What does a change to Chained CPI mean?

I’ll admit to getting that glossy eyed stare whenever I hear mention of “Chained CPI”. It’s as if I’m right back in algebra class near the back watching the leaves begin to return after a long winter. So I came across a fairly straight forward account of what it is and why it’s even a part of the discussion. (Forbes: Why Veterans’ Advocates Don’t Like Chained CPI) At least the “discussion” in Washington and on the Sunday morning talk shows.

Why was it proposed in the first place? Possible it will decrease the deficit by $340 billion

Forbes: 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CPI argue that the current index, which considers the spending habits of urban wage earners and clerical workers, is outdated.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.

Why are Veterans groups fighting against it?

Forbes: Among those who would see a reduction in VA benefits with a chained CPI are 3.2 million disabled veterans, 310,000 low-income veterans who receive a pension and 350,000 surviving spouses and children.

In addition, veterans that receive both Social Security and VA benefits and would be hit twice by chained CPI.

One estimate forecasts that a veteran who began receiving disability benefits at 30 — presumably as a result of service in Iraq or Afghanistan — would see a reduction in benefits of $1,400 at 45 and $3,200 by 65.

COLA - Chained CPISo there’s the problem. Our country is running the risk of going bankrupt if we don’t begin spending less than we take in. But, no one receiving payments and benefits want to see them cut either. Basically, the “not in my backyard” problem. Everyone wants a solution, but only if it effects someone else.

NIMBYI propose we start publishing a list of all government programs, grouped by agency, ranked by total expenditures, and let the public decide which beneficiaries are more deserving of their tax dollars. Got a better idea?

Speak Your Mind