Posted: 7/21/11 11:17 AM ET
The chained Consumer Price Index (CPI), a provision included in the Gang of Six's deficit reduction package, raises taxes on low-and moderate-income workers, according to a recent report by the Joint Committee on Taxation. This belies the claim that the harm done to the middle class by the chained CPI's benefit cuts would be partly off-set by the revenues it would generate.
The chained CPI, a change in the inflation formula that would result in cuts to Social Security, VA benefits, Supplemental Security Income (SSI), and other benefits, as well as increases in revenue, has been on the table in deficit talks for months. The measure has specifically been seen as a possible point of bipartisan compromise, because it both cuts spending and raises revenues.
The provision has gained even more momentum now that the Gang of Six has included it in their recently unveiled deficit reduction plan.
Progressives have been critical of the benefit cuts that would result from the chained CPI, citing the threats they pose to vulnerable populations like the very elderly and disabled; the failure of the measure to accurately account for the higher health care costs of seniors and disabled persons; and the fact that the cuts would begin right away, falling on current beneficiaries, who have not had time to plan accordingly. Some have pointed out that the change may drive thousands of seniors into poverty.
More:
http://www.huffingtonpost.com/daniel-marans/gang-of-six-debt-ceiling-_b_905202.html