Chained CPI, Social Security, and the budget

Video

Event Summary

On Thursday morning at AEI, AARP's David Certner and AEI's own Andrew Biggs convened to discuss the bipartisan proposal to use a Chained Consumer Price Index (Chained CPI) to calculate Social Security's annual cost-of-living adjustment (COLA). Certner explained that he opposes this policy because it would cut benefits for the oldest, most vulnerable Americans exponentially over time.

He further stated that as an off-budget program, Social Security reform should be addressed outside of budget negotiations. According to Certner, in the context of budget negotiations, Social Security reform would become an avenue for short-term deficit reduction, and would therefore fail to improve the program as a whole.

While Biggs agreed that the Chained CPI is bad policy, he did not agree that Social Security should be spared from budget discussions. Instead, he proposed alternative solutions to a Chained CPI. For example, he suggested that Social Security be reformed to incentivize people to work longer and claim benefits later by holding total lifetime benefits constant and increasing benefits at later ages. He also proposed basing Social Security’s COLA on a CPI for the elderly. Both speakers agreed that the Chained CPI would hurt older Americans and do little to fix long-term Social Security problems.
--Brittany Pineros

Event Description

The Obama administration and House and Senate Republicans have reportedly discussed applying the Chained Consumer Price Index (Chained CPI) to the federal budget as part of a “grand bargain” to reduce deficits and debt. The Chained CPI is intended to be a better measure of inflation, but there is no agreement over whether it is a better basis for calculating Social Security cost-of-living adjustments and numerous other aspects of federal spending and the tax code. David Certner, legislative counsel and director of legislative policy for government affairs at AARP, and AEI’s Andrew G. Biggs will discuss how the Chained CPI should fit into our thinking regarding Social Security and the federal budget.

If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.

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About the Author

 

Alan D.
Viard
  • Alan D. Viard is a resident scholar at the American Enterprise Institute (AEI), where he studies federal tax and budget policy.

    Prior to joining AEI, Viard was a senior economist at the Federal Reserve Bank of Dallas and an assistant professor of economics at Ohio State University. He has also been a visiting scholar at the US Department of the Treasury's Office of Tax Analysis, a senior economist at the White House's Council of Economic Advisers, and a staff economist at the Joint Committee on Taxation of the US Congress. While at AEI, Viard has also taught public finance at Georgetown University’s Public Policy Institute. Earlier in his career, Viard spent time in Japan as a visiting scholar at Osaka University’s Institute of Social and Economic Research.

    A prolific writer, Viard is a frequent contributor to AEI’s “On the Margin” column in Tax Notes and was nominated for Tax Notes’s 2009 Tax Person of the Year. He has also testified before Congress, and his work has been featured in a wide range of publications, including Room for Debate in The New York Times, TheAtlantic.com, Bloomberg, NPR’s Planet Money, and The Hill. Viard is the coauthor of “Progressive Consumption Taxation: The X Tax Revisited” (2012) and “The Real Tax Burden: Beyond Dollars and Cents” (2011), and the editor of “Tax Policy Lessons from the 2000s” (2009).

    Viard received his Ph.D. in economics from Harvard University and a B.A. in economics from Yale University. He also completed the first year of the J.D. program at the University of Chicago Law School, where he qualified for law review and was awarded the Joseph Henry Beale prize for legal research and writing.
  • Phone: 202-419-5202
    Email: aviard@aei.org
  • Assistant Info

    Name: Regan Kuchan
    Phone: 202-862-5903
    Email: regan.kuchan@aei.org

 

Andrew G.
Biggs
  • Andrew G. Biggs is a resident scholar at the American Enterprise Institute (AEI), where he studies Social Security reform, state and local government pensions, and public sector pay and benefits.

    Before joining AEI, Biggs was the principal deputy commissioner of the Social Security Administration (SSA), where he oversaw SSA’s policy research efforts. In 2005, as an associate director of the White House National Economic Council, he worked on Social Security reform. In 2001, he joined the staff of the President's Commission to Strengthen Social Security. Biggs has been interviewed on radio and television as an expert on retirement issues and on public vs. private sector compensation. He has published widely in academic publications as well as in daily newspapers such as The New York Times, The Wall Street Journal, and The Washington Post. He has also testified before Congress on numerous occasions. In 2013, the Society of Actuaries appointed Biggs co-vice chair of a blue ribbon panel tasked with analyzing the causes of underfunding in public pension plans and how governments can securely fund plans in the future.

    Biggs holds a bachelor’s degree from Queen's University Belfast in Northern Ireland, master’s degrees from Cambridge University and the University of London, and a Ph.D. from the London School of Economics.

  • Phone: 202-862-5841
    Email: andrew.biggs@aei.org
  • Assistant Info

    Name: Kelly Funderburk
    Phone: 202-862-5920
    Email: kelly.funderburk@aei.org

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