Supporters of the plan say a CPI-E would provide a more accurate measure of calculating Social Security cost-of-living adjustments (COLAs). The CPI-E would use the same formulas and measures currently used by the consumer price index for urban wage earners and clerical workers (CPI-W), but would assign greater weight to the products that adults 62 and older actually buy, along with where this group shops.
We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about changing the method for indexing Social Security benefits to inflation.
Below is a summary of the debate that ensued between the two professors.
Bloink: Social Security benefits are currently tied to the CPI-W, which isn’t necessarily an accurate depiction of how the cost of living is increasing for older people collecting Social Security benefits. They have different spending habits and different needs than other groups of taxpayers. If there’s a way that we can use a more accurate measure to calculate the cost-of-living adjustments for Social Security recipients, we should jump at the chance to provide a greater measure of financial security to this group.
Byrnes: Older adults make substitutions in making purchasing decisions just like any other group of taxpayers. When the cost of one product rises, older people have the option of choosing to purchase another product in precisely the same manner as anyone else. There’s no reason to implement a special indexing procedure simply because this group is receiving Social Security benefits.