The Huffington Post top story about the fiscal cliff shows a picture of President Obama and one of Nancy Pelosi, and above them the headline:
“Social Security Sell-Outs”
Gaius will be updating us in detail in the morning. But for now, here’s where the HuffPo headline links to, a story about Pelosi saying the “chained CPI” proposal for cutting Social Security benefits would “strengthen” the program, which is typically Republican language for covering up “cuts.”
The cut involves swapping out the traditional method for calculating cost of living increases, based on the current standard for measuring inflation, for something called a chained CPI, or chained Consumer Price Index.
The chained CPI works by assuming that when the price of a product, such as beef, gets too high, consumers don’t keep paying the higher prices. Instead, the model predicts they will switch to something cheaper, such as chicken, keeping their cost of living lower and leading to a lower rate of inflation, as measured by the chained CPI. The lower rate of inflation would mean a downward adjustment in cost of living, and thus stingier benefits.
The cuts would start small, but wind up costing beneficiaries thousands of dollars over time, which is why Democrats have traditionally fought the idea.