It was reported on Friday that the White House would send a budget to Congress next week with proposed cuts to Medicare and Social Security, the latest effort by President Obama to reach a so-called grand bargain with Republicans to put the U.S.'s fiscal house in order. One proposal in particular has liberals all worked up, and it revolves around a seemingly innocuous bit of wonk-speak: Chained CPI. Here, a guide to chained CPI and why Democrats don't like it: 
 
 What is chained CPI? 
 
 The government uses the consumer price index (CPI) to measure inflation. According to the Department of Labor, the CPI measures how much the cost of a "market basket of consumer goods" changes over time. That basket includes things like housing, food, clothing, etc. 
 
 Chained CPI also tracks changes in the cost of living, but takes into account that consumers might change their preferences due to changing prices. So, for example, if the price of beef goes up and pork goes down, chained CPI assumes you would buy less beef and more pork. As a result, it has the effect of measuring a lower rise in costs. 
 
 Why don't liberals like chained CPI? 
 
 Obama's budget proposal reportedly ties Social Security benefits to chained CPI instead of regular CPI. Paul Krugman of the New York Times says that's bad news for seniors: 
 
 First of all, there is no reason to believe that the chained index is a better measure of inflation facing seniors than the standard CPI. It’s true that the standard measure arguably understates inflation for the typical household — but seniors have a different consumption basket from the young, one that includes more medical expenses, and probably face true inflation that’s higher, not lower, than the official measure. [New York Times] 
 
 In Krugman's view, this "is, purely and simply, a benefit cut." CNNMoney reports that adopting chained CPI for Social Security would mean that "by 2030, the median payment would be 3 percent less than it would be if today's inflation measure were used," reducing spending by $216 billion over the next 10 years. 
 
 In response, Sen. Bernie Sanders, the liberal Independent from Vermont, issued a statement saying millions of people "will be extremely disappointed if President Obama caves into the long standing Republican effort to cut Social Security and benefits for disabled veterans and their survivors through a so-called chained CPI." The AARP even developed a calculator to show seniors how much the switch would cost them in benefits. 
 
 "Why are Democrats even suggesting the inflation adjustment be reduced?" asks Robert Reich, former secretary of labor under President Clinton, at The Huffington Post. "Republicans aren't asking for it. Not even Paul Ryan's draconian budget includes it." 
 
 Reich is gracious enough to explain his objections in video form: 
 
 Ezra Klein and Evan Soltas of the Washington Post argue that liberals shouldn't get too worried because Republicans will reject the budget anyway, letting Obama claim that nobody "can say he isn’t trying to reach a deal, and the cries from liberals will prove that he's forcing his base to accept very tough medicine." Indeed, Speaker John Boehner (R-Ohio) later in the day dismissed Obama's proposals as too "modest" to justify tax increases. 
 
 In other words, expect to hear a lot more about chained CPI in the future. 

 It's dull. It's controversial. And it might work. 
 
 A change to the way inflation is measured could help President Obama and Republicans cut a debt-reduction deal this summer. 
 
 It's not the biggest way to cut deficits. But it might be a good compromise because it would reduce projected spending, which Republicans are pushing for. And it would also raise revenue, which Democrats want. 
 
 A potential deal killer: The change would incense many on the left who contend it will unfairly hurt seniors and veterans. 
 
 Obama's 2014 budget blueprint, due out Wednesday, might include a proposed switch to "chained CPI," or "superlative CPI" as it's also known. He has supported such a change in the past, most notably in his debt ceiling negotiations with House Speaker John Boehner in 2011. 
 
 From CNN.com: Obama to propose changes to Social Security 
 
 Proponents say chained CPI is a more accurate way to measure inflation than the way it's done now, which they say overstates growth in consumer prices. 
 
 On average, chained CPI is expected to grow 0.25% to 0.3% slower than the CPI measures used today, according to Marc Goldwein, who coauthored a report on the issue for the Bowles-Simpson Moment of Truth Project. 
 
 That doesn't seem like a huge difference, but it adds up over time. Between 2000 and 2011, for example, the usual CPI measures showed that prices rose by 34%. But as measured by chained CPI, the increase would only be 29%. The longer the time frame, the more pronounced the difference. 
 
 A switch to chained CPI would affect Americans in two ways. 
 
 It would slow the growth rate in all federal payments that are adjusted annually for cost of living. These include Social Security benefits, civilian worker and military pensions, veterans' benefits, and Pell Grants. 
 
 For example, Social Security payments would continue to grow every year, but by 2030, the median payment would be 3% less than it would be if today's inflation measure were used. 
 
 It would also slow changes to tax parameters that go up with inflation -- and that could mean somewhat higher taxes for many filers. Measures adjusted for inflation include income tax brackets, the standard deduction, phase-out levels for tax credits and contribution limits to 401(k)s. 
 
 All told, the switch to chained CPI could reduce spending over 10 years by $216 billion and raise $124 billion in revenue, according to Congressional Budget Office estimates. That would mean total deficit reduction of $340 billion, before counting interest savings. 
 
 To date, the fight over chained CPI has gotten most heated over Social Security ($127 billion saved) and in programs affecting veterans and the poorest elderly and disabled ($36 billion saved). 
 
 This is where Obama will likely face resistance from progressives. 
 
 "During his first run for the White House, in 2008, Mr. Obama said he would not cut Social Security. I hope he remembers that promise and keeps it," Senator Bernie Sanders, an independent known for his progressive views, wrote in a New York Times letter to the editor. 
 
 Sanders advocates for expanding the amount of income subject to the Social Security tax -- currently set at the first $113,700 of wages. 
 
 Meanwhile, some liberal economists say chained CPI is not a better way to measure inflation for Social Security recipients, because they spend so much on health care, which rises faster than inflation. 
 
 By contrast, other liberal economists do see chained CPI as a more accurate inflation measure but say adjustments should be made to protect the most vulnerable from any hardships caused by the smaller benefit increases under chained CPI. 
 
 Obama has indicated he would support such adjustments, although he hasn't specified what they would be. 
 
 One option could be a one-time increase to Social Security benefits for seniors once they're in their 80s, said Goldwein, senior policy director at the bipartisan Committee for a Responsible Federal Budget. Another option: Exempting Supplemental Security Income, which pays benefits to poor seniors and the disabled, from chained CPI. 
 
 Combined, such protections could curb chained CPI's deficit-reduction potential by about $60 billion, Goldwein noted. 

 Rumored details of President Obama’s proposed budget sparked a firestorm among progressives on Friday. The 2013 budget, expected to be released next week, is said to include phased-in cuts to Social Security benefits. 
 
 “You can’t call yourself a Democrat and support Social Security benefit cuts,” Progressive Change Campaign Committee co-founder Stephanie Taylor said in a widely circulated statement. “The president is proposing to steal thousands of dollars from grandparents and veterans by cutting cost-of-living adjustments, and any congressional Democrat who votes for such a plan should be ready for a primary challenge.” 
 
 The cuts would come in the form of a policy called chained CPI, which was originally proposed by the Republican Party and later adopted by the White House. Chained CPI would reduce the rate at which Social Security benefits increase, effectively cutting the program in the long term. 
 
 Progressive members of Congress emphatically rejected the possibility of passing a budget with chained CPI. 
 
 “In 2008, candidate Barack Obama told the American people that he would not cut Social Security,” said Senator Bernie Sanders, I-Vt. in a statement. “Having him go back on his word will only add to the rampant political cynicism that our country is experiencing today.” 
 
 “I support President Obama, but believe it is deeply misguided and harmful to cut Social Security benefits for seniors, veterans, and children already struggling to get by,” said House Progressive Caucus co-chair Keith Ellison, D-Minn., in a Facebook post. “We should not try to lure Republicans with a policy that harms our seniors, particularly when they have been unwilling to take even a dime away from tax loopholes for millionaires and wealthy corporations.” 
 
 Unions were also unhappy. In a Friday statement on the most recent jobs report, AFL-CIO president Richard Trumka dismissed chained CPI advocacy “as more ‘Washington speak.’” 
 
 President Obama’s support for chained CPI is nothing new. The president included the policy in his proposed fiscal cliff bargain. Though some of the largest labor unions strongly opposed the policy at the time, they declined to withdraw their support for the deal. 
 
 In reaction to the president’s latest rumored proposals, House Speaker John Boehner said that “modest” cuts to entitlements must not “be held hostage for more tax hikes.” In February, multiple Republican strategists told the Washington Post’s Ezra Klein that Obama would need to embrace chained CPI in order to strike a deal with the Republicans—even though, by that point, he already had. In other words, the president has yet to get credit for the concession from Republicans, while taking plenty of heat for it from his own party. 

 Sigh. So Obama is going with the “chained CPI” thing in his latest proposal — changing the price index used for Social Security cost adjustments. This is, purely and simply, a benefit cut. 
 
 Does it make sense in policy terms? No. First of all, there is no reason to believe that the chained index is a better measure of inflation facing seniors than the standard CPI. It’s true that the standard measure arguably understates inflation for the typical household — but seniors have a different consumption basket from the young, one that includes more medical expenses, and probably face true inflation that’s higher, not lower, than the official measure. 
 
 Anyway, it’s not as if the current level of real benefits has any sacred significance. The truth — although you’ll never hear this in Serious circles — is that we really should be increasing SS benefits. Why? Because the shift from defined-benefit pensions to defined contribution, the rise of the 401(k), has been a bust, and many older Americans will soon find themselves in dire straits. SS is the last defined-benefit pension still standing — thank you, Nancy Pelosi, for standing up to Bush — and should be strengthened, not weakened. 
 
 So what’s this about? The answer, I fear, is that Obama is still trying to win over the Serious People, by showing that he’s willing to do what they consider Serious — which just about always means sticking it to the poor and the middle class. The idea is that they will finally drop the false equivalence, and admit that he’s reasonable while the GOP is mean-spirited and crazy. 
 
 But it won’t happen. Watch the Washington Post editorial page over the next few days. I hereby predict that it will damn Obama with faint praise, saying that while it’s a small step in the right direction, of course it’s inadequate — and anyway, Obama is to blame for Republican intransigence, because he could make them accept a Grand Bargain that includes major revenue increases if only he would show Leadership (TM). 
 
 Oh, and wanna bet that Republicans soon start running ads saying that Obama wants to cut your Social Security?
– President Obama is making some concessions to Republicans in his new budget, and there's one that has particularly rankled the Democrats' ranks, reports MSNBC: A proposal to change the way Social Security benefits are determined by linking it to something called "chained CPI." So what is it and why don't liberals like it, asks the Week. Chained CPI is an alternative way of measuring cost of living adjustments to the regular Consumer Price Index. It assumes that when the price of a product or service goes up, people switch to a cheaper option. The result is a lower estimated cost of living adjustment. "This is, purely and simply, a benefit cut," writes Paul Krugman in the New York Times. The move will reduce the deficit, but also reduce Social Security payments for seniors—a particularly bad kick in the teeth, he says, because they typically have a higher cost of living than average, thanks to medical expenses. By 2030, the median payment would be 3% less than under the standard CPI, reports CNNMoney. AARP has created a handy tool to calculate how much your own Social Security, veterans' disability, or military pension benefits will be cut.