Chained CPI: Because elders can substitute cat food for real food, Social Security benefits should be cut
Chained CPI is how Obama wants to jigger the Social Security numbers to get his Grand Bargain with Boehner and starve some old people. (So much for Biden's "flat guarantee" -- which Obama never signed on to). Trudy Rubin explains:
Why is the chained CPI (chained Consumer Price Index) so attractive to such people? As we reported a couple of weeks ago, it cuts spending and raises revenue. The Congressional Budget Office Office estimates it could produce some $217 billion in savings over ten years, with about $145 billion coming from cuts to Social Security benefits and other government pensions.
It’s a juicy target for another reason, too: the public knows next to nothing about it. Its obscurity may have led Slate to characterize it as “the sneaky plan to cut Social Security.” The headline on a blog post by The Atlantic’s Derek Thompson called it “The Sneaky, Complicated Idea That Could End the Fiscal Cliff Showdown.”
Whether that will happen is very much up in the air at the moment. Some Washington writers and columnists aren’t keen on the idea. The idea behind “chaining” is to allow for the way people substitute cheaper goods and services when prices rise. Timothy Noah, writing for The New Republic blog, gave a good description of why the Chained CPI may not measure the cost of living with as much accuracy as its advocates promote. “Would chaining really bring Social Security benefit increases in line with spending patterns? Actually no,” he argues, pointing out that the proposed index doesn’t deal with healthcare spending very well. Healthcare is the biggest expense for many of the elderly, and consumes a larger share of their budgets than does for the rest of the population. If you need a heart bypass, you can’t substitute a hernia operation, the way someone might substitute chicken for steak.
While it didn’t take a position on the proposed formula, the National Journal’s good reporting clearly explained what the new index was all about. It noted the drawbacks of making a change, even quoting Andrew Biggs, a resident scholar at the conservative American Enterprise Institute and former principal deputy commissioner of the Social Security Administration, who expressed serious doubts about switching over to the chained CPI. “One reason is, it’s not based on the purchasing habits of the elderly,” Biggs said. “The consumption patterns of a working household aren’t the same as the consumption patterns of, say, an 85-year-old Alzheimer’s patient living on a fixed income.”
The advocacy group Social Security Works estimates that a person age 75 in the future will get a yearly benefit that’s $653 lower after ten years of chained CPI than that person would get under the current formula. An 85-year-old will have $1,139 less to live on. While this doesn’t seem like a princely sum to an investment banker, it is to the very old.
Heck, $1,139 is a princely sum to me, and I'm not "very old"!
What I really, really like about "Chained CIPI" is that it makes the "Cat Food" component of Obama's plan to gut social insurance programs perfectly clear: Prices go up, old people can substitute a can of Whiskas for the luxurious indulgence of fresh vegetables or a loaf of bread, so cut those benefits and problem solved!
There's only one "compromise" positiion here: "Not one penny of cuts to social insurabce programs, and any savings to be passed on to beneficiaries." That's a compromise from that plus lowering the Social Security age to 60 to free up some jobs for young people, and so old people don't have to work 'til they die in harness at Walmart.