Adjusting The Cost Of Living Adjustment

Congressional budget-cutters eye a gauge to replace the CPI

Throughout last year's bitter budget battles, negotiators kept one big deficit-cutting plan simmering on the back burner: trimming annual cost-of-living adjustments that boost Social Security benefits and protect taxpayers from inflationary tax hikes. Economists, from Federal Reserve Chairman Alan Greenspan on down, argued that the consumer price index overstates price hikes faced by the average household. ReducingK COLAs would slash the budget by billions--if Congress and the White House would face the political risks.

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