So, Very Serious People are pushing the chained price index as a preferred alternative to the CPI for indexing future Social Security benefit increases. This is estimated to raise benefits per year by about 0.3% less than the CPI does, and is claimed to be more accurate due to allowing for substitutability of goods, along with reducing future expenditures, if not reducing the deficit in the immediate term. Anyway, it is on the table as part of the ongoing fiscal cliff negotiations.
However, an experimental price index for seniors estimated by the BLS finds them facing higher rates of price increase than the CPI measures, although this index needs further refinement and research and has not been officially released. Nevertheless, it is quite believable that seniors do face higher cost of living increases, particularly as they spend far more on medical care than other people as a perent of their spending and income, and that is one of the two most rapidly rising components of the CPI (the other being higher ed).
A letter has been issued with accompanying documents, signed by 250 economists, arguing for more study of this senior price index and against putting seniors on a Cost of Living Chain Gang Index. The entire set of documents and the signatures can be found at http://www/epi.org/publications/social-security-cola-changes-letter . If anybody had asked me, I would have signed it as well...
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