Gauging prices
Whatever happens in the current debt showdown, there have been a number of different proposals — some good, some bad — put forward in recent weeks concerning the nation’s long-term fiscal policies.
One good plan deserves to be part of the ultimate solution — and if it isn’t included in the inevitable looming compromise, it should be considered on its own in the near future.
By simply shifting to a more realistic calculation of the Consumer Price Index, the nation could save up to $300 billion over the next 10 years. “It would have a significant long-term impact on the viability of the Social Security system,” an investment expert told USA Today.
Currently the CPI tracks increases in the cost of a set basket of goods that doesn’t change. But economists note that people alter their behavior when prices rise — instead of continuing to buy beef cuts as the cost soared, for instance, they might switch to less expensive chicken.
Applying this principle to the CPI would likely provide a more accurate assessment of how rising prices affect consumers and their preferences. The impact would be minimal on individual seniors or others who rely on cost-of-living increases in their checks. But the effect on the massive federal budget would be significant.
The so-called “chained CPI” has already been embraced by the bipartisan Senate “Gang of Six.” If it isn’t part of the eventual GOP-Obama debt deal, it should be put to Congress as a stand-alone bill.