Changing the inflation calculator potentially provides Obama and congressional Republicans with a way to accomplish their goals. Obama is seeking more revenue through tax-code changes, while Republicans are pushing to trim entitlement programs such as Social Security in cutting spending.
The change in calculation would make the annual adjustments smaller than they are now. As a result, more income would be subject to higher income tax rates. The administration in its earlier proposal estimated that would bring in additional tax revenue of about $100 billion over 10 years.
In 2020, the change would raise taxes for 78.3% of households by an average of $124, according to the nonpartisan Tax Policy Center in Washington. Taxes would increase for 98% of households making between $75,000 and $100,000 a year.
Boehner’s spokesman said House Republicans will resist attempts to raise tax revenue to cut the deficit, which was $1.1 trillion in fiscal 2012.
“The president got his tax hikes already,” the spokesman, Michael Steel, said in an e-mail. “It’s time to deal with Washington’s spending problem, so we can get our economy moving again and create more American jobs.”
Switching to the alternative inflation yardstick for Social Security would save $130 billion, according to the plan Obama offered last year.
Obama hasn’t included the changes to Social Security and tax bracket calculations in previous spending blueprints and might still leave them out, according to a person familiar with White House discussions, who asked for anonymity to talk about the internal debate.
The propect of such a change already is generating opposition.
“Millions of working people, seniors, disabled veterans, those who have lost a loved one in combat, and women will be extremely disappointed if President Obama caves into the long standing Republican effort to cut Social Security,” Vermont Senator Bernie Sanders, an independent who caucuses with Democrats, said in a statement today.