Market Reaction
Stocks rose slightly yesterday. The Standard & Poor’s 500 Index rose 0.3 percent to 1,413.94 at 4 p.m. New York time; the Dow Jones Industrial Average was also up by 0.3 percent, closing yesterday at 13,074.04. Treasury 10-year note yields fell today by less than one basis point, or less than one percentage point, to 1.58 percent at 7:29 a.m. New York time, according to Bloomberg Bond Trader data. Yesterday the yield dropped to 1.56 percent, the least since Nov. 16.
Boehner, in a $2.2 trillion deficit-cutting plan he offered this week, proposed using a new inflation yardstick -- the so- called chained consumer price index -- that would reduce cost- of-living increases in Social Security, as well as raising the Medicare eligibility age. Other Republicans have also advocated means-testing.
Democrats have long regarded their party as the champions of preserving safety-net programs for the poor and elderly, and Reid has repeatedly said that Social Security is off the table in debt-deal talks.
Failed Talks
Still, raising the Medicare eligibility age and using a different Social Security inflation yardstick were on the table during failed budget talks between Obama and Boehner in 2011.
Simpson cited either of those options as a way to win Republican votes for a tax rate increase on top earners.
Schumer, when asked about the ways to trim entitlement costs, said, “Let them give it to us officially as an idea,” without ruling them out.
Since Obama’s re-election last month, much of the public debate on a possible deal has focused on the tax issue. Obama yesterday visited a middle-class couple in Falls Church, Virginia, a suburb of Washington, to spotlight the need for an agreement to keep the family’s taxes from rising.
Entitlement programs are the biggest driver of the long- term debt. With the oldest of the baby-boom generation reaching retirement age, the number of people age 65 and older is projected to increase by about one-third in the next 10 years, according to the Congressional Budget Office.