Politicians now show some signs of facing reality regarding our debt/spending crisis -- but for most, it's still too soon to stop posturing and start proposing. That will get going in earnest about December 20, probably. Congress is a congregation of 535 Last-Minute Louies.
Interest groups at this stage are showing even less willingness to get real. "Don't tax (or cut) you, don't tax (or cut) me - tax that fellow behind the tree," as the old saying goes. Every expenditure - the mortgage deduction, the lower tax rates on dividends, existing benefits for individuals, the military budget, corporate welfare ... all these, if you listen to their proponents, are indispensable and will be defended to the death. Let's hope that every one of these groups will be disappointed in their attempt to keep all their piece of pie while everyone else gives up a bite. It won't work otherwise.
One proposal for reducing our spending on entitlements is to tie federal cost-of-living adjustments to a new yardstick known as the "chained" CPI. As the Washington Post explains, compared to the "regular" CPI, this measurement produces somewhat lower figures for annual inflation (about three-tenths of one percent lower), meaning that all social security beneficiaries and federal retirees would get slightly lower rates of increase in future BUT our government would be reducing expenditure by about $300 billion over ten years.
Those who benefit from the CoLA will complain if this change is made. They might say that the current CPI itself doesn't truly keep pace with inflation, because it measures the wrong things, is calculated after inflation has already taken place (a sort of de-compounding effect), and is usually reduced by Congress for political reasons. Also, the chained CPI turns out lower estimates of inflation because it postulates that when prices go up, people substitute lower-priced alternatives for some goods, which isn't really true for the basics that retirees must buy. (Shortly after my retirement, the price of natural gas for home heating just about doubled within two years.)
Those objections are all basically true, yet the effect on benefits would amount to only about thirty cents less per hundred - $99.70 instead of $100. Frankly, nobody is going to driven into starvation by that.
As a former Fed, I don't receive social security but I do receive in retirement an "annuity," for which I contributed 7% of my pre-tax income, and that annuity has a cost-of-living adjustment based on the CPI. Yes, I would lose something from a switch to the chained CPI, but I say, even to have a CoLA is a significant benefit. Maybe not perfect, but certainly better than a poke in the eye with a sharp stick, as my pappy used to say. And changing it in this small way is, to my mind, entirely reasonable.
Let's all get real in assessing how change will affect us.