The "Chained CPI": Why It's Bad for Social Security and Why the White House Shouldn't Be Touting It

Friday, 05 April 2013 11:07

The White House and prominent Democrats are talking about reducing future Social Security payments by using a formula for adjusting for inflation that’s stingier than the current one. It’s called the “Chained CPI.” I did this video so you can understand it — and understand why it’s so wrongheaded.

Even Social Security’s current inflation adjustment understates the true impact of inflation on the elderly. That’s because they spend 20 to 40 percent of their incomes on health care, and health-care costs have been rising faster than inflation. So why adopt a new inflation adjustment that’s even stingier than the current one?