Chained CPI Not in Budget but Is on Table

Unlike past Obama administration budgets, the document does not call for switching to the “chained” consumer price index to annually adjust many benefit programs including federal annuities. The budget says that proposal is not being repeated because of “congres¬sional Republicans’ unwillingness to negotiate on fundamental issues and agree to a balanced plan to deal with our long-term fiscal challenges.” However, it adds: “The compromise embedded in last year’s Budget—which included policies like chang¬ing the measure of inflation used by the Federal Government to the chained Consumer Price Index that Republicans had asked for in previous fiscal negotiations—re¬mains on the table.” Prior estimates have shown that the chained CPI would produce inflation adjustments of about half a percentage point less per year, on average.