Obama Administration backs off push for “chained CPI”

Photo close up of social security cards and cash
Chained CPI abandoned

The Obama Administration will not include a proposal to change how Social Security benefits are calculated, heavily criticized by disability advocates, in its Fiscal Year 2015 budget.

The so-called “chained consumer price index” would modify the traditional CPI, which measures inflation for the purposes of calculating annual cost-of-living adjustment (COLA) increases in Social Security benefits, including Social Security Disability Insurance and Supplemental Security Income benefits.

The inflation rate for the chained CPI is typically about 0.3 percent lower than under the CPI.

The decision, made February 21, came two days after House Democrats sent a letter to President Obama, signed by 117 representatives, strongly objecting to any modifications of the CPI.

“We recognize that additional measures are required to address our nation’s long-term budget challenges, and we appreciate the difficult choices you are wrestling with as you prepare a fiscal blueprint to promote economic growth,” the letter stated. “But, we respectfully ask that you not place the burden of additional deficit reduction on the backs of seniors, veterans, federal retirees, disabled individuals and others by including chained CPI in your Budget for Fiscal Year 2015.”

The proposal was included in both the Obama Administration’s Fiscal Year 2014 budget, and was heavily discussed in the negotiations leading up to the budget deal at the end of 2012.

“We strongly oppose cuts to these and other vital supports, including under the chained CPI,” the ARC said in a policy memo opposing the chained CPI. “Benefits are minimal, and many people cannot afford any cuts in their basic income that goes to pay for essential housing, food, and medical costs. The Arc knows that the impact of the chained CPI would be real and painful, and we firmly believe this is not the way to balance the budget.”