Top Economist Rejects 'Chained' CPI
In his most recent column , Economic Policy Institute President Lawrence Mishel demolishes arguments in favor of "chained" CPI, which is often offered in grand bargain negotiations, saying it is nothing more than a way to explain away cuts to the program.
Supporters say chained CPI is more accurate than currently-used measurements and that this is nothing more than a technical fix. Mishel makes it clear that isn't a more accurate measurement for Social Security recipients, whose spending and costs are significantly different from the general public. Mishel writes seniors and people with disabilities "spend a greater share of their incomes on out-of-pocket medical expenses than do other consumers, and health costs have risen faster than overall inflation in recent decades." Beyond that, he says, there is no other motivation for using "chained" CPI other than to cut benefits. In fact, 55% of voters reject the "chained" CPI cut .
He concludes the "chained" CPI is a bad policy option:
The economics could not be clearer: In regards to the Social Security COLA, there is no merit at all to the claim that adopting a chained CPI measured for the average consumer is a technical improvement. In addition, there is no liberal safe harbor where one can argue that a chained CPI is technically accurate but vulnerable populations should be shielded from the consequences.
Supporters of the "chained" CPI are not acting like it is a more accurate measure. If it was, he argues, there would be no need to protect vulnerable populations from the change, since a more accurate measure of inflation would accurately reflect the needs of the vulnerable. If you wanted to create a measure that was more accurate, you would create one that specifically examined seniors, but supporters of "chained" CPI are not doing that, they are instead proposing to use "chained" CPI and create exemptions for specific programs.
Read more on the AFL-CIO Now blog: Push for Social Security 'Chained' CPI Rears Its Ugly Head Again .
