As word spread that Mr. Obama was considering large savings from the use of a different measure of inflation to reduce the annual cost-of-living adjustment in Social Security benefits, Democrats joined with lobbyists for older Americans to reject the idea. Representative Chris Van Hollen of Maryland, the senior Democrat on the House Budget Committee, said Democrats would oppose changes in Social Security benefits as part of the deficit-reduction talks.
“Any discussion of Social Security should be on a separate track,” he said. Representative Nancy Pelosi of California, the House Democratic leader, said, “Any savings should be plowed back into making Social Security stronger.”
Representative Sander M. Levin of Michigan, the top Democrat on the Ways and Means Committee, said, “The proposal would place new burdens on the backs of seniors.”
Representative Xavier Becerra of California, a member of the House Democratic leadership, said, “The cuts in Social Security benefits would grow larger as retirees age, and seniors who rely most on Social Security to pay for basic necessities would receive the biggest benefit cuts.”
On the Senate floor, Senator Sheldon Whitehouse, Democrat of Rhode Island, said Thursday: “Social Security and Medicare benefits should not be on the table. Social Security is not the cause of the deficit, and beneficiaries should not be made to shoulder the burden of deficit reduction.”
In particular, Mr. Whitehouse said, Congress must not “cut benefits through backdoor methods such as lowering the cost-of-living adjustment.”
Republicans are concerned about the growth of entitlement programs, including Social Security and Medicare. Some, like Senator Tom Coburn of Oklahoma, support the idea of an alternative measure of inflation, known as the chain-weighted version of the Consumer Price Index, because they believe it is more accurate. But the party, waiting to see details, has not taken an official stand.
Lobbyists for older Americans were blistering in their criticism of the proposal, which, according to the Congressional Budget Office, could reduce federal spending by more than $110 billion over 10 years.
“This is nothing more than a backdoor benefit cut that Washington hopes Americans won’t notice or understand,” said Max Richtman, executive vice president of the National Committee to Preserve Social Security and Medicare.
He said Social Security beneficiaries did not receive a cost-of-living adjustment this year or in 2010 because inflation, as measured by the standard Consumer Price Index, was so low.
AARP, the lobby for older Americans, said last month that it might be open to modest reductions in Social Security benefits for future recipients. But A. Barry Rand, the group’s chief executive, tried to quash the inflation adjustment idea, saying that “AARP will not accept any cuts of any kind to Social Security as part of a deal” to reduce the deficit and increase the debt limit.
The proposal under discussion would affect current and future beneficiaries. Any move to exempt current beneficiaries would reduce the amount of savings.
Supporters of the proposal argue that the current measure of inflation overstates increases in the cost of living because it does not adequately reflect how, when faced with higher prices, consumers change their buying habits, substituting cheaper items for more expensive ones.
On the other hand, some economists say the current measure understates the impact of inflation on older Americans, who tend to spend more of their income on health care. Medical prices have been rising faster than the overall price index.
Budget negotiators are also discussing a proposal that would use the alternative measure of inflation to adjust income tax brackets and other provisions of the tax code, like the standard deduction and the personal exemption amount.
This proposal would raise nearly $60 billion over 10 years, as more Americans would find themselves in higher tax brackets.
Republicans, adamantly opposed to any form of tax increase, worry about an increase that might result from using the new measure of inflation to adjust tax brackets.
Representative Robert E. Andrews, Democrat of New Jersey, said he would consider changes in the Social Security benefit formula only as part of a giant deficit-reduction package that included substantial new revenues and cuts in military spending. If the alternative measure of inflation is more accurate, he said, it would be “logical, consistent and desirable” to use it in adjusting tax brackets and Social Security benefits.
Grover G. Norquist, a prominent conservative strategist who is president of Americans for Tax Reform, said he saw a big difference. Reducing Social Security benefits would be a cut in spending, and “that would be fine,” Mr. Norquist said. But he said using the new price index to set tax brackets would be a tax increase, in violation of the pledge made by Republican leaders.
Stephen C. Goss, the chief actuary of Social Security, said the alternative inflation measure could reduce annual cost-of-living adjustments so the benefit for a retiree turning 85 in 2035 would be about 7 percent lower. The cuts are cumulative and would have a larger effect on older beneficiaries, who depend more on Social Security as a source of income.
Congressional Democrats said that using a different version of the Consumer Price Index could also reduce Medicare payment rates for some health care providers, including ambulatory surgical centers, clinical laboratories and suppliers of durable medical equipment like wheelchairs and respirators.
In addition, they said, the proposal could eventually increase the number of Medicare beneficiaries who must pay higher premiums because they have incomes above a certain level — $85,000 for individuals and $170,000 for married couples this year.
