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Ripping Off Needy Seniors Through The 'Chained CPI'

Wednesday, July 13, 2011 - 11:32 AM
From LATimes.com
Basing Social Security cost-of-living increases on the chained consumer price index, which presumes people will trade down to cheaper goods as costs rise, would force elderly people on fixed incomes to forgo essentials.

Of all the ways policymakers in Washington show they have absolutely no conception of how their tinkerings with the federal budget affect average Americans, one stands alone. That's the proposal to change the formula that determines annual cost-of-living increases for people on Social Security.

At the heart of this particular change is an inflation indicator known as the chained consumer price index. You may have heard the term bandied about, along with the claim that it's more accurate at measuring inflation than the plain-vanilla versions of the CPI used today for inflation adjustments in Social Security, the income tax and other federal programs.

First published by the Bureau of Labor Statistics in 2002, the chained CPI was designed to adjust for the ways real-life consumers compensate when....

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WhataBummerWhataBummer413 posts since
Oct 15, 2010
Rep Points: 1,702
1. Wednesday, July 13, 2011 - 1:41 PM
In addition to describing this new chained CPI and the standard CPI, there's an interesting reivew of an experimental CPI from the BLS called CPI-E. According to the article:
Among other differences, the index overweights medical care as a factor in seniors' spending.

[...]

That helps explain why the CPI-E rose nearly 7% faster than the standard CPI from 1998 through 2009, according to government estimates. It also tells you why, from the standpoint of seniors' real cost of living, the chained CPI is a rip-off.

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Ken TuminKen Tumin5,468 posts since
Nov 29, 2009
Rep Points: 125,018
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