WaPo Endorses Chained CPI, Cites Moment of Truth Project Paper
Today's editorial in the Washington Post, "The Chained CPI, an easy way to save money," endorses switching to the chained CPI for indexation of all inflation-indexed federal programs and provisions in the tax code -- a change CRFB has long supported. We even included the change in our recent list of common-ground deficit reduction measures that could be a foundation for a long-term debt reduction plan.
The editorial cites the recent paper "Measuring Up: The Case for the Chained CPI," published by the Moment of Truth (MOT) project -- a project of CRFB -- and written by MOT and CRFB analysts Adam Rosenberg and Marc Goldwein. The paper explains the problems with the current measure used to estimate inflation (the CPI-W and CPI-U), the improvements made under the chained CPI (the C-CPI-U), and the budgetary effects of making the switch.
We recently estimated that changing to the chained CPI would save $255 billion over ten years by reducing Social Security outlays by $112 billion, reducing other spending by $56 billion, and increasing revenue by $87 billion. Including interest savings, the switch would achieve roughly $300 billion in savings over 10 years.
Hopefully, this and other common-ground proposals get enough traction to be a part of bipartisan budget negotiations in Congress, perhaps as a down payment toward a larger long-term budget deal.