Pelosi caught in a bind on entitlement cuts

President Obama's openness to Social Security cuts as part of a sweeping budget package has put Rep. Nancy Pelosi (D-Calif.) in a tough spot.

The minority leader is straddling the gulf between a Democratic president who's been willing to shrink pay hikes under the popular retirement program for the sake of a bipartisan deficit deal, and numerous liberals in her caucus who are fighting tooth-and-nail to prevent that change.

The issue has left Pelosi with at least three balls in the air.

First, she wants to keep a united front in the high-stakes budget battle with Obama, who has backed a less generous formula for inflationary adjustments to Social Security benefits in exchange for more tax revenue from Republicans.

Second, she wants to defend the views of her caucus, who largely oppose any change in the formula for calculating those benefits, particularly since it could hurt poor seniors who rely on Social Security for their everyday needs.

Third, she's hoping to cultivate the image of Democrats as the more reasonable negotiators in the debate, the party willing to sacrifice in the name of deficit reduction and bipartisan compromise. Members of her caucus acknowledge it’s not an easy job to juggle the three.

“It puts her in a difficult situation,” Rep. Elijah Cummings (D-Md.) said Friday.

Cummings, senior Democrat on the House Oversight and Government Reform Committee, is among the liberals who opposes the adoption of a less-generous formula for updating inflationary hikes for Social Security and other benefit programs.

“Basically what you're doing is cutting benefits," Cummings said. "The question is, are you going to balance the budget on the backs of seniors who have already paid into the system?"

Obama has been floating that idea for months, arguing that no grand bargain on deficit reduction will be possible unless both sides are willing to offer up certain things they deem sacrosanct. For Republicans, that means accepting new tax revenues; for Democrats, it means swallowing some entitlement cuts.

The issue came to a head Thursday when Obama met with House Democrats in the Capitol, where Rep. Keith Ellison (D-Minn.), co-chairman of the Congressional Progressive Caucus, conveyed his concerns about the chained CPI and asked Obama to clarify his intentions.

“He [Obama] took a long time to answer it,” Cummings related. “And then he said, 'I took this much time to answer it because I knew that most of you … would be concerned about it.' So he knows that's a No. 1 issue for many of us progressives.”

Rep. Sheila Jackson Lee (D-Texas) conceded that Democrats will have to make sacrifices if they hope to achieve a sweeping budget deal. But the chained CPI, she argued, cuts an earned benefit and shouldn't be a part of the grand bargain talks.

“I do not see it as contributing to helping the poor and the vulnerable,” Jackson Lee said Friday. “It may be on the table, but I'm hoping we'll be able to convince the White House that that is not the direction to go.”

More than half of all House Democrats endorsed a letter to Obama last month opposing the chained CPI as part of the effort to replace the sequester. More recently, liberal lawmakers began circulating another letter vowing to “vote against any and every cut to Medicare, Medicaid, or Social Security” that emerges this year. Twenty-eight House Democrats have signed on.

Through most of the budget battles that practically defined the last Congress, Democratic leaders agreed that Social Security should be excluded from the talks. The program has not contributed to the debt, they argued, and therefore should not be offered up in efforts to reduce it.

In December, however, Pelosi raised eyebrows when she defended Obama's offer of the chained CPI amid the “fiscal cliff” debate, saying the move represented "a strengthening of Social Security." Although the provision was not included in the final deal, liberals were up in arms that top Democrats seemed open to Social Security cuts as part of the package.

“The chained CPI is, no doubt about it, a benefit cut,” Ellison said at the time.

This month, Pelosi has been extremely cautious in her approach to the chained CPI. She has in no way endorsed the shift, promising only to consider it; she has stipulated that the Democrats won't budge on the issue unless Republicans are willing to accept new tax revenues; and she has insisted that any change to Social Security, or other entitlements, must protect the most vulnerable beneficiaries. “If we can demonstrate that it doesn't hurt the poor and the very elderly, then let's take a look at it,” Pelosi said Thursday.

She singled out research by the Center on Budget and Policy Priorities, a liberal policy shop, that's advocated for the chained CPI, but only if specific safeguards are put in place for poor and very elderly.

Still, while the CBPP has outlined the contours of a plan, there's no legislative proposal. And a number of Democrats are skeptical that Congress could design protections that work.

“Everybody makes the same pitch: You don't want to hurt the people on the bottom,” Rep. Jim McDermott (D-Wash.) said Friday. “OK. Show me how you're going to do that. I haven't seen it.”

Rep. Raul Grijalva (D-Ariz.), who heads the Congressional Progressive Caucus with Ellison, delivered a similar warning.

“Absent some technique, a proposal, that I don't see in a crystal ball, it's going to be very difficult if not impossible [to protect the vulnerable],” Grijalva said. “Unless it's something so creative nobody's thought of it, it's going to be very hard.”

The liberals might have nothing to worry about. With Speaker John Boehner (R-Ohio) and his Republican conference near-unanimous in their opposition to any new tax revenues, many lawmakers are voicing strong doubts about Congress's ability to pass a deficit grand bargain. It's a scenario Obama is well aware of. “One of the things he [Obama] said when he answered Keith Ellison's question, he said, 'You may not have to worry about it, because if they're not going to go along with revenue, then we're not going to have a deal anyway,’” Cummings said Friday. “So he said, basically, keep your powder dry.”

Cummings also noted a political advantage in the openness of Obama and Pelosi on the chained CPI: “They're trying to show that they are being reasonable,” he said. “It shows the public that if a deal is not struck, it's not our fault.”

Cummings said, despite liberals' reservations about the chained CPI, there's near-unanimous faith in Pelosi to protect the Democrats' ideals.

"She finds a way to bring her party to some type of consensus," he said. "It may not be 100 percent, but consensus."