Pelosi: "I'm not thrilled" with Obama's fiscal cliff proposal - but it's not a benefit cut

[davekriss]

52. It is a cut

You are confusing nominal dollars with real dollars. In real terms, chained CPI results in less spending power than you had the previous year. Benefits no longer maintain the same real value. Their value becomes, in reality, less. "Less" means the individual experiences a real cut. The concept is very simple. And very real. It is a political sleight of hand, a trick.

(If you are not aware, the principle of chained CPI works this way: in year 1 your ramshackle efficiency apartment costs $500 a month. On year 2 landlords in aggregate push the rent to $600 per month. You can no longer afford it, so you move to a nice cozy spot under a train trestle, where you pay $0 in rent. CPI-U, which is what is used today, says that housing inflated by 20%. Chained CPI says housing deflated 100%. Sure, I'm being extreme in my example, but I correctly illustrate how Chained CPI works.)