# Is the progressive outrage over chained CPI warranted? **URL:** \ **Category:** Great Debates\ **Created:** [April 10, 2013, 1:58am UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280 "2013-04-10T01:58:17Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![CJJ](https://avatars.discourse-cdn.com/v4/letter/c/ecc23a/32.png) [@CJJ](https://boards.straightdope.com/u/CJJ)\ **Post date:** [April 10, 2013, 4:26pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/21 "2013-04-10T16:26:42Z")
> [@brickbacon](#): > > It’s around 2% over 20 years. I doubt most consider that significant. [The Washington Post](http://www.washingtonpost.com/blogs/wonkblog/wp/2012/12/11/everything-you-need-to-know-about-chained-cpi-in-one-post/) calculated the difference between benefits calculated using CPI-W and Chained CPI using data for the past 12 years (bolding mine): > [@](#): > > Imagine, for example, a person born in 1935 who retired to full benefits at age 65 in 2000. According to the Social Security Administration, people in that position had an average initial monthly benefit of $1,435, or $17,220 a year. Under the cost-of-living-adjustment formula and 2012 inflation, that benefit be up to $1,986 a month in 2013, or $23,832 a year. But under chained CPI, the sum would be around $1,880 a month, or $22,560 a year. **That’s a cut of over 5 percent, and more as you go further and further into the future** Moreover, the call isn’t just to use Chained-CPI for SS benefits, but for yearly adjustment of tax brackets. This has been analyzed by the [Tax Policy Center](http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=3104&DocTypeID=1), and it leads to a general increase in the average federal tax rate of ~0.2% for middle-class Americans (the wealthy aren’t affected because they’re already in the highest bracket). I agree that’s not alot, but it sure seems oddly regressive. > [@Jas09](#): > > As politics its unclear - does pitching a policy that your base hates but that centrists like hurt you or help you, particularly when you can count on it never passing? Counting on it never passing means Obama is counting on the the usual obstructionist idiots; IMO Boehner and the rest of the Republican leadership would take this deal in a heartbeat if it wasn’t for the Tea Party caucus, and there’s a chance they could raise enough corporate support for this to blunt them. Obama is playing with fire here; I don’t know why he’s decided that it’s worth it in order to win a tiny tax increase on the wealthy, but for some reason this is the hill he’s decided to die on. Moreover, Obama now goes down in history as the first Democratic president to propose cuts in SS retirement benefits (Clinton technically cut SS during the 1996 welfare reform because Aid to Families with Dependent Children falls under SS). That is significant, and it will be the starting point for any future negotiation regardless of what happens with this budget. And the GOP will never let him forget it; by rejecting his budget, they can now proclaim themselves the protectors of SS–just like they did with Medicare in the 2010 elections. Of course it’s hypocritical–they want these social programs gone, they just don’t want to be blamed for it–but it serves their purposes. ---
**Author:** ![waterj2](https://avatars.discourse-cdn.com/v4/letter/w/858c86/32.png) [@waterj2](https://boards.straightdope.com/u/waterj2)\ **Post date:** [April 10, 2013, 4:36pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/22 "2013-04-10T16:36:02Z")
> [@clairobscur](#): > > Hmmm… Could someone explain to clueless foreigners what a chained CPI is 😕 ? The Obama administration has proposed basing the cost of living adjustments in Social Security benefits on the C-CPI-U rather than the current CPI-W. The various CPIs (consumer price indexes) measure inflation through price changes on a basket of goods based on the purchasing habits of consumers. CPI-W fills that basket with purchases typical for urban clerical workers, while CPI-U uses all urban non-farm consumers. In between adjusting the basket of goods for which prices are tracked, chaining assumes that as prices rise, consumers shift to purchasing cheaper products. The extra C in C-CPI-U is for that chaining. This results in a slightly lower measure of inflation, which would mean smaller cost of living increases for Social Security recipients, which would mean smaller payments, with the difference increasing the longer one is on Social Security. Which would save the government money. Economists generally seem to consider chaining a more accurate way of measuring inflation. Many also point out that the goods typically purchased by Social Security recipients are different than the goods purchased by everyone in aggregate. There is also a CPI-E, which tracks inflation among elderly consumers, and naturally a chained version of that, too, but these aren’t currently as rigorously done as the other two. But they certainly could be, if these proposals were primarily about accuracy, rather than about cutting benefits. ---
**Author:** ![BobLibDem](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/boblibdem/32/3149_2.png) [@BobLibDem](https://boards.straightdope.com/u/BobLibDem)\ **Post date:** [April 10, 2013, 4:50pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/23 "2013-04-10T16:50:01Z")
I have a hard time getting worked up about changes in how inflation adjustments are made. I’d rather go ahead and remove the cap on contributions while retaining a cap on benefits. I think Airman was spot on. Obama continues to offer reasonable proposals only to see Republicans piss on his face. Let’s just accept that Republicans are going to obstruct because they have a base that wants Obama to fail. So let’s just hang loose and work on getting Dems in charge of state houses so they can redraw the districts so they can take back the House. ---
**Author:** ![pinqy](https://avatars.discourse-cdn.com/v4/letter/p/a3d4f5/32.png) [@pinqy](https://boards.straightdope.com/u/pinqy)\ **Post date:** [April 10, 2013, 5:36pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/24 "2013-04-10T17:36:31Z")
> [@clairobscur](#): > > Hmmm… Could someone explain to clueless foreigners what a chained CPI is 😕 ? Short version: When measuring price changes one of the difficulties is that the amounts of items varies especially as relative prices between goods change. So the two most basic ways to handle this would be [ul] [li]Assume there has been no change in the amounts bought: keep the quantity set for some reference period and look at what the total increase to maintain that fixed market basket would be. This tends to overstate inflation as in reality people will substitute goods that don’t go up as much in price.[/li][li]Assume that in the past reference period the amounts bought were the same as now: use the current quantities and look at what the increase of cost between reference period and current period prices would be. This tends to understate inflation.[/li][/ul]There are a couple of ways to mitigate this problem, but a chained consumer price index does so by taking a (geometric) average of the past and current expenditures. (it’s not done directly but as weights based on share of expenditures) I can give an example with math if anyone desires. ---
**Author:** ![CJJ](https://avatars.discourse-cdn.com/v4/letter/c/ecc23a/32.png) [@CJJ](https://boards.straightdope.com/u/CJJ)\ **Post date:** [April 10, 2013, 5:57pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/25 "2013-04-10T17:57:35Z")
> [@BobLibDem](#): > > I think Airman was spot on. Obama continues to offer reasonable proposals only to see Republicans piss on his face. Let’s just accept that Republicans are going to obstruct because they have a base that wants Obama to fail. So let’s just hang loose and work on getting Dems in charge of state houses so they can redraw the districts so they can take back the House. Obama seems to want to win over the Washington Post editorial page with proposals like these. He’s hoping that by winning the approval of the centrist pundits, he’ll move the debate in his direction and gain leverage over the GOP. If that is his strategy, it will almost certainly fail. First, the Republican base distrusts the beltway media implicitly, so getting Dana Milbank on your side would probably cause them to double down on the outrage. Second, if 4+ years of blatant obstructionism hasn’t brought the media courtiers around to your side, why do you think this latest proposal will? Third–and most important of all–“centrism” among pundits is a pose, not a real policy position; it’s a narrative method for political writers to appear above the political fray and thereby assume a mantle of authority. When the Republicans reject Obama’s offer (as I hope their crazy caucus forces them to do), these centrist pundits may chide the GOP, but they will also criticize the president for some other reason–like he “didn’t show enough leadership” or was making only “a political gambit rather than a serious proposal”–because that’s how centrist punditry works. ---
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [April 10, 2013, 6:02pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/26 "2013-04-10T18:02:04Z")
Basically, if you want to see arguments on why progressive think this is a big deal, go to the front page of the Daily Kos or similar websites. You’ll find not only arguments that it’s flat out a cut to Social Security without ifs, ands, or buts, but you’ll also see arguments that it’s bad politics (as they think that Republicans will just run as the defenders of Social Security in 2014, using this as the basis of their anti-Democrat attacks, and that “low information voters” will eat it up, not remembering that Republicans have also long run on outright eliminating Social Security and similar programs). ---
**Author:** ![Gangster\_Octopus](https://avatars.discourse-cdn.com/v4/letter/g/a8b319/32.png) [@Gangster\_Octopus](https://boards.straightdope.com/u/Gangster_Octopus)\ **Post date:** [April 10, 2013, 6:04pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/27 "2013-04-10T18:04:18Z")
I am a progressive and I have studied price indexing and I can honestly say that while there is no perfect measure of price increase, chained CPI is an improvement over the current CPI measure. So I do support using it, however, given the considerable economic effect it will have on individuals, I believe it needs to be phased in somehow. I have not really looked at the proposal(s) too closely, so I am not sure how it is being implemented, but I could imagine, a simplified way would be to use a weighted average of chained and unchained CPI over time increasing toward the chained until say ten years from now chained is used exclusively. ---
**Author:** ![hajario](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hajario/32/171_2.png) [@hajario](https://boards.straightdope.com/u/hajario)\ **Post date:** [April 10, 2013, 6:10pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/28 "2013-04-10T18:10:37Z")
> [@Roderick\_Femm](#): > > “Dole”? I’ve paid into that system for 45+ years. If I had taken the same money and instead invested it in a 401(k)-like tax-free program, I would have no need for any retirement money from the government. I do not view whatever I end up getting from Social Security as a dole. Thank you. > Roddy It’s just an expression. Calm down. ---
**Author:** ![pinqy](https://avatars.discourse-cdn.com/v4/letter/p/a3d4f5/32.png) [@pinqy](https://boards.straightdope.com/u/pinqy)\ **Post date:** [April 10, 2013, 6:48pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/29 "2013-04-10T18:48:07Z")
> [@Gangster\_Octopus](#): > > I am a progressive and I have studied price indexing and I can honestly say that while there is no perfect measure of price increase, chained CPI is an improvement over the current CPI measure. So I do support using it, however, given the considerable economic effect it will have on individuals, I believe it needs to be phased in somehow. I have not really looked at the proposal(s) too closely, so I am not sure how it is being implemented, but I could imagine, a simplified way would be to use a weighted average of chained and unchained CPI over time increasing toward the chained until say ten years from now chained is used exclusively. Since the base year of 1999 for the CCPI-U, it has increased 33.19% while for the same period the CPI-U increased 37.95%. That’s less than 5% difference over 13 years. So I’m not sure there’s any weaning period necessary. And some overlap is used anyway…the Final C-CPI-U only goes until 2011. 2012 values are interim, and 2013 values use the same weights as the current CPI-U. ---
**Author:** ![clairobscur](https://avatars.discourse-cdn.com/v4/letter/c/839c29/32.png) [@clairobscur](https://boards.straightdope.com/u/clairobscur)\ **Post date:** [April 10, 2013, 7:15pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/30 "2013-04-10T19:15:57Z")
> [@waterj2](#): > > The Obama administration has proposed basing the cost of living adjustments in Social Security benefits on the C-CPI-U rather than the current CPI-W. The various CPIs (consumer price indexes) measure inflation through price changes on a basket of goods based on the purchasing habits of consumers. CPI-W fills that basket with purchases typical for urban clerical workers, while CPI-U uses all urban non-farm consumers. In between adjusting the basket of goods for which prices are tracked, chaining assumes that as prices rise, consumers shift to purchasing cheaper products. The extra C in C-CPI-U is for that chaining. This results in a slightly lower measure of inflation, which would mean smaller cost of living increases for Social Security recipients, which would mean smaller payments, with the difference increasing the longer one is on Social Security. Which would save the government money. > > . Thanks. Much clearer now, but I still have a question. I understand the point of switching from non chained to chained, but what are the motives/consequences of switching from the CPI-W to the CPI-U? ---
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [April 10, 2013, 8:29pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/31 "2013-04-10T20:29:12Z")
Here’s my question on the C-CPI. What is the research behind assuming consumers will substitute Brand X for Brand Y? If I like Tide (IIRC nortorious in the customer loyalty arena) then what will it take for me to change to cheaper and “just as good” detergent or is there just an assumption that when conditions A, B and C are met I will automatically move to Gain. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [April 10, 2013, 8:45pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/32 "2013-04-10T20:45:14Z")
If social security was a insurance program, this would be considered a breach of contract. Since it isn’t, ss recipients won’t be getting what they paid for, and they have no legal recourse to get that. Once again the federal government shits on its subjects. This is nothing more than a cut in benefits. The tactic of appealing to the “experts” who calculate CPI is nothing more than the old trick of the state seeking validation from the intellectual class. Nothing new under the sun. It’s not what you do but how it’s done. ---
**Author:** ![CJJ](https://avatars.discourse-cdn.com/v4/letter/c/ecc23a/32.png) [@CJJ](https://boards.straightdope.com/u/CJJ)\ **Post date:** [April 10, 2013, 9:14pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/33 "2013-04-10T21:14:58Z")
Looks like it’s not only progressives who are “outraged” about chained CPI. Here’s a rep from Oregon and NRCC Chair Greg Walden interviewed by CNN’s Wolf Blitzer this morning: > [@](#): > > BLITZER: Well, let’s talk about these proposed changes that the president is putting forward when it comes to Social Security and Medicare, the shocking proposals that you say the president’s putting forward that could affect seniors. What’s so shocking about changing that CPI, that consumer price index the way that you would determine how much inflation would go ahead with increases for Social Security recipients, for example? > > WALDEN: Well, once again, you’re trying to balance this budget on the backs of seniors and I just think it’s not the right way to go. …and here’s [Grover Norquist and his group Americans for Tax Reform:](http://www.huffingtonpost.com/2013/04/10/grover-norquist-chained-cpi_n_3052646.html?ncid=edlinkusaolp00000003) > [@](#): > > Americans for Tax Reform, the advocacy group that asks lawmakers to sign a formal “Taxpayer Protection Pledge,” said Tuesday that chained CPI violates the pledge. > > “Chained CPI as a stand-alone measure (that is, not paired with tax relief of equal or greater size) is a tax increase and a Taxpayer Protection Pledge violation,” the group said in a blog post. > > Anti-tax crusader Grover Norquist, leader of the organization, criticized the policy via Twitter on Wednesday. “Chained CPI is a very large tax hike over time,” Norquist wrote. “Hence Democrat interest in same.” Of course, all of this is just Republicans positioning themselves to attack Dems on Social Security in the 2014 election, but of course the dems will win the day with the argument that now we have a more accurate measure of inflation. ---
**Author:** ![Procrustus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/procrustus/32/2994_2.png) [@Procrustus](https://boards.straightdope.com/u/Procrustus)\ **Post date:** [April 10, 2013, 9:19pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/34 "2013-04-10T21:19:13Z")
> [@WillFarnaby](#): > > If social security was a insurance program, this would be considered a breach of contract. Since it isn’t, ss recipients won’t be getting what they paid for, and they have no legal recourse to get that. Once again the federal government shits on its subjects. > > This is nothing more than a cut in benefits. The tactic of appealing to the “experts” who calculate CPI is nothing more than the old trick of the state seeking validation from the intellectual class. Nothing new under the sun. It’s not what you do but how it’s done. where in the Social Security “contract” (legitimate expectation) is there the promise that a certain method would be used in the future to decide how much to\* increase\* a person’s benefits? I’m beginning to sound like a right winger, but jesus, how is a smaller increase called a “cut?” ---
**Author:** ![asterion](https://avatars.discourse-cdn.com/v4/letter/a/4da419/32.png) [@asterion](https://boards.straightdope.com/u/asterion)\ **Post date:** [April 10, 2013, 9:23pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/35 "2013-04-10T21:23:11Z")
I understand that it’s a cut in benefits (even though it doesn’t seem like much of one) and personally can’t get worked up about it, especially when I’m at least 30 years out from even considering getting Social Security. However, it seems to me that if one of the problems is that SS isn’t enough to deal with things like medical bills, the problem isn’t with the SS benefit calculation but the cost of medicine. So why not use the chained CPI as a bargaining chip to get other benefits that do things like reduce those costs instead? I don’t think a plan of “no Hoverround for you” would get very far, much less a plan of “let the freaking old people die already”, which seems to me to be the simplest (and worst) way of reducing Medicare costs. ---
**Author:** ![Spectre\_of\_Pithecanthropus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/spectre_of_pithecanthropus/32/12343_2.png) [@Spectre\_of\_Pithecanthropus](https://boards.straightdope.com/u/Spectre_of_Pithecanthropus)\ **Post date:** [April 10, 2013, 9:23pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/36 "2013-04-10T21:23:36Z")
> [@Gangster\_Octopus](#): > > I am a progressive and I have studied price indexing and I can honestly say that while there is no perfect measure of price increase, chained CPI is an improvement over the current CPI measure. So I do support using it, however, given the considerable economic effect it will have on individuals, I believe it needs to be phased in somehow. That’s the whole idea. By its very nature, this “stealth-cut” _is_ a gradually phased in slashing of benefits. The whole concept seems to based on some weird kind of circular logic, because the fundamental purpose of the COLA is to keep pace with inflation. The result of using this less generous chained CPI will be a COLA that isn’t, but they can still claim that it is, at least nominally. It’s highly disingenuous given that a low inflation rate, like 2%, is generally seen as optimal for promoting growth. What comes after giving up red meat for chicken? Switching to canned pet food? ---
**Author:** ![Spectre\_of\_Pithecanthropus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/spectre_of_pithecanthropus/32/12343_2.png) [@Spectre\_of\_Pithecanthropus](https://boards.straightdope.com/u/Spectre_of_Pithecanthropus)\ **Post date:** [April 10, 2013, 9:25pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/37 "2013-04-10T21:25:11Z")
> [@Procrustus](#): > > where in the Social Security “contract” (legitimate expectation) is there the promise that a certain method would be used in the future to decide how much to\* increase\* a person’s benefits? I’m beginning to sound like a right winger, but jesus, how is a smaller increase called a “cut?” See my post above. An increase just to keep up with inflation is not an increase. An increase that does not keep pace with inflation is a cut. ---
**Author:** ![brickbacon](https://avatars.discourse-cdn.com/v4/letter/b/898d66/32.png) [@brickbacon](https://boards.straightdope.com/u/brickbacon)\ **Post date:** [April 10, 2013, 9:26pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/38 "2013-04-10T21:26:45Z")
> [@CJJ](#): > > [The Washington Post](http://www.washingtonpost.com/blogs/wonkblog/wp/2012/12/11/everything-you-need-to-know-about-chained-cpi-in-one-post/) calculated the difference between benefits calculated using CPI-W and Chained CPI using data for the past 12 years (bolding mine): My percentage (~2.2% IIRC) was for 11 basis points over 20 years, as was stated in the question. Regardless, the numbers the Post is using are skewed because they are averages over the last decade or so, and neglect the trend over that time indicating the spread is narrowing. As I noted, the spread over the last couple years was 11 basis points; which is down from around 50 basis points about a decade prior. That trend, which should hold in the near-ish future due to low general inflation, would make the aggregate difference closer to 2% than 5%. Either way, if the C-CPI is indeed more accurate, then I am not sure what the issue is beyond whining because you might get less money. ---
**Author:** ![MilTan](https://avatars.discourse-cdn.com/v4/letter/m/71e660/32.png) [@MilTan](https://boards.straightdope.com/u/MilTan)\ **Post date:** [April 10, 2013, 10:04pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/39 "2013-04-10T22:04:39Z")
> [@Spectre\_of\_Pithecanthropus](#): > > What comes after giving up red meat for chicken? Switching to canned pet food? That’s not how CCPI works. CCPI does not make assumptions about substitutability. If, in reality, people are not replacing chicken with cat food in their diet, CCPI will reflect that. That, presumably, is part of why CCPI and CPI-W are converging, as **brickbacon** points out. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [April 10, 2013, 10:09pm UTC](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280/40 "2013-04-10T22:09:08Z")
It should not be overlooked that the impact of the switch is almost as big on the tax side as on the spending side. Apparently the tax brackets are indexed to CPI, and switching to C-CPI will put a lot of middle class taxpayers into higher brackets. > [@Airman\_Doors\_USAF](#): > > I am sick to death of this Republican obstruction. And that’s what it is, obstruction. They won’t give a thing, and everybody is being hurt by it. I don’t know if that’s looking at the whole picture. A lot of Democrats felt pretty triumphant when the Republicans caved on $600B of tax increases with nothing to show for it. This is the flip side of the coin. [Previous page](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280.md?page=1) [Next page](https://boards.straightdope.com/t/is-the-progressive-outrage-over-chained-cpi-warranted/655280.md?page=3)