Chained CPI: How Likely Social Security Change Could Affect Seniors

WASHINGTON — The pillars of a big budget deal between President Barack Obama and House Speaker John Boehner have begun to emerge: higher taxes on higher incomes paired with cuts to social insurance programs. Obama and Boehner have both embraced a change to the way the government measures inflation, which would reduce spending on Social Security and other programs by giving beneficiaries smaller cost-of-living adjustments. 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.”Read More…
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Chained CPI: How Likely Social Security Change Could Affect Seniors


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