President Obama will not pursue adding the chained CPI to his next budget, according to Senator Bernie Sanders (I-VT).
“It is my understanding that the chained CPI will not be in the president’s budget,” Sanders said in a Capitol Hill press conference.
What is the Chained CPI?
While the usual consumer price index (CPI) deals with the rise and fall in fixed items, a “chained CPI” would also consider choices people may make as a result of changes in their behavior. For example, if the price of beef goes up, many people will buy chicken instead because it may be a substitute that costs less. Also, when the price of a product goes up, people will probably buy less of that product.
The chain weighted CPI incorporates changes in both the quantities and prices of products. When it comes to calculating costs for multibillion dollar programs like Social Security, a chained CPI is likely to mean that benefit increases do not rise as much. Over time, benefits, payments, and pensions that are adjusted with CPI calculations could all fare differently under chained CPI rules.
For more information on how a chained CPI could impact your federal retirement benefits, see How Bad is the “Chained CPI?”.