CPI Unchained

The sneaky plan to cut Social Security and raise taxes by changing how inflation is calculated.

By Matthew Yglesias  |  Posted Friday, Dec. 7, 2012, at 2:24 PM ET

On Wednesday I wrote about one of the most widely discussed and high-profile ideas for reducing federal spending on the elderly—raising the eligibility age for Medicare. It’s a simple idea to understand and a pretty terrible one. The other idea that comes up constantly in negotiations and rumors of negotiations and hypothetical grand bargains, by contrast, languishes in obscurity. It involves indexing Social Security benefits to the Chained Consumer Price Index for All Urban Consumers (C-CPI-U) rather than the Consumer Price Index for All Urban Consumers (CPI-U) that’s currently in use. This change shows up in all kinds of think-tank plans and unofficial sketches, and it has at various times secured the endorsement of everyone from Dick Durbin to Eric Cantor.