Transcript: Senior White House officials on chained-CPI & Social Security savings proposed in the FY2014 budget

Edited by Jenny Jiang
Partial transcript of remarks by senior White House officials on chained-CPI and Social Security savings proposed in the FY2014 budget. The press briefing was held on April 10, 2013.

On chained-CPI, you say the switch will apply to non-means tested programs. In addition to Social Security, can you give us an example of what some of those or list of what some of those programs would be and how would you specifically protect the vulnerable populations in those programs?

Jeffrey Zients, Acting Director of the Office of Management and Budget (OMB):
Well, the means-tested programs would not switch over to chained-CPI. So the federal retirement program is an example of a program that would have chained-CPI going forward.

Veterans’ programs as well?

Jeffrey Zients, Acting Director of the Office of Management and Budget (OMB):
The means-tested veterans’ programs are excluded…

Gene Sperling, Director of the White House National Economic Council:
SSI, Pell Grants would be examples of things that where chained-CPI would not apply.

…On the chained-CPI. Speaker [John] Boehner has criticized the administration for, in his words, “holding that hostage to raising revenues”. If going to the chained CPI is a good way to rationalize entitlement programs and if it, in fact, would also raise revenues, why not handle that separately as an issue on its own?

Jeffrey Zients, Acting Director of the Office of Management and Budget (OMB):
It’s not the President’s preferred policy. He’s willing to do it as part of a comprehensive $1.8 trillion deal that puts us on a sustainable path, gets us out of this pattern of manufactured crisis after manufactured crisis. So the condition for CPI is part of a balanced comprehensive package and, again, the second condition is it has these protections to protect the most vulnerable and older recipients of Social Security.

Gene Sperling, Director of the White House National Economic Council:
And let me just add – several of us have been part of many bipartisan budget agreements. Obviously, when you’re having a bipartisan budget agreement, it requires give and take on both sides. You can’t have an agreement where one side says when if you make a compromise, they say, “Well, we’ll just take that.” That doesn’t work, and it can’t work. It couldn’t work the other way. If they said, “Well, as part of your agreement, we’re willing to support your infrastructure plan but only if you did all the entitlement savings,” we couldn’t say, “Oh well, thank you, we’ll just take that.” You’d understand that was put on the table as part of a compromise.

Now, you know, Dec. 3, Speaker [John] Boehner, Eric Cantor, [Jeb] Hensarling, [Paul] Ryan wrote this President a letter very explicitly saying that they were willing to do $800 billion in revenues if it followed the offer – the compromise that Erskine Bowles had put out to the Super Committee, which you know included the CPI. The leader – the Minority Leader – Sen. [Mitch] McConnell again said that if you have a deal with revenues, this is as recent as Jan. 6 on Meet The Press, that one of the things that they felt was needed for giving revenues was the CPI.

So when they’ve gone to us and said this is one of the things you need to do for us to be willing to do a comprehensive package, obviously it doesn’t feel right or isn’t in the spirit of a bipartisan compromise to then say if the President’s willing to put that on the table something that’s not ideal for him to compromise that therefore you can decide that’s just an a la carte menu that you can pick off.

We’ve made very clear that everything in our budget it has to be part of an agreement. We’ve made very clear that the last offer to Speaker Boehner that everything else is – that the last offer to Speaker Boehner is not conditioned on the additional investments that we think are best in our budget. But the offer that is there for Speaker Boehner is not an a la carte menu, and you can’t decide to only pick out the concessions that the President has made and not include the concessions from the Republican side that need to be part of a bipartisan deal that could pass both houses.

…On the social safety net on the other end of the spectrum, how do you propose to protect the oldest Social Security recipients? Do you want, for example, a one-time payment to people who’ve been in the program for 20-25 years?

Jeffrey Zients, Acting Director of the Office of Management and Budget (OMB):
…There is an adjustment for older Social Security beneficiaries that kicks in at age 76 and begins to phase in at that point. This is consistent with what Bowles-Simpson also recommended as part of movement to chained-CPI. So there’s an adjustment that starts at age 76.

A yearly adjustment?

Jeffrey Zients, Acting Director of the Office of Management and Budget (OMB):
Yes, based off of 5% of average wages.

Gene Sperling, Director of the White House National Economic Council:
And fully phases in at 80. It goes from 76 to 85 in the adjustment.

What about this argument that when you cut Social Security and now the bottom 50% of Social Security recipients get 90% of their income from it so means-testing is going to be very difficult and even in response to Boehner? And when you cut Medicare, you’re just adding to poverty among the elderly which is now down to 7% from 65% before the programs. And on the other side, if you means test, you’re pulling away the broad support for Medicare and Social Security and you’re endangering the programs politically…So that’s why the program was designed that way in the first place. Can you address those?

Gene Sperling, Director of the White House National Economic Council:
Every single thing that the President does that affects Medicare is designed to protect it – protect its benefit guarantee structure, its universality for all seniors. The measures in our plan – as you know, Medicare was supposed to be insolvent in 2016. The measures in the ACA pushed it to 2024. These measures would push it another 4 years out on solvency.

This President has rejected very strongly anything in the premium support or vouchers that would in any way segment people. So there were incentives designed to segment those depending on how young or how healthy you were versus older and having health issues. So I mean, this President is completely dedicated that.

Now, as the President said, we do have a challenge. It’s not our only fiscal challenge but the cost of Medicare growth – I mean, health care growth while Medicare growth has come down significantly, and most importantly the baby boom generation does create challenges. And the President is trying to do very sensible reforms that, again, protect that core benefit structure.

Now, in terms of the means-testing. The only thing what’s in this proposal and this is – was one of the three things that some of the Republican leadership has called for is to have some means-testing on Medicare. Now, the way – what the President has done is propose that in Part B the premium that is paid by those who are well-off in their senior years will be higher. So right now, the average Medicare recipient only bears 25% of the cost of Part B Medicare – the part that goes to your doctor coverage. Prior to the President coming in, there had already been policies that said at $170,000 a couple and above – $170,000 a couple above, people would pay higher than 25% and that ranges up to about $420,000 a couple.

So what this proposal does is it says that if you are above – if you are an older couple that has income of $170,000 or above, you’re going to pay a higher percentage of the costs. But in all cases, you still have a benefit of being in Medicare. You know, if you’re making $500,000, you’re going to pay a large fraction of that program is so that the rest of general revenues – the rest of the public is not subsidizing it. But in all cases, an older American – anyone – is still better off being part of the Medicare Part B program.

So there’s nothing that we have done that in any way tears the program apart. Quite the opposite – what the President has fought hardest for is against things like premium support. You know, there’s been a lot of talk about the fact that he was willing to accept their condition of CPI but you should also recognize the President has not accepted their condition of raising the Medicare retirement age to 67. That’s something that he has both private and publicly rejected.

And in terms of Social Security, nothing in the proposal we have – the adjustments we have – would increase the elderly poverty rate. What the President’s trying to do – all of the savings to the effect that the CPI has impact on Social Security, those go back and actually help close about 10% to 15% of the solvency gap for Social Security; we put fund savings back to adjust for older Social Security recipients.

And just remember too that this President has fought so hard to also protect Medicaid in this budget. We have minimal Medicaid savings. Medicaid is where older Americans get their long-term health care from. He has again made that very, very tough fight.

So I think when you look at what this President’s done overall, it is just a hard, vast defense of what he considers some of the crown jewels of our government and key for retirement dignity. And everything he does is designed to make sure that they’re as strong for the next generation as they have been for previous generations.

…It goes to 35% or 40% if you get the $170,000…and then it goes up a little higher as you go up the bracket, up to – with the highest being over $420,000 a couple. But in all cases, you’re paying for a higher percentage of your Medicare Part B but again everyone still has an incentive to still be part of the Medicare program.

Jay Carney, White House Press Secretary:
…When the President accepted some demands, if you will, from Republicans to include in the offer to the Speaker of the House, one of those demands or proposals from Republicans that he rejected was that we raise the retirement for Medicare, for Social Security. He rejected that because he felt that it was not fair or good policy.


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2 Comments on “Transcript: Senior White House officials on chained-CPI & Social Security savings proposed in the FY2014 budget

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