Chained to the CPI

The Concord Coalition is an organization I generally agree with when it comes to government fiscal policy, but this week they sent an email singing the praises of something called the "Chained CPI" as a replacement for the "regular" CPI as the COLA in Social Security.  It's one of the "under the radar" ways that fiscal hawks think they can make a dent in the Federal debt and budget deficits without really touching (very much) the "third rail" of politics: Entitlement programs.  

They supplemented their own positions with links to this article explaining the case for switching the COLA index, and to this article criticizing the NY Times for opposing the switch.  The CC's support is all within a larger strategy of trying to eliminate government debt, a noble cause and one which I support.  However, they got it wrong on this one.  What they are advocating is a bait & switch, a broken promise, a failed trust.  I had to call them on it, had to write them back.  So I did:

"Folks, I cannot disagree with you more on your advocacy of the Chained CPI as a better way to measure inflation.  While it may indeed better reflect reality when it comes to how people deal with inflation, what it does NOT do well is function as a Cost of Living Adjustment (COLA).  The presumption is that COLAs are in place for the express purpose of "keeping people whole", in terms of what it takes to maintain their standard of living, which is the rationale behind its inclusion in Social Security.  If you go to the Chained CPI as the COLA standard, you are no longer keeping people whole, you are forcing them to change!  In essence you require that, to keep whole, they adapt in the exact same way as other consumers do to inflation: by changing what they purchase to mniimize the inflationary effect.  

"But that is not, I submit, what a COLA is for - it's not to ensure that 'seniors' adapt to inflation & make sacrifices like everyone else.  It's to be sure they don't HAVE to!  While I am not of retirement age yet, I can recognize a shell game when I see one, even if it's being played on someone else.  In this particular shell game, the government promises COLAs (the bait), and then changes what COLA means (the switch).  I say shame on the government for suggesting it, and shame on you for supporting it.  Keeping your promises, whether at the level of the individual, or at the level of society, is crucial to trust, both personal and public."

[response pending]