1. Richard Remmele Richard Remmele United States says:

    We need to make it better by using the CPI-E that weights rents and housing, Medical, and other more heavily and is thought to better reflect the spending of the Elderly. Right now, Social Security's cost-of-living adjustments (COLA) are tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.

    Republican lawmakers have suggested ditching the CPI-W in favor of the chained CPI. Like the CPI-W, the chained CPI measures the change in price for a predetermined basket of goods and services. But there's one big difference. The chained CPI takes into account a behavior known as substitution that the CPI-W does not.

    Substitution involves the idea that consumers will trade down to a less expensive good or service if the price of another good or service increases too much in price.  But in actuality most seniors living on Social Security have already made as much of that trade off as possible because most have Social Security as their largest source of income or their only source of income.  Trade offs only really affect those higher income Social Security beneficiaries.  There are other ways to address that if it is necessary.

    Since substitution implies that the chained CPI will grow at a slower pace than that of the CPI-W, it also means that seniors would see a smaller "raise" each year if the chained CPI were used. It is too small right now

The opinions expressed here are the views of the writer and do not necessarily reflect the views and opinions of News Medical.
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