One of the hottest proposals aimed at stemming the growth in entitlement spending is the Chained CPI. That’s the short form of this chop-buster: Chained Consumer Price Index for All Urban Consumers. If it were to become law, it would replace the CPI-W, which has an even harder to remember and pronounce name: Consumer Price Index for Urban Wage Earners and Clerical Workers.
The purpose of mechanisms like these is to measure the change in the value of the dollar, which we all know has eroded badly over the last 20 years, and to help all recipients of Social Security benefits and federal retirees who receive annual cost-of-living adjustments to keep pace with inflation.
While some would argue that using the Chained CPI would be a more accurate way of measuring change, the real purpose – as I stated in the first sentence of this article – is to cut the growth in entitlement spending. How would it do that, you ask? Let me explain.
The system works by taking a basket of goods and services and measures the month-to-month changes in consumption. The CPI-W assumes that a Social Security recipient would want to continue buying the service or product he or she preferred when the price goes up. So benefits are increased to allow that to happen.
On the other hand, the Chained CPI assumes that when the price goes up, the consumer will switch to a less expensive alternative. Following that logic, during a period of inflation, the Chained CPI would see consumers switching from steak to hamburger to beans, with their cost-of-living adjustments growing more slowly as it keeps pace with their lowered living standards.
But what the heck. The Chained CPI isn’t about maintaining a senior’s lifestyle, it’s all about the money. If the Chained CPI were to become law, it would save the federal government about $130 billion over the next 10 years. Money out of your pocket into theirs.
So let’s see a show of hands. Who favors the Chained CPI? Most Republican members of Congress and the Obama administration. Who opposes the Chained CPI? Lots of Democratic members of Congress and retiree organizations.
Dear reader, here’s one topic on which you can honestly say, "I have a dog in this fight." Wherever you stand on the subject, let your member of Congress know what your think.
