Taking it a step further, he is not even capitulating.

He is actively participating in the destruction of the values of the democratic party because either he is a doctrinaire conservative authoritarian at heart, or he is dutifully following the dictates of the corporate interests to which he is beholden.

Why not give in on something the GOP actually asked for?

There is a line of thinking that says chained CPI concessions now are far easier to reverse later than the other things that O could concede.  So one argument is that he chose that as a bargaining chip because it is a much better concession than the other options on the table in terms of democratic ability to fix later.

We will leave aside the fact that Obama talked about cutting Social Security before the Republicans asked for any concessions at all and just deal with the subject of why Obama likes the chained CPI.

The reason for implementing the chained CPI is because it is a devious way to cut benefits and implement a regressive tax increase after promising not to raise taxes for people making under $250,000 (the biggest hit goes to people in $30 - 40k range). Here is Erza Klein pointing that out:

All told, chained CPI raises average taxes by about 0.19 percent of income. So, taken all together, it's basically a big (5 percent over 12 years; more, if you take a longer view) across-the-board cut in Social Security benefits paired with a 0.19 percent income surtax. You don't hear a lot of politicians calling for the drastic slashing of Social Security benefits and an across-the-board tax increase that disproportionately hits low earners. But that's what they're sneakily doing when they talk about chained CPI. link

Matthew Yglesias on the same subject

I get the feeling that your definition of "moving first" is what I would describe as "waving the white flag," giving up before ever doing anything else.

Honestly, we've seen this so-called "strategy" so many times, and I can't think of a single time it truly advanced the cause - well, at least the causes as I see them.

At a minimum, if there were going to be any conceding, it should be on something that, in large part, both sides actually agree on, where there are differences without much distinction.

The problem I have is that Obama keeps coming back to that Grand Bargain, the plans as laid out by Simpson/Bowles - the ones that have been more or less dead in the water in Congress, but which Obama just won't let go of.  Does he cling to it because he thinks it's actually sound policy, or is he fixated on it because he sees it as more history-in-the-making, another "first" he can claim ownership of?

AMT in theory was designed to make sure that people making a lot of money pay something in the way of taxes. The chained CPI makes sure that the working poor and the middle class pay more in taxes so that people making a lot of money don't have to pay their fair share.

It is a REGRESSIVE TAX. People making between $30,000 - $40,000 per year will experience the biggest hit.  

It results in higher taxes on the working poor and the middle class. Wealthy people are already in the highest tax bracket and while the working poor and the middle class will continuously see their taxes increase, these increases will barely impact the wealthy if at all.

You don't hear a lot of politicians calling for the drastic slashing of Social Security benefits and an across-the-board tax increase that disproportionately hits low earners. But that's what they're sneakily doing when they talk about chained CPI.