For months, the activist left has undertaken a public relations campaign to attack "chained CPI." That is a method of calculating the consumer price index that is generally more accurate, but which results in a slightly smaller annual increase in inflation. You might have seen the many letters in this newspaper criticizing this formula. The question is: why?
The answer is that the right has tried for years to have the federal government use chained CPI when calculating the annual benefit increases for Social Security, and earlier this year President Obama hinted that he might be open to the idea. The activist left must have felt incredibly disappointed this week when Obama released his 2014 budget and it applied chained CPI to Social Security benefit increases.
This was Obama's big concession to Republicans on entitlements. Chained CPI will slow the automatic rate of growth of Social Security benefits by about 0.2 to 0.3 percentage points. That's it. For that, Obama wants a bunch of new tax increases and to take most other entitlement reforms off the table.
That is hardly a deal fiscally responsible members of Congress - of either party - can take. But the Obama concession on chained CPI is good news still. It is an acknowledgment from the President that the growth of entitlements, including Social Security, is a serious financial problem. It is a small step toward recognizing our fiscal reality.