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Wonkology: Chained CPI

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May 9, 2013

Each month, the Thompson Coburn Lobbying & Policy group decodes Washington lingo by giving you a straightforward definition of a political term that is in the news.

CHAINED C•P•I

Noun - An alternative formula to measure inflation. Unlike the Consumer Price Index, the formula for which is set once every two years, the Chained Consumer Price Index for All Urban Consumers (C-CPI-U) takes into account month-to-month changes in consumption habits in response to rising or decreasing prices.

Why does it matter?

The Consumer Price Index is used by various agencies to determine cost-of-living adjustments for federal programs, including Social Security, disability, and veterans benefits. Groups pushing for the government to adopt Chained CPI say it will reduce the federal deficit. Opponents claim it will reduce federal payments to the elderly and the needy.

Which party supports it?

As the old adage goes, politics makes strange bedfellows. Though the concept has been associated in recent years with Republicans, it has bipartisan roots, and was backed by President Obama in his 2014 budget. Just in the last week, eight conservative groups voiced strong concerns over shifting to Chained CPI.

About Wonkology

Political jargon can be headache-inducing. But your ability to understand how Washington works could significantly impact your business. Wonkology is a monthly email alert from the Thompson Coburn Lobbying & Policy group. In each edition, we will decode Washington lingo by giving you a straightforward definition of a political term that is in the news.