Committee for a Responsible Federal Budget

WaPo Endorses Chained CPI, Cites Moment of Truth Project Paper

May 27, 2011 | Social Security

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.