Chained CPI Not in President's FY2015 Budget
Today, the White House announced that the President will not propose adopting the “chained CPI” in the President’s Budget this year, as he did last year (though the White House commented today that they are open to the provision as part of a bipartisan deficit reduction deal).
We argued yesterday that this would be a mistake, explaining that the chained CPI is not only a much more accurate measure of inflation but would also result in several hundred billion dollars of savings in the first decade and more than $1 trillion in the second.
For those interested in learning more about the chained CPI, CRFB and its partner – the Moment of Truth Project – have published a large amount of material on the topic. Their paper, Measuring Up: The Case for the Chained CPI, explains the interaction between the inflation measure and the budget, makes the technical case for chained CPI, and shows the budgetary and distributional impact of adopting it.
In addition to this paper, we have published answers to frequently asked questions about the chained CPI, corrections to some common myths, explanations of the distributional impact, pushback on misleading claims, and dozens of blog posts discussing various facets of chained CPI.
Our chained CPI resource page compiles numerous resources on chained CPI from CRFB and from government agencies, think tanks, and economists from across the ideological spectrum. Our resources page also links to a brief summary of the issue, which can be viewed below:
As we’ve explained many times before, chained CPI is a common-sense proposal with broad bipartisan support that would not only improve the way we measure inflation but also raise additional revenue, slow the growth of government spending, and help to shore up Social Security.
Although we are glad the President remains open to the policy, we are disappointed he has removed it from his budget. As CRFB President Maya MacGuineas said today in a statement from our partner Fix the Debt:
We are incredibly disappointed to learn that the President has decided to drop his proposal to correct the way in which the federal government measures inflation…Reaching agreement on a comprehensive debt deal will require consideration of all policy options and compromises by both sides. While we welcome today’s statements from the administration indicating they remain open to supporting chained CPI in the context of a bipartisan deficit reduction agreement, the nation needs the President to lead on this issue. The clear pullback on his part is a disturbing sign that he will not.
To learn more about chained CPI, visit our chained CPI resource page here.