RSS

So What IS This Chained CPI Thingy?

14 Dec

A few days a go, in one of these rants, I made fleeting reference to House Sphincter John Boehner’s plan to cut “entitlements”.   (I hate to use that word “entitlements”, but it’s the only way you can get the attention of the terminally ignorant.)  In doing so, I made an even more fleeting reference to the concept of “chained CPI” which forms the basis not only for Boehner’s so called “plan” but for many of the right wing talking points being advanced in the “fiscal cliff” discussions.  Sorry about all those air quotes but it’s just my way of saying that anyone who takes these concepts and talking points seriously is as full of shit as a barnyard duck.

Well, sure enough, someone wanted to know what “chained CPI” meant and being the conscientious type I’ve always been known to be I figured I owed it to my faithful readers… all three of them… to explain the whole thing in ordinary every day English because we all know that John Boehner wouldn’t and Michele Bachmann couldn’t and Mitch McConnell is too busy looking at Gucci chins in the Nieman Marcus Plastic Surgery Christmas Wishbook.

Well, basically, Chained CPI means Chained Consumer Price Index.  Now I know you all thought that the Consumer Price Index was kind of a standalone measure of consumer prices which is used to help determine, among other things, a person’s ability to afford certain commodities and items necessary to the sustenance of life.  And you’d be right, because that’s pretty much what it is.  Or was…?  But in today’s Neocapitalist society, it appears that all things have to be tied… or chained… to something else.  Like disaster relief being chained to cuts in the safety nets.  The problem with the CCPI concept was trying to figure out what they were chaining their indices to.

Thanks to Dave Johnson at Campaign for America’s Future, I think we now have working analogy.  It’s kind of dated in a way because actually us modern and up to date with it old folks no longer have to resort to cat food… well, unless we want meat in our diets now and again… because we have that modern day marvel of a substitute for Soylent Green, ramen noodles. But if any of you have trouble grasping Mr. Johnson’s comparisons, simply substitute ramen for cat food and… except for the densest 47%, the ones who voted for Mitt… we’ll be good to go.  Ready?  Mr. Johnson:

The latest proposal to cut Social Security coming from our out-of-touch DC elites literally says that because old people cut back to cat food when people food is expensive, then we shouldn’t let Social Security rise enough to keep covering people food. It literally says that.

There is a Social Security proposal circulating among the out-of-touch DC elites that says because old people cut back when prices rise, then Social Security inflation adjustments should be cut back, too. They are actually saying that because people have to cut back to cat food, then they should only be getting enough to pay for cat food

. The proposal is called by a funny name, “Chained CPI.” The elites love it because it helps keep the government from raising taxes on the rich to pay back what was borrowed from Social Security and used to give tax cuts to the rich.

OK, did you manage to follow the reasoning there?  I know that the logic is a little… oh I dunno, shall we say… “out there” and there were obviously some fairly sharp little twists and turns that led to the conclusion upon which this whole chained CPI thing is based but I’m pretty sure that anyone with enough intelligence not to have voted for Romney will get it and there’s likely no hope for the 47% that did anyway.

APM’s Marketplace explained how Chained CPI works in Alternate inflation index could save billions:  (Note – if the audio stream player doesn’t show up, please go to this link to listen.)

Fiscal cliff talks have brought into the mainstream a phrase previously little-known outside economic policy circles: Chained Consumer Price Index. The concept is as complicated — evidenced by a jargon-splattered FAQ on the Labor Department’s website — as its impact could be massive.
… The CPI measures the price of various goods over time. But it doesn’t really account for how humans behave when prices go up. Sometimes they buy less of items that become more expensive. For example, rising beef prices will affect the CPI. But consumers may just buy more pork instead.
… Chained CPI accounts for this shift in consumer behavior, what economists call the substitution effect. The simple act of switching the way we measure inflation could save hundreds of billions of dollars. That’s because chained CPI is lower than the benchmark CPI. If life really isn’t as expensive as we thought, the government doesn’t have to pay as much in benefits.
Benefits will still continue to increase over time, just more slowly. One place where a switch to Chained CPI will have major impact is Social Security, which is why powerful seniors interest group AARP has a flotilla of lobbyists fighting this idea.

Got that? Old people switch from eating beef when the price goes up, therefore we don’t need to increase Social Security when prices go up. Except they are switching to cat food, not pork.  This makes some kind of weird sense if you are in the 1% who doesn’t have to worry about it, and who gets that cash that isn’t put into increasing Social Security along with inflation.  And besides, if we all switched to pork or chicken or whatever you can damned well bet that by the next fiscal year pork or chicken or whatever wouldn’t be any more affordable than beef but hey, who wants to be bothered with the little stuff, right?

So there you are… Chained Consumer Price Index in a Nutshell.  In our next installment we’ll be discussing how certain quantum particles are able to exist in two places at the same time… or not at all if it happens to be their lunch break or something.  Glad I could help and… as always, feel free to ask me anything

 
Leave a comment

Posted by on December 14, 2012 in Uncategorized

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
Follow

Get every new post delivered to your Inbox.

Join 1,672 other followers

%d bloggers like this: