Chained CPI Plan 'A Stealth Way To Give People Less' Says Keith Ellison, Minnesota Congressman (VIDEO)

12/19/2012 07:12 pm ET | Updated Dec 19, 2012

Democratic Rep. Keith Ellison (Minn.) said Tuesday that one part of a potential deal to avoid the so-called "fiscal cliff" is actually "a stealth way to give people less" and that he and other members of the House Progressive Caucus won't vote for any plan that includes it.

"It's a bad idea and it's a stealth way to give people less," Ellison told HuffPost Live host Alyona Minkovski. "And, so we're saying we're not gonna do it. It is a benefit cut -- and here's the real problem with it being a benefit cut: It would be absolutely horrible if it were a benefit cut but the cut was designed to extend the life of Social Security and to make the program more solvent. But that's not why they're doing it. They're doing it so that they can preserve somebody else to have a tax cut and to not raise taxes on the top 2 percent."

One of the details to emerge out of the ongoing budget negotiations between President Barack Obama and House Speaker John Boehner (R-Ohio) is the possibility of changing the way the government measures inflation in order to reduce spending by giving smaller cost-of-living adjustments to beneficiaries of Social Security and other programs. If adopted, the new system would use the "chained" consumer price index to measure inflation as opposed to the regular CPI used now.

Many economists say the alternative version of the Consumer Price Index, known as the "chained CPI," is a more accurate measure of inflation. Chained CPI accounts for the way consumers avoid higher prices by substituting purchases. The Bureau of Labor Statistics has a favorite example: "If the price of pork increases while the price of beef does not, consumers might shift away from pork to beef."

Obama has not ruled out the possibility of the change, but some Democrats have said they won't vote for any budget plan that includes reductions to Social Security benefits.

Alan Simpson and Erskine Bowle, co-chairs of the Obama administration's commision on deficit reduction, proposed a switch to chained CPI in 2010 coupled with new protections for low-income and older seniors.

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