...the article. HERE. In a nutshell, this morning was a briefing by one of the President's advisors to the Democratic Caucus letting them know Chained CPI was very much on the table.

Boehner put forth a Plan B, but time is on the Democrats' side because of the tax hikes that'll kick in on Jan 1. So, this "Plan B" Boehner walks away from the table thing is pure kabuki theater: The GOP has far more to lose by not accepting Obama's deal than walking away.

PB

There is 'speculation' that there may be a proposal to 'Chain' the CPI, which would have the effect of changing the calculation of the COLA rate.

This was discussed decently by a guest on Ed Schulz show who, while Ed appeared ready to jump up and at the President due to the suggestion, actually allowed it to appear that the result of the 'change' would not be radical, or dramatic, nor likely be felt for years in the future. And there is one approach to 'chaining' which includes an element to buffer the effect on the elderly. The guest, whose name I do not recall, referred it to CPI-e. http://www.bls.gov/opub/ted/2012/ted_20120302.htm

Another economist discusses it here. (Note that the measure could/would be used to 'adjust changes in government benefits, tax brackets, and so on.')

'Theoretically, chained CPI seems like a totally reasonable way to think about changes in the cost of living in an economy, so it's hard to object on principle to using this measure to adjust changes in government benefits, tax brackets, and so on. In addition, there is a potential efficiency argument to be made in favor of chained CPI approach to deficit reduction. When it comes to taxes and policy changes, there are two types of costs that occur. The first is a transfer of money from households and companies to the government, and the second is a loss of economic activity that occurs (deadweight loss, in economic terms). (For example, if I value a t-shirt at $15 and you can produce it for $13, a $3 tax will prevent an otherwise value-creating transaction.) While the first cost is important from a distributional perspective, the second is important from an efficiency perspective as well. As counterintuitive as it may seem, taxes and policy changes are more efficient (not necessarily more fair, however) when people don't change their behavior in response to them, since then there is only transfer and no loss of economic activity. And hey, people can't change their behavior fully if they don't understand how policy changes are affecting them, right?

As an economist, I think that there is long-term potential to improve policy by incorporating chained CPI as a more accurate cost of living index. That said, the government shouldn't try to leverage the lack of understanding of it's citizens, efficient or not, and should instead work on educating the public about what the change means for them. In addition, the government needs to avoid a rush to adopt the index as a short-term fix without fully thinking through the logistics and distributional impact of its implementation.'

http://www.huffingtonpost.com/jodi-beggs/chained-cpi_b_2297631.html

Prices go up, so you switch to cheaper things. Therefore, price-levels didn't really go up at all. You just chose to eat hamburger instead of steak. It's all the same, right?

That is horribly dishonest. It is *not* a more accurate way of calculating the index. It is a LIE and it is a malevolent lie.

This is nothing more than an attempt to cut benefits while fooling the innumerate among us into believing that nothing happened.

should have no place at DU. *Of course* the chained CPI harms seniors. It is BASED on the assumption that their standard of living will decline.

Thank you for calling out the viciousness of this right-wing bullshit. It needs to be slapped down, hard, every single time it is spewed here.

suffering of anyone, I do not expect such to occur significantly, as a result of decisions made by President Obama. I do hope that people including DUers pay attention to facts, and NOT inflate things about which they appear to know little into huge matters, AND fail to recognize that negotiation can NOT occur in public.

'Reeking third way propaganda should have no place at DU. *Of course* the chained CPI harms seniors. It is BASED on the assumption that their standard of living will decline,' so we should not discuss it, or learn about it, or should only rail against what some suppose will occur.

Chained CPI is based on the assumption that accurate 'cost of living' is necessary for the government to determine, and that the basket of goods we bought 10 years ago differs from that which we buy today, and ten years hence will differ from that of today.

(FWIW, I am a senior, retired, on a government pension with a small social security component, and I stand to be affected at least as much, if not more, than many here.)

Hey, beans are cheap. There's no way inflation could go up so much an elderly person can't afford beans, right? It's almost like steak, except without the meat. Meat's bad for you after a certain age anyway. Which is why this is better for America's elderly.


















JIK

Seniors are lucky to have the Third Way looking out for them. On beans, there will be less heart disease all around!

Cat food, even better, has lots of filler in it. I am sure I heard that fiber is good for old bowels.

If you're going to be so rude as to be a leach like that, you deserve to be too poor to survive. Or so some seem to think.

Although I'd really like to have some ground round with my Hamburger Helper! But cat food will do since I can't afford ground round anymore ...

But my cost of living hasn't gone up (I'm spending the same but getting less), so no need to give me a COLA ...

Bake

if the price of electricity goes up so I can't afford to heat my house -- the price didn't really go up, I just "chose" to do without heat.

Bullshit.

Chain CPI change sounds all so wonky and safe. Until you look at what a load of crap chain CPI really is. It in no way measures inflation, or allows for an accurate COLA. It measures what it costs to barely survive in this economy.

I'll believe in the miraculous powers of the chained CPI when I hear that Medicare part B premiums will be subjected to it as well.

I recently got a letter from SS informing me that my 2013 payments would reflect an increase of something like 2% while my Medicare premiums would jump approximately 9%. At this rate in about 15 years my social security payments will be totally consumed by the cost of health care. And this is prior to any tinkering with COLA's.

So perhaps you might understand my skepticism at some economist telling me why I should love the chained CPI.

Essentially, the government would be taking the position that it will officially "lie" about increases in the cost of living. Because if you can't afford bacon anymore, you can just switch to potted meat. Or something like that.

And I saw a video of Jay Carney (I think) talking about it, so it is a real thing.

Also, lots of info (and indignation) about this can be found here:

http://digbysblog.blogspot.com/

Exactamundo!

and "turkey" sausage made from parts of the bird you wouldn't name at the dinner table, plus some agri-industrial waste byproducts that can't be used anywhere else. And if some of us should start to grow third arms, aren't we always saying "we could use another hand around here"?

Prudent seniors and soon to be seniors will stock up on cat food starting now. Later on, when everyone is eating it, the price will rise through the roof. Which is why the Democratic Party would like to take this time to introduce its next market-based policy innovation: Cat Food Savings Accounts! Individually mandated of course, to ensure the longterm viability of your freedom of choice®. (Don't complain, it's either the Democratic version of the bill, or Sarah Palin turns you all into Soylent Green. You aren't voting for Sarah Palin, are you?)

But in the out years, twenty and thirty years down the line, it will make life significantly tougher for lots of people. It will be a sad day if we go down this road.

and let Nancy Pelosi take the lead, she is tougher than he is. I have also come to the conclusion that she understands policy and long range implications (fiscal and political) better than he does. Apparently the same two people that improperly coached him just before the first debate are still the only people who have his ear.

Why do people still fall for this bullshit??

Technically a White House source is well within the scope of that definition.

+10000000000000000000000000000000000000000000



Bake