Tuesday, August 09, 2011

Social Security and "chained CPI"

Jeff Gelles in Promises that can't be kept? Philadelphia Inquirer 08/07/2011 describes the scheme of Social Security opponents to significantly cut benefits by means of a "chained CPI" inflation adjustment. Gelles describes the pitch:

The idea: Shift annual adjustments downward by basing them on the so-called "chained" Consumer Price Index, a version designed to reflect how consumers shift their behavior when they face higher prices. The idea is that some people who can afford, say, an increase in the price of beef will simply absorb it, but others will instead buy more pork or chicken.

Using the chained CPI is a proposal with a lot of weight behind it from Washington's insider class of "very serious people," such as private-equity billionaire Pete Peterson and the chairs of the Bowles-Simpson fiscal-reform commission. It's even won support from some liberal groups that portray it as a mere "technical change" - albeit one that would save the federal government about $300 billion over the next decade, more than a third of that by reducing Social Security costs, and thus help ensure the program's long-term solvency without what Harry Potter might call the fiscal-adjustment-that-must-not-be-named. [my emphasis]
He goes on to explain that a more realistic measure of the actual inflation experienced by Social Security recipients would likely be higher than the current CPI adjustment being applied to Social Security payments. But of course that's just the opposite of what Social Security opponents want. They want to use a "chained CPI" calculation that would lower payments to recipients the older they get. Since female Social Security recipients live longer than male recipients, in practice the change would hurt female recipients harder. Another victory for the Radical Right's grim version of "family values."

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