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Lew’s Conflicting Statements on Chained CPI – an Example of What's Wrong in Washington
If it is “better” policy, then let’s do it, Mr. President
Included in the President’s budget proposal was a change to the way Social Security measures inflation – moving from the current measure to the chained Consumer Price Index. As Treasury Secretary Lew stated during his testimony before the Ways and Means Committee on the President’s budget, “The Chained CPI is a more accurate measure of inflation in that it does a better job of reflecting the substitution of goods in response to relative price changes.” Additionally, he noted that this provision was included in the President’s compromise offer to Speaker Boehner during discussions on the fiscal cliff.
Unfortunately, Secretary Lew also noted that the President “is not prepared to do something like chained CPI” unless taxes are increased above and beyond the tax increase at the start of the year.
According to the Social Security Administration actuaries, using the chained CPI to determine Social Security cost of living increases would solve 20 percent of the Social Security shortfall and allow Social Security to pay full benefits for an additional two years. If this policy is good for the long-term health of the Social Security program, it should not be held hostage for more political demands.
Chained CPI has broad bipartisan support and is not a Republican idea or a Democratic idea. In fact, the Washington Post editorial board noted that, “Mr. Obama too often casts entitlement reform as a concession to extract Republican assent to higher taxes, rather than a worthy end in itself. This is especially odd regarding his proposed new cost-of-living measurement for Social Security: Mr. Obama’s own budget documents say that it’s ‘more accurate’ than the measurement now in use. Isn’t ‘more accurate’ better?”
Americans expect that Congress and the President work together and provide solutions to strengthen and preserve Social Security for current beneficiaries and future generations. The President has repeatedly called on Congress to act on policies we can agree on. We must take action now, and enact meaningful reforms to secure the future of this vital safety net. That is why this morning, the Ways and Means Social Security Subcommittee will hold a hearing examining the use of the chained CPI to measure inflation.