This morning brings news of a possible deal on the horizon, concerning the “fiscal cliff.” Obama would get the an extension of the Bush tax cuts for households with incomes under $400,000 (not $250,000, which was his goal), a two-year debt limit reprieve, the elimination of the sequester, and additional revenue and the extension of emergency unemployment benefits.

What he is willing to give up for this? Quite a lot, actually. It amounts to about half a trillion dollars in future cuts to social programs (the nature of these cuts have yet to be determined), and also significant cuts to Social Security benefits, in the form known as “chained CPI.” “Chained CPI” is an alternative way of calculating the cost of living which will lower benefit amounts.

I realize that compromises are going to be made on this deal which I, along with most Democrats, are not going to like, but I am not a fan of this deal. At all. Where do I begin?

First of all, the idea of all those large unspecified cuts in social programs makes me very uneasy. Secondly, the two-year debt reprieve, while it sounds like a good idea, is actually quite risky for the Democrats, as Brian Beutler explains. And then there are those Social Security cuts.

In last night’s lukewarm blog post about the deal, Paul Krugman pointed out that at least the Social Security cuts “are not nearly as bad as raising the Medicare age.” That is true, but it is also faint praise. Basically, I’m with Delong, who says,”‘Chained-CPI’ is code for ‘let’s really impoverish some women in their 90s!’ It’s a bad policy.”

Indeed. Chained CPI would have a disproportionately negative effect on women, who receive less Social Security than men to begin with, and who also rely more heavily on Social Security as a source of retirement income than men do (because they are less likely to have savings or private pensions).

We actually should be talking about raising Social Security benefits, not lowering them. Very few employers are providing defined benefit pensions these days, and declining wages and increasing economic instability make it difficult for many Americans to save for their retirement. Dramatic fluctuations in the stock market mean the values of workers’ retirement portfolios can suddenly plunge in value. As Joe Nocera pointed out in this excellent column from earlier this year, our pension system has utterly failed to meet the challenges of our brave new economy.

Already, the U.S. social security system is far less generous than those of other industrialized nations. According to the OECD, the social security benefits the median U.S. worker earns are among the lowest of any OECD country — about 42% of earnings, as compared to an average among OECD countries of 61% of earnings (see p. 119 of the report).

Cutting Social Security benefits should be off the table. As Delong says, “This deal would still be on the table in January. And odds are Obama could get a much better deal than this come January.” I agree. I worry, though, that cutting Social Security may be the kind of “Grand Bargain” Obama has always seemed amenable to. I don’t think it’s too cynical to believe that the White House floated the story that they were considering raising the Medicare age, so that Democrats would find the bitter pill of cutting Social Security more acceptable. Let’s hope progressives put up a real fight on this one and force the White House to hold out for something better.

UPDATE: The Washington Post’s Greg Sargent is reporting that, according to Senator Dick Durbin, who is close to the White House, chained CPI and other Social Security cuts may be off the table.

Kathleen Geier

Kathleen Geier is a writer and public policy researcher who lives in Chicago. She blogs at Inequality Matters. Find her on Twitter: @Kathy_Gee