President Obama's budget, unveiled today, proposes to cut Social Security benefits by changing the formula used to calculate annual cost-of-living adjustments (COLA). This is a bad idea masquerading as a painless technocratic correction.
The specific proposal is to calculate cost-of-living adjustments (COLAs) based not on the CPI-W (consumer price index for urban wage earners and clerical workers) but on a different price index that takes tries to take into account the extent to which consumers change their purchasing behavior from higher-priced goods to lower-priced goods. This would probably reduce the annual COLA by about 0.2-0.3 percentage points, thereby reducing federal government outlays on Social Security benefits. The sneaky thing about the proposal is that it can be defended on reasonable-sounding grounds: since some economists think that chained CPI is a better measure of true inflation than the ordinary versions of the CPI, it can be framed as simply reducing COLAs to what they should have been anyway.
There are a number of problems with this proposal, including the fact that the real cost of living for the elderly probably increases faster than the CPI-W, since the elderly consume a disproportionate amount of health care, which has a higher inflation rate than the overall economy.*
More generally, you don't actually save any money by reducing Social Security checks. There's no "waste" in Social Security. It's a program in which one set of people pays cash to the government and the government pays virtually all of that cash back out to another set of people. Every dollar in lower benefits is one dollar less in someone's wallet.