Senate Nears Debt Ceiling Consensus Which Demands Change In CPI Definition

Tyler Durden's picture

Politico reports that the latest development in the constantly changing and oh so theatric "struggle" to find a compromise on how to raise the debt ceiling by $2.5 trillion, is one which will not only not do anything to fix the deficit situation but will in fact set America back, as a key part of the "savings" will come precisely from the same change in the definition of inflation courtesy of the Chained CPI introduction, which the democrats previously blasted, and for good reason: because it will be an implicit theft from Social Security. Recall that the last time this was proposed the AARP started foaming in the mouth within minutes. The broad strokes of the plan are as follows: "The once moribund Senate “Gang of Six” regained new life Tuesday after Oklahoma Sen. Tom Coburn unexpectedly rejoined the group — and more senators are now coalescing around a new proposal that would cut the debt by as much as $3.7 trillion over the next decade.  According to a copy of the plan, obtained by POLITICO, the group would impose a two-step legislative process that would make $500 billion worth of cuts immediately followed by a second bill to create a “fast-track process” that would propose a comprehensive bill aimed at dramatically restructuring tax and spending programs. The plan calls for changes to Social Security to move on a separate track, and establishes an elaborate procedure for considering the measures on the floor." And here is the kicker: "The $500 billion in cuts would come from a range of sources, including shifting to a new consumer price index to make cost-of-living adjustments to Social Security." Care to wager what the bulk of this $500 billion will come from: that's right - social security, whose deliverable obligations will plunge as suddenly the inflation variable in the actuarial calculation will very mysteriously be cut courtesy of Senate-endorsed theft.

More from Politico:

To enact a comprehensive deficit plan, the group calls for congressional committees to report legislation within six months that would “deliver real deficit savings in entitlement programs over 10 years,” the plan says.

It calls on the Finance Committee to permanently reform or replace Medicare’s Sustainable Growth Rate - an outdated formula aimed at determining the amount to reimburse doctors for treating Medicare patients - by $298 billion.

The Finance Committee would be instructed to deliver “real deficit savings” through simplifying the tax code and raise as much as $1 trillion. It would do this by establishing three tax brackets with rates of 8-12 percent, 14-22 percent and 23-29 percent. It would permanently repeal the $1.7 trillion Alternative Minimum Tax. And it calls for establishing a single corporate tax rate, between 23 percent and 29 percent, and to move to a competitive territorial tax system.

Overall, the group claims it would result in a $1.5 trillion net tax decrease.

The group punts many of the specifics to other committees, which would be asked to find savings in discretionary and mandatory spending. This includes: $80 billion out of Armed Services; $70 billion out of Health, Education, Labor and Pensions; $65 billion out of Homeland Security and Government Affairs; $11 billion out of Agriculture; $11 billion out of Commerce; $6 billion out of Energy and Natural Resources. The Judiciary Committee would be asked to find savings through medical malpractice reform.

Who is pushing the Chained CPI bill?

Senators in the Gang of Six - Kent Conrad (D-N.D.), Dick Durbin (D-Ill.), Mark Warner (D-Va.), Mike Crapo (R-Idaho) and Coburn - discussed the proposal with 43 senators Tuesday morning on the first floor of the Senate, after more than six months of struggling to broker a deal.

And here are the next steps in the theater:

If any committee cannot propose cuts, it would would impose “across-the-board” cuts to programs under the panel’s jurisdiction. It would exempt programs aimed at low-income communities.

To avoid gridlock, floor amendments that upset the deficit-reduction goals would be ruled out of order. Any bill that could receive 60 votes would be held at the desk until the Senate considers the separate Social Security bill.

Once a comprehensive deficit plan has the votes, a measure aimed at ensuring 75-years of solvency of Social Security would head to the floor. The Finance Committee would be required to recommend the Social Security changes.

Bottom line: our initial prediction that absolutely nothing will change now appears been optimistic, as the net result will be a far worse outcome, one which effectively changes the rules vis-a-vis inflation tracking, making stealth devaluation a core premise of this and any other future "deficit reductions."

Once again, middle-class America is about to be raped by its own "representatives" while the banking oligarchy flourishes.


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Nolsgrad's picture


max2205's picture

I gues I have to ask why we don't just freeze cost increases to Dr's and Insurance Co's for medical costs....oh forgot that they are helping to write this bill....duhoooo

Inibo E. Exibo's picture

That and price controls are a guaranteed to create a shortage of services.

XPolemic's picture

Orly? So in the countries where they have socialised medicine, (UK, France, Australia,Canada,etc) there are no doctors right?

Strange .... I haven't noticed a doctor shortage ... but I guess all those US doctors wouldjust just throw away their education, residency, practice and go become wall street bankers if the government ever interfered with their god given human right to charge whatever they wanted.

I guess thats why Americans who live in the North East never cross the border to Canada for medical services, because of Canada's horrendous doctor shortage. Someone better tell Canada about how they could get some more doctors by implementing the US model.



TheGameIsRigged's picture

This is REALLY getting ridiculous.  The Senate is so old and behind the curve of technology that they think they can make these changes (the same types of "changes" they have been making for decades) - except now technology can follow their every move - and can tell America in REAL TIME how they are being screwed....Americans NEED NEED NEED to wake up and start lambasting their congress-idiots.  I truly hope for congresspeople to experience the pain that normal Americans are feeling.


Rage against the Machine, people.

eureka's picture

Rage is Un-american activity. Rather, tell the old people they should sacrifice themselves for the Federation, since they're gonna die soon anyway, they get to be soldiers - for free and die for the fatherly HomeLand - in Iran, or where ever!

Ask not what the HomeLand can do for you, but what you can do for it.

That's the American spirit. One collectivist tribe uber alles.

Uncle Remus's picture

If it is coupled with a take-a-bankster-or-two-with-you-when-you-go program, I think you might have a Wynner.

Gene Parmesan's picture

"Your city thanks you; your country thanks you; your planet thanks you. But the deepest thanks of all is from future generations."

francis_sawyer's picture

"and are still fresh as daisies..."

OTOH... In the end... some 'daisies' prove to be just a little too high strung...

SheepDog-One's picture

The old coots think they can enter a Model T and win the Indy 500!

I did it by Occident's picture

Yes, do to them what they have been doing to the country for years. 

repeat after me "disdain, disrespect, discredit, disrepute..."

Not that they need any help.  the congress is cerainly doing a bang up job all on their own. 


camaro68ss's picture

grandma should have saved her own money instead of blowing it on woodstock and Cocaine and expecting the goverment to take care of her

DosZap's picture


IF Grandma worked, SHE did save(forced SSI/FICA)............the Government spent Granny's money, and now they are going to bend her over yet again.

Got Vasoline?.


TruthInSunshine's picture


This is not in jest: Real study by BLS:

U.S. Bureau of Labor Statistics

First Quarter 2011

  • Consumer Expenditure Survey: Do two live as cheaply as one? Evidence from the Consumer Expenditure Survey (HTML) (PDF)
O RLY? Part II:
Gene Parmesan's picture

If Grandma thought SSI/FICA were the savings she would live off of through retirement then she isn't very bright to begin with.

camaro68ss's picture

if grandma wasent dumb and trust her goverment then we would have no problems

Under the Supreme Court Case Helvering v. Davis case. On November 12, 1936, "(Social Security payments) are not earmarked for any special purpose." They are (Social Security payments) "true taxes, their purpose being simply to raise revenue . . . available for the general support of Government." This was a Supreme Court decision questioning the constituionality of Social Security

you been lied to bitchez!

Gene Parmesan's picture

SS = separate taxation and welfare programs

Unfortunately few understand this.

I did it by Occident's picture

I always thought it funny that it has the same initials as Schutzstaffel (i.e. of 1939-1945 fame). 

Anyways, I believe the Supreme Court "had to" say that it is a tax which the govt is authorized to levy.  Otherwise, it amounts to taking of property without due process, a violation of the 5th amendment.

Thisson's picture

@Doszap: Bullshit.  Grandma has gotten way more out of the system than she has contributed.  Moreover, we abandonned gold as our money on her watch.

DosZap's picture


I have put a couple of hundred K into that system.BY FORCE,no choice,it's mine,it was a contract,has been since inception.

My beef is not that it's not that it take it's share,but to hit the least able in our culture to absorb it, is insanity.

The argument of recieving more back than put in applied to MY parents generation,and their parents.Not boomers born after WWII.

You get back a % of whatever you put in.....................I / we did not have a say in those rules either, did we?.

I do not expect younger people to get our mores, and value systems are far apart.

 Besides, any way THEY or YOU want to see it,it's MY money, my earnings, by my sweat of the brow,and I fully intend  to get it one way or the other.

I have yet to recieve one dime back,newsflash to all politicians,get ready for a lubeless f75698ng in 2012.

Wait till the older voters hit the booths.

malek's picture

Give up the belief you paid into an intricate system which somehow guarantees you a return.

You paid the money to the then-retired, and you got a Social Security Trust shoebox full of worthless promises that enough money can/will be extracted from future generations to pay your pension when you are retired. If this won't be possible... politicians will come up with some nice excuses. We're now in the opening ceremony for that game.

JR's picture

Your argument for financial justice, DosZap, is the one that will echo from the Atlantic to the Pacific if this Social Security revision nonsense gets anywhere near passage. If anyone thinks the political backlash from Murdochgate is big, wait till this one whips through Congress.

Former House Speaker Tip O’Neill didn’t call Social Security the third rail of American politics for nothing; he knew more than anyone that Social Security is murderous to touch.

This banker-run government is going through a process of unwinding Western civilization—the people are fighting the same exploiters—the banker-corporate connection. If the fight now begins in earnest, my bet is on the American People.

As for the U.S. Senate targeting the elderly, the historian Albert Toynbee concluded from his study of the world’s great civilizations that a society's quality and durability can best be measured “by the respect and care given its elderly citizens.”

The bankers have almost exclusive say about how America’s government is run, operating as private investment houses while bestowing upon themselves gifts from the U.S. Treasury with no-risk, too-big-to-fail privileges, pumping high-risk investments into no-risk largess backed by the full faith and credit of the U.S. taxpayer.

And if they now have to loot the taxpayers and the old folks and later-to-be-old folks to do it by cannibalizing and bastardizing Americans' paid-up Social Security Trust Fund, so be it say the supporters of Chained-CPI fraud. The Obama-Goldman Sachs-Robert Rubin road map for social security “reform” has long been to increase the retirement age while cutting benefits. We'll see if Congress has the fortitude to just say the bankers. 

Well said, DosZap. 

nah's picture

gramps done had 65 years to figure out how to protect himself... if he doesnt like the system he should call his people


ask me its better than mandatory health insurance at penalty of law for 18yr olds that cant buy beer legally


old folks are better suited to withstand actuarial oppresion.... kids just want to set shit on fire and chase girls when they revolt

caconhma's picture

Please somebody explain to me why are Republicans are so eager to help Obama be reelected? Any idea?

Larry Darrell's picture

For the millionth, billionth, trillionth, quadrillionth, etc fucking time..........




Even with the re-election of that stupid fuck, the people who are sponging off the system to everyone else's detriment will continue to enjoy said lifestyle.


And one more time for the slow learners.......


D-E-M-O-C-R-A-T = R-E-P-U-B-L-I-C-A-N = F-U-C-K - T-H-E - C-I-T-I-Z-E-N-S


JFC I get tired of repeating myself

CptAwesome's picture

I hear ya loud and clear, problem is I think I may be the only one listening!

Mr Kurtz's picture

Spot on! At the end of the day both repukenicans and democraps have drinks at the same country club congratulating one another on another hard days work shoving it up the ass of the plebians.

Escapeclaws's picture

True enough. Democrats have become Republicans. However, Republicans have not become Democrats. That's why they're the same.

depression's picture

Inflation what Inflation ?

What we got here is a  fangled deflation index

The real plan is clarifying: put the doc's and hospitals on a nice steady cost deflation glidepath, and guess what, all of a sudden it sucks being a doctor. head to the back of the line grannie, now shaddup and eat yer strained peeze.

Tuffmug's picture

Grandma will be fine. CPI change will reflect the fact Government will slap price controls on the cost of the large cardboard boxes she and you will be living in under the overpass. Inflation in cost of "housing" will be zero.

idea_hamster's picture

Also, I suspect TIPS investors will get the hose if this new CPI is approved -- look for good old "inflation" to FukushiMorph into "explosive decompression" when those principle hikes don't get paid.

NotApplicable's picture

Anybody stupid enough to buy gov debt tied to a gov generated inflation index... well that's stupid squared.

scatterbrains's picture

This should also free up XOM and the like to ramp gasoline prices higher for sale to overseas market without impacting cpi.. folks will switch from cars to bicycles to get around.. see inflation is chained down nicely. I'm looking foward to /XRB skying on this news.

Escapeclaws's picture

Quick, somebody show that the new inflation index is based on faulty methodology!

emsolý's picture

And we welcome the United States to the ranks of an official banana republic.

SheepDog-One's picture

Big yellow banana on a chartreuse background may as well be USA's new flag.

Long-John-Silver's picture

Just replace the 50 stars with one big banana.

DosZap's picture

Top Kill,

NO 57 Bananas...........our POTUS thinks he's the ruler of the Arab states.

Sudden Debt's picture

Those banana's will look jummy with a red background, yellow half moon and a golden sickle.

It will look so great!


I did it by Occident's picture

That'd be an awesome T-shirt!  When/where will you be selling said awesome T-shirts?   


redpill's picture

What a bunch of assholes. Any time you hear any of them say "over 10 years" you know they are fucking liars because it's utterly meaningless.

Confused's picture

It is laughable isn't it? If this were to really create a public uproar, I would imagine either party would try and rally support by rolling the offending parts back.

Bay of Pigs's picture

Saying they're cutting 3.7T is equally absurd.

XPolemic's picture

Even if it were true, 3.7T over ten years is 370B a year, and the USG is 14.3T in the hole.

lol, wtf?

I would love to call the Credit Card company and say "Yeh, sure I owe you 100 grand, but I am planning to pay back 25 grand of that over the next ten years ... while I still use my Credit Card."

Who are the USG's creditors?


fiftybagger's picture


Bureau of Lying Statisticians