{
  "id": "R43363",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "R43363",
  "active": true,
  "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 446506,
      "date": "2015-10-15",
      "retrieved": "2016-04-06T18:11:12.372056",
      "title": "Alternative Inflation Measures for the Social Security Cost-of-Living Adjustment (COLA)",
      "summary": "Monthly Social Security payments for retired workers, disabled workers, and all other beneficiaries are generally increased annually by a cost-of-living adjustment (COLA), which is based on growth in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a measure of inflation calculated by the Bureau of Labor Statistics (BLS). Several proposals would base the COLA on other measures of inflation produced by the BLS. Some would set the Social Security COLA equal to growth in the Chained CPI for All Urban Consumers (C-CPI-U), which is projected to reduce Social Security COLAs. Other proposals would use a measure of inflation experienced by older consumers, which is projected to increase benefits.\nProponents of using the C-CPI-U have included the 2010 National Commission on Fiscal Responsibility and Reform (chaired by former Senator Alan Simpson and Erskine Bowles) and the Bipartisan Policy Center\u2019s 2010 Debt Reduction Task Force (chaired by former Senator Pete Domenici and Alice Rivlin). The President\u2019s 2014 budget (but not subsequent budgets) proposed using the C-CPI-U to compute COLAs for Social Security and in some other federal spending programs; it also proposed indexing the tax code to the C-CPI-U, which would increase federal revenues.\nProponents of basing the COLA on the C-CPI-U argue that it is a more accurate measure of changes in the cost of living because it more fully accounts for how consumers adjust their purchases as relative prices of various items change and, unlike the traditional CPI, does not have a statistical bias that increases measured inflation. Using the C-CPI-U to compute COLAs is projected to reduce overall Social Security outlays by the government, because the C-CPI-U tends to grow more slowly than does the CPI-W, which in turn would result in lower Social Security COLAs.\nOther proposals would link the Social Security COLA to a measure of inflation that is based on purchasing patterns of the elderly, such as the BLS\u2019s Experimental Consumer Price Index for Americans Aged 62 and Older (CPI-E). The CPI-E grows faster than the CPI-W, on average, because a larger portion of spending by the elderly goes toward health care expenditures and other items whose prices tend to rise more rapidly. As a result, switching to such a measure is projected to result in larger COLAs and higher Social Security benefits.\nThis report explains how the Social Security COLA is computed under current law and explains some criticisms of using the CPI-W to compute COLAs. It discusses two alternative measures of inflation, the C-CPI-U and the CPI-E. The report then explains how using those alternative measures would affect different groups and how it would affect Social Security\u2019s finances. It concludes with a review of key recent proposals to change COLA computations and other possible changes to the COLA.",
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      "topics": [
        {
          "source": "IBCList",
          "id": 328,
          "name": "Social Security"
        }
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    },
    {
      "source": "University of North Texas Libraries Government Documents Department",
      "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc814761/",
      "id": "R43363_2015Mar13",
      "date": "2015-03-13",
      "retrieved": "2016-03-19T13:57:26",
      "title": "Alternative Inflation Measures for the Social Security Cost-of-Living Adjustment (COLA)",
      "summary": null,
      "type": "CRS Report",
      "typeId": "REPORT",
      "active": false,
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  "topics": [
    "Domestic Social Policy",
    "Economic Policy"
  ]
}