Chained CPI Must Be Off the Table in Further Budget Talks, Union President Says

WASHINGTON, Feb. 21, 2014 /PRNewswire-USNewswire/ -- The Obama administration made the right decision in withdrawing a budget proposal that would cut cost-of-living adjustments for Social Security recipients, veterans and federal retirees, but it's making a grave mistake by keeping the plan on the table as part of budget negotiations, the head of the nation's largest federal employee union said today.

"Any action that would slash income for the poor and working class must be rejected," American Federation of Government Employees National President J. David Cox Sr. "White House statements that the proposal remains on the table, even though it's been pulled from the upcoming budget, sends a conflicting message about how committed the president truly is to reducing income inequality in this country."

The proposal, which was included in the president's fiscal 2014 budget, called for adopting the so-called chained CPI formula for measuring inflation in various federal programs. The change would cause a large hit to federal pensions, Social Security benefits, veterans' benefits, and federal benefits to poor children and the disabled. It also would raise taxes substantially on the poor and middle class, while leaving the rich untouched.

"Chained CPI not only cuts benefits to the most vulnerable and neediest Americans, it also is less accurate than the currently used measure of inflation," Cox said. "The inflation measures currently used from the Bureau of Labor Statistics, the CPI-U and the CPI-W, already understate inflation for the elderly. If any change is made regarding which measure of inflation to use, it should be one geared to actual expenditures of the elderly. BLS already has such a measure, and it produces a higher measure of price change, not a lower one as the chained CPI would create."

The American Federation of Government Employees (AFGE) is the largest federal employee union, representing 670,000 workers in the federal government and the government of the District of Columbia.

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SOURCE American Federation of Government Employees