From a spending standpoint one of the problems for Social Security, and for any retirement annuity or lifetime pension, is how to maintain purchasing power for recipients in a world of generally rising prices.  It would be so nice, all agree, if prices could just be made not to rise so quickly.  This is, unfortunately, very difficult to control.

Enter the Chained CPI.  It's a measure of inflation that takes the substitution effect of consumers changing their buying habits in response to a rise in prices.  If the price of steak goes up, the story goes, consumers buy more chicken and the government doesn't have to worry about making sure that retirees can keep up with the price of steak.

The steak/chicken analogy is popular among Chained CPI proponents, I suspect, because it's so inconsequential.  Americans don't generally believe that society owes you a dry-aged porterhouse.  Chicken will do.

Chained CPI proponents also like to talk about all of the gadgets out there.  Once adopted, prices for televisions, microwaves, cell phones and computers of all types tend to plummet.  One day, you can't afford the new iPad.  A few years later, you can get something just as good at a bargain price.

It's easy to trivialize inflation with these anecdotes and analogies.  It's also easy for politicians to argue that moving Social Security to the Chained CPI, as opposed to the current Consumer Price Index which measures the prices of a fixed basket of goods, is not a cut, it's just in line with reality.  Yes, it will slow the growth of Social Security payments over time, but nobody will sacrifice anything.

Except that, they will.  The Chained CPI is a race to the bottom.  Maybe the idea of somebody giving up steak for chicken doesn't bother us.  But the Chained CPI memorializes that consumer choice.  What happens when the price of chicken rises?  Somewhere down the line, you're eating potted meat like a hobo.