How to Cut Essential Public Services Without Anyone Noticing: Use Wonky Acronyms
Why You Should Care About the CPI-U and the chained-CPI
How do you effectively kill a bunch of people without admitting that’s what you’re doing? You adjust the Consumer Price Index for All Urban Consumers to a Chained Consumer Price Index! Obviously.
If your eyes glazed over just now, you’re not alone. But stick with me here because this is actually incredibly important, and not as confusing as it first sounds. Trickle-downers love to use off-putting acronyms to describe useful everyday economic realities because they’re counting on the fact that if they make it seem obscure and complex, you’ll assume you won’t understand it and just keep moving. Don’t buy it.
The Consumer Price Index for All Urban Consumers (CPI-U) is the tool our government currently uses to calculate the poverty level adjusted for inflation, meaning it’s what the government uses to decide who’s poor enough to receive government supported essential services and who’s not. The chained Consumer Price Index (chained- CPI) is a slightly different way of calculating these things, one that assumes (you know what they say about assuming!) consumers will substitute across categories to counteract rising prices. The Trump administration has proposed doing away with the CPI-U and moving to the chained-CPI to calculate inflation and decide the poverty line.
What Does This Mean and Why Does It Matter?
Substituting across categories means that if you have $1500 to spend on a vacation and the cost of vacations goes up, you’ll spend that $1500 on something else that supports your leisure, like a flat screen TV or a bouncy castle. Aside from the obvious point that a bouncy castle is the way to go here, let’s also remember that 40% of Americans can’t afford a surprise $400 expense, let alone $1500 for leisure activities.
The problem is we’re not talking about bouncy castles here. Substitutions only apply to non-essential spending. There are expenses in life that have no substitution — like rent, or food, or childcare. For many Americans, the choice is not between renting or buying—it’s between renting and becoming homeless. When the price of rent goes up, I can’t substitute something else for that cost. The effect of this substitution assumption is that the inflation rate and cost of living increase appear lower than they actually are, because the government is calculating them based on the people buying $1500 bouncy castles, not the folks who are unable to make rent. This miscalculation results in a lower poverty line, so the government thinks there are fewer poor people than there actually are. Or to put it plainly, millions of Americans will no longer receive essential services they need to survive because they’re not considered “poor enough”.
According to a report from the Center on Budget and Policy Priorities, calculating with chained-CPI over 10 years would lower the poverty line by 2% and cause millions of low-income people, seniors, and people with disabilities to either lose their benefits completely or receive less assistance. Hundreds of thousands of seniors would either lose completely or see reduced assistance from Medicare Part D. More than 300,000 children would lose Medicaid and Children’s Health Insurance Program coverage, as would some pregnant women.
Under chained-CPI, many seniors would lose their premium tax credits and be forced to pay higher premiums through Medicare, while many adults would lose their Medicaid altogether. Even people who buy their medical coverage on the marketplace would see their premium tax credits shrink. These impacts would continue to grow over time, decreasing the accuracy of the poverty level, the inflation rate and the cost of living increase and forcing millions of Americans deeper into poverty and hardship — while at the same time artificially giving the appearance that the government is succeeding in fighting poverty, because they’ve changed what’s being measured and in doing so made millions of people experiencing poverty totally invisible.
In case all of this wasn’t horrifying enough, using chained-CPI has historically seen support on the left as well, from Nancy Pelosi and even President Obama. So beware of anyone, friend or foe, pushing for chained-CPI. In fact, even the current measurement system is deeply inaccurate — the CPI-U doesn’t take into account that wages and incomes are barely keeping up with inflation and not even close to keeping up with cost of living increases.
While I understand that no administration wants to be blamed for making poverty worse — which is likely what would happen to an administration that instituted an accurate poverty measure — the Trump administration is (not surprisingly) going to the other extreme. They are making themselves look good while exponentially worsening the problem by further impoverishing and silencing millions of Americans. Rather than help poor Americans climb out of poverty, the Trump administration is trying to pretend they don’t exist.
