He asked what motivation there is for Democrats to fight for what, in their eyes, is the worse deal.

"On Jan. 1, if we do nothing, seniors get a full COLA [cost-of-living-allowance] … and Lloyd Blankfein pays more in taxes," DeFazio said, referring to the head of Goldman Sachs. "If we do nothing, seniors don't get stuck with this deal."

As part of the fiscal-cliff package Obama offered to Speaker John Boehner (R-Ohio) this week, the president included the chained CPI provision as a sweetener to entice wary House Republicans to get on board. The change would reduce the inflationary raises made annually to the federal programs indexed to the CPI, including Social Security.

Although House Democratic leaders have said for weeks that Social Security has no place in the current fiscal debate, they've displayed a sharp change of tone on the chained CPI since Obama offered it to Boehner. 

House Minority Leader Nancy Pelosi (D-Calif.), for instance, raised plenty of liberal eyebrows Wednesday when she said Obama's proposal did not constitute a cut to Social Security benefits. 

"No, I don’t," Pelosi said, when asked directly if she thought the provision is a benefit cut. "I consider it a strengthening of Social Security. But that’s neither here nor there. There’s no use even discussing that, because we don’t even know if we have a plan."

But a number of liberal Social Security advocates disagree — and they're hardly keeping quiet. 

"The chained CPI is, no doubt about it, a benefit cut," Rep. Keith Ellison (D-Minn.) said Thursday.

Any fiscal-cliff deal between Obama and Boehner will need backing from a significant number of Democrats to pass the lower chamber because Tea Party Republicans are expected to reject such an agreement.

Still, the liberal Democrats are not quite making their support for a deal contingent on the absence of the Social Security provision, instead emphasizing that they need to see the full package before deciding how they'll vote. 

"All of us want to see the texture of whatever deal comes out," said Rep. Donna Edwards (D-Md.). "But as it's put forward right now, this is really not acceptable."

The ultimate vote — if it ever happens — could come to bear on upcoming elections. The Progressive Change Campaign Committee (PCCC), a liberal advocacy group, warned this week that it will push to find primary candidates for any Democrats who support a fiscal-cliff deal that includes the chained CPI provision.