	Introduction

In an effort to protect the purchasing power of Social Security recipients, Congress in the early 1970s indexed benefit increases to the only consumer price index available at the time. The index to which Social Security benefits are linked became known as the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) after the U.S. Bureau of Labor Statistics (BLS) began publishing the Consumer Price Index for All Urban Consumers (CPI-U) in 1978. Concern has periodically been expressed that the CPI-W may not accurately reflect the inflation experience of the elderly, who make up the majority of Social Security beneficiaries. Several plans to curb the growth in the U.S. budget deficit, which were put forth in 2010 and 2011, recommend that inflation-indexing be based on the Chained Consumer Price Index for All Urban Consumers (C-CPI-U) rather than on the CPI-W or CPI-U. Because the C-CPI-U has typically risen more slowly than the two indexes, this proposal raised concern at that time among those Social Security recipients who believe they already are being insufficiently compensated for increases in their cost of living. A bipartisan amendment in the nature of a substitute to the FY2013 budget resolution in the House, which was introduced but not approved in March 2012, suggests that interest remains in slowing the growth in the deficit by changing the price index on which Social Security COLAs are based. Today, it reflects changes in the cost of living of about 32% of the population. The Experimental CPI for the Elderly

In 1987, Congress amended the Older Americans Act of 1965 to direct BLS to develop an experimental price index to track inflation in the population aged 62 and older. Switching from the CPI-W or CPI-U to the Chained CPI-U may reduce government outlays and raise revenue in future years because the Chained CPI-U has risen more slowly than the two official indexes—and therefore, more slowly than the CPI-E. Leaving aside whether the Chained CPI-U is a more accurate measure of inflation than the CPI-W and CPI-U, it would not appear to achieve the purpose of those who have proposed changing to the Chained CPI-U to instead switch to the CPI-E for calculation of Social Security benefits as some have suggested. Were BLS to replace the experimental index with a newly developed index more representative of the elderly population, there also is no guarantee it would bear the same relationship to the CPI-W and Chained CPI-U as that of the CPI-E.
The federal government, in an effort to protect the purchasing power of Social Security beneficiaries, indexes benefits to increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Concern has periodically been expressed that the CPI-W may understate the impact of inflation on the elderly population and that it therefore may not be the most appropriate measure of inflation's impact on the elderly.
At the behest of Congress, the U.S. Bureau of Labor Statistics (BLS) developed an experimental price index to track changes in the cost of living for the population aged 62 and older. In most years since 1982, the start of the experimental consumer price index (CPI-E) for the elderly, the annual rate of change in the CPI-E has exceeded that of the CPI-W and CPI-U. But, methodological limitations in the experimental index may have contributed to this pattern. Were BLS to construct an index that is more representative of the elderly population than the CPI-E, there is no guarantee that the relationship between the new index and the CPI-W would be the same.
Interest in the CPI-E most recently emerged in response to deficit-reduction plans issued in 2010 and 2011 that recommend inflation-indexed provisions in federal law be based on the Chained Consumer Price Index for All Urban Consumers (C-CPI-U). Because the C-CPI-U has typically risen more slowly than the CPI-W, this proposal raised concern at the time among those Social Security recipients who already believe they have not been fully compensated for increases in their cost of living. Bills were then introduced to switch for purposes of Social Security indexation from the CPI-W to a CPI for those aged 62 and older (H.R. 456, H.R. 539, H.R. 776, H.R. 798, and S. 1876). As suggested by an amendment in the nature of a substitute to the FY2013 budget resolution in the House, interest has lingered into 2012 among some Members to switch to the C-CPI-U as a means of curbing the rate of growth in the budget deficit.