Congressman Garamendi introduces bill, voices his support for the CPI-E
I'm holding a press conference to introduce my new bill, CPI-E Act of 2017 (H.R. 1251). This bill would make Social Security fairer to seniors by requiring the program to use the Consumer Price Index for the Elderly (CPI-E) to calculate cost of living adjustments for retirement benefits. This would increase benefits and better ensure that cost of living adjustments (COLA) in Social Security actually reflect the real rising costs for seniors and disabled people in America. From 1982 to 2011, CPI-E rose at an annual average rate of 3.1 percent, compared with 2.9 percent for the methods that are currently used.
Posted by Congressman John Garamendi on Wednesday, March 1, 2017
Video: Facebook / Repgaramendi
On February 28th, Congressman John Garamendi (D-CA) introduced H.R. 1251, a bill that would formally switch the current consumer price index from the CPI-W to the CPI-E, a cost-of-living adjustment (COLA ) calculation formula championed by many of those looking to expand and strengthen Social Security benefits for seniors.
In a conference held earlier this afternoon, the Congressmen explained the dire situation facing America’s seniors: current Social Security COLAs simply do not realistically address seniors’ unique spending habits and financial needs.
Critics of the current calulation, the CPI-W — or consumer price index for urban wage earners and clerical workers — say while this calculation may reflect the average spending on goods and services for a working individual, it fails to account for retirees without income from employment.
Alternatively, some have proposed switching to the chained CPI, or consumer price index for all urban consumers. The chained CPI is a much better overall measure for inflation across working and non-working groups.
The same critics of the CPI-W, however, claim that the chained CPI still misses the mark. Despite being a more accurate general measure of inflation across the country, it ignores the unique costs facing seniors. For example, a decrease overall in the price of gasoline may cause COLAs to drop, but that doesn’t matter much to a senior who no longer drives or commutes regularly. On the other hand, the rapid rise and fall of healthcare costs can have a dramatic financial impact on seniors, but when lumped in with younger generations, healthcare spending doesn’t carry nearly the weight that it should in determining seniors’ Social Security COLAs.
Enter the consumer price index for the elderly (CPI-E), a calculation formula specifically designed with senior spending in mind. Using the same prices and calculation formulas already in place, the CPI-E simply weights areas of spending differently. The CPI-E is based solely on American spending habits for those age 62 and older, ensuring a COLA that rises much faster to keep up with medical inflation.
Adopting the CPI-E to create a fair COLA for retirees is one of the major benefit-strengthening changes proposed in the Social Security Expansion Act (S.427, H.R.1114).