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Zombie CPI in chains

October 7, 2013

LATimes: “The chained CPI: A zombie benefit cut still walks” by Michael Hiltzik:

…Republicans and Democrats get into a standoff over the federal budget, and their best plan for wriggling out of it is to nickel-and-dime people on Social Security and Medicare. The worst zombie in this package, a terrible idea that simply won’t die, is the “chained CPI.” This is a version of the consumer price index that purportedly yields a more “accurate” reading of inflation…

Hiltzik has written about this issue a bunch, calling it “junk economics,” “stealth benefit cut,” and “Ripping off needy seniors“, he explains:

If you’re going to kill a zombie, you have to keep coming at it.

And suddenly Vice President Biden‘s remark from the 2012 campaign: “put you all back in chains” makes some sense.

The strange math of the chained-consumer-price-index for use in cost of living increases is that the increases for cost of living are reduced so as not to be enough to actually maintain the same living. Instead the cost of living increase would only cover an approximation of the same quality of living but with substitutions for cheaper options. But quality is a troublesome measure, the availability of cheaper options may not necessarily equate to equal quality. So a cost of living increase based on chained-CPI is a stealth cut based on junk economics.

zombie michael hiltznik

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