Excerpt from: Forbes (click for full article)
Like many things on Capitol Hill, the “chained” Consumer Price Index (CPI) is not sexy enough to grab the public’s attention but it involves how billions of dollars are spent.
This budget proposal aims to control Social Security expenditures by calculating cost of living adjustments (COLA) in a way that proponents argue is a more accurate reflection of how prices for consumer goods fluctuate.
Those in favor of a chained CPI argue that the current index, which considers the spending habits of urban wage earners and clerical workers, is outdated. In its place, a chained CPI would calculate inflation more conservatively, and thus, yield significant COLA savings. Over a 10-year period, according to the Congressional Budget Office, such a measure would decrease the deficit by $340 billion.
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