In President Obama’s budget proposal for 2014, he has suggested that the cost of living adjustments for Social Security and other retirement benefits be tied to the chained CPI rather than the CPI-W.

While this sounds like just a minor technical adjustment and some would argue that the chained CPI is a more accurate way of measuring inflation, this is not the case when dealing with seniors.

The CPI-W is the Consumer Price Index for Urban Wage Earners and Clerical Workers and is used to adjust Social Security and other federal programs. As implied by the name, it is a price index for workers and so does not include the retired.

Given this it is far from certain how well the CPI-W (or even the CPI-U) would reflect price inflation for seniors. So The Older Americans Act of 1987 had the Bureau of Labor Statistics (BLS) develop a new index for price inflation faced by seniors, the CPI-E . Not surprisingly, the CPI-E is a bit higher than the CPI-W.

So the CPI-W which is used to adjust retirement programs including Social Security actually understates inflation experienced by seniors. And now it is proposed the adjustment actually be lowered further.

If Congress wishes to cut Social Security that is certainly within their rights. (Whether it is a good idea is an entirely different question.)

But let us be honest. This is not merely a technical adjustment to increase the accuracy of inflation adjustment. It is a purposeful decrease in benefits which will hurt many of the elderly.