Posted Monday, Dec. 17, 2012, at 4:14 PM
There's an increased pace of rumor-mongering around a budget deal in which cutting Social Security benefits by switching to the Chained CPI will feature as a headline Democratic concession. It's easy to find progressive activists and progressive groups who don't like this idea, but make no mistake—it's something most liberals in congress will stomach as part of a broader deal that has other elements they like.
The Medicare eligibility age was another story. There are Democrats who support kicking 65 and 66 year-olds off Medicare and others willing to swallow it as the price of a deal, but even if the White House fully backed such a plan they'd get plenty of pushback from House Democrats and some senators. The CPI issue is seen differently, and staffers who worked to scuttle any talk of a Medicare deal have also tried to lay the groundwork for CPI chaining as an acceptable concession. It's a little bit hard to say exactly why this is, except that the abilty to characterize the change as technical in nature seems to make many feel like it's less a breach of principal to give ground here than on other aspects of entitlements. And it is true that most researchers think that, in general, chain-type indexes are a better way of measuring the hedonic impact of price shifts.
That said, as more details of a potential deal emerge I remain interested to see what happens to the very poorest group of senior citizens which should be an area of concern with the Chained CPI since it's basically an indiscriminate cut.