The Chained Consumer Price Index

Included in President Obama’s December 17th proposal to avert the fiscal cliff was a significant change to government benefits, most notably Social Security. The President conceded to Republican demands to change the method currently used to measure inflation, which determines the cost of living adjustment (COLA) for Social Security and other federal programs.  The President’s proposal would mean that inflation would now be measured using the chained Consumer Price Index (chained CPI), which would replace the current CPI formula.  Although not included in the final fiscal cliff bill, the chained CPI is very much still on the table as a…

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