I was expecting Social Security shenanigans in the post-election period. I discussed a different kind of dodge in the December Extra!, but the actual proposal we’re getting—the change to the “Chained CPI”—is just another way of packaging benefit cuts as a superficially rational adjustment.

The CPI change has an advantage over “raising the retirement age” because it’s harder to understand and therefore easier to get past the public. Don’t expect much help from corporate media on this, because they’re deeply invested in a “grand bargain” to save us from the “fiscal cliff,” and getting that bargain through very much depends on citizens not really knowing what this part of the deal entails.

Chicken Cow, by Egui_

Steak, chicken—pretty much the same thing, right? (Photo: Egui_)

Basically, the government has several versions of the Consumer Price Index—its basic measure of inflation—and one of them, known as the Chained CPI, consistently gives a lower rate of inflation than the one currently used for Social Security Cost Of Living Adjustments.  When looking at the prices of a sample bundle of products, the Chained version takes into account the prices of goods that might be substituted for ones that are getting more expensive—the example usually given is that if the price of steak goes up, maybe the price of chicken stays the same, and you can buy that instead.

Conceptually, the idea seems dubious: If someone was eating steak rather than chicken, presumably they like steak better, and by making the substitution they’re lowering their subjective quality of life. (If people eat cat food because they can no longer afford meat intended for humans, does that mean that the price of meat hasn’t really gone up?) A Washington Post piece (12/19/12) labels the index as “a more accurate measure of inflation,” but switching to the chained CPI has nothing to do with accuracy—there’s actually another version of the CPI that’s designed to more accurately measure inflation’s impact on the elderly, and it generally gives a higher rate, mainly because healthcare costs have more impact on older people.

As economist Dean Baker put it in a helpful primer on the controversy, “While many policy types and pundits have claimed that the chained CPI would provide a more accurate measure of the cost of living for seniors, they have no basis for this claim.”

No, the reason people are talking about switching to the Chained CPI is because it shaves a little off retirees benefit checks every year, and that savings can be used to preserve more of the Bush tax cuts for the wealthy. The effect is cumulative, so the longer a retiree lives, the more money the government would save. The straightforward way to describe it is a cut in benefits, particularly for the very elderly—but that’s not a great way to sell it.

A better way: Call it “one of the least painful deficit-cutting moves the government could make,” like NPR‘s Scott Horsley (Morning Edition, 12/14/12). Horsley attributes this characterization to virtually his sole source for the piece, “Marc Goldwein of the nonpartisan, nonprofit Committee for a Responsible Federal Budget”—without noting that CRFB is part of the chain of advocacy groups backed by investment banker Peter Peterson to lobby for cutting benefits to old people.

Or you could describe the Chained CPI with the popular media phrase, “a less-generous measure of inflation” (e.g., Washington Post, 12/18/12; PBS NewsHour, 12/18/12; Miami Herald, 12/18/12)—implying that there’s something “generous” about a measure of inflation that acknowledges that chicken and steak are two different things.

But maybe the best approach is to play down the details of the proposal and just bask in the warm glow of bipartisanship. After all, as a Boston Globe news story (12/19/12) pointed out, “Americans have signaled they want compromise in Washington.” So tell them that’s what they’re getting, rather than cuts to their retirement income.