That helps explain why the CPI-E rose nearly 7% faster than the standard CPI from 1998 through 2009, according to government estimates. It also tells you why, from the standpoint of seniors' real cost of living, the chained CPI is a rip-off.
When you factor in that two-thirds of our retirees get most of their income from Social Security — and for one-third of retirees the program accounts for 90% of their income — you can see that the chained-CPI proposal is nothing but a stealth benefit cut aimed at the neediest Americans, and one that weighs ever more heavily as people grow older, and needier.
But the sad truth is that the proposal to link Social Security inflation protection to the chained CPI isn't really about making annual cost-of-living increases more "accurate." That's mere window dressing. The goal is to cut benefits and thereby cut government costs. As has been the case throughout the discussion in Washington about the budget and the federal deficit, the guiding principle here has been to preserve benefits for the wealthy at the expense of everyone else.
How do we know this? If you use the chained CPI instead of the standard CPI for the annual adjustment in income tax brackets, over time that will create an effective tax increase, especially for wealthier taxpayers. (That's because the bracket thresholds will rise more slowly relative to inflation than they do now.) The gain for the Treasury would be about $72 billion over 10 years, according to the congressional Joint Committee on Taxation.
What do the agents of the wealthy say about that? Let's ask the right-wing Cato Institute, which cherishes both a sedulous admiration for free enterprise and a long-standing hostility to Social Security. Cato last year called switching to the chained CPI for Social Security a "sound and overdue reform." But when it came to using the chained CPI to adjust tax brackets, Cato called that "a very bad idea."
One would think it only fair that if you change the inflation index for one government program, you should do so for all of them. It's a measure of the cynicism that guides debate in the nation's capital that an "overdue reform" that would take $112 billion from the needy can be regarded as "a very bad idea" if it costs the rich $72 billion — and that no one pauses to ponder the rank injustice involved. Must be that they can't make out their own words over the purring of those Mercedes engines.
Michael Hiltzik's column appears Sundays and Wednesdays. Reach him at email@example.com, read past columns at latimes.com/hiltzik, check out facebook.com/hiltzik and follow @latimeshiltzik on Twitter.