Tuesday April 09, 2013 | 04:43 PM

WASHINGTON – Politicians and government officials are renowned for their habit of using acronyms and bureaucratic-speak to make already complicated issues all but incomprehensible.

One phrase that will likely be heard repeatedly in the weeks ahead is “chained CPI.” So here’s a little explainer – or an attempt at one – on what “chained CPI” means, why it might matter to a growing segment of Maine’s population and where the state’s congressional delegation has stood on the issue.

CPI stands for “consumer price index,” which as many people already know is the way the government keeps track of how prices change on the goods and services that all of us commonly purchase. “Chained CPI” is another way of making that calculation by assuming that as prices change, consumer adapt by changing their buying habits.

The most common example given is if the price of beef increases, we might fill our grocery carts with more chicken or pork. Chained CPI attempts to account for those shopping shifts.

As a result, chained CPI is often lower than the traditional consumer price index. And this becomes important when policymakers decide which consumer price index – regular old CPI or chained CPI – to determine cost-of-living changes for government programs.

News that President Obama plans to once again offer to use chained CPI – again, the lower of the two methods – to determine Social Security benefits is triggering another wonky debate with real policy implications. Obama will unveil his budget on Wednesday.

Obama’s anticipated offer is gesture to congressional Republicans in hopes of striking a bigger budget and spending deal. Members of the president’s own party, however, are already condemning it, as are groups such as the AARP.

AARP Maine issued a press release on Monday warning that, according to a recent poll, “68 percent of older Maine voters would be considerably less favorable to their member of Congress or Senator if the member voted for a chained or superlative CPI proposal.”

AARP Maine estimated that Maine’s 200,000-plus Social Security recipients would lose more than $500 million in benefits during the next decade under chained CPI.

But some economists see chained CPI as a perfectly viable way to reduce federal spending in a less-than-drastic way and, therefore, potentially help shrink the deficit.

The nonpartisan Congressional Budget Office estimated that using chained CPI would save the government $127 billion through 2023 in reduced Social Security benefits alone. Applying chained CPI to other government cost-of-living adjustments – including to military pensions – or other federal programs would raise that figure to $216 billion, reducing the deficit by $340 billion in the process.

So where do members of Maine’s congressional delegation stand on the issue? Here are two responses so far.

U.S. Rep. Chellie Pingree – the state’s most liberal member in Congress – vowed to vote against any cuts to Social Security, Medicare and Medicaid.

"No matter what you call it, a chained CPI is a cut to Social Security benefits,” Pingree said in a statement on Monday. “For someone who retirees today, that cut would mean they would be getting $650 less a year when they are 75 and over $1,100 less a year when they reach age 85.  Seniors shouldn't be facing cuts to the benefits they have earned while millionaires and billionaires are getting a tax break.”

Independent Sen. Angus King, meanwhile, sounded more open to the idea.

“If press reports are accurate, the president's budget will include protections for older, low income seniors and veterans that would make a switch to the chained CPI more acceptable,” said in a statement to the Portland Press Herald. “While we will have to wait to see exactly what is in the President's budget tomorrow, at this point everything is on the table if it gets us to a grand bargain where sacrifice is shared across the entire country and increased revenues are a part of the picture.  We must deal with the budget so we are not pushed from one crisis to another, stalling our economy with each confrontation.”

 

 

 

               

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About the Author

Kevin Miller is Washington bureau chief for the Portland Press Herald and MaineToday Media. He has worked as a journalist in Maine for 6 ½ years, covering the environment, politics and the State House. Before arriving in Maine, he wrote about politics, government and education for newspapers in Virginia and Maryland.
Kevin can be reached at 317-6256 or kmiller@mainetoday.com

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