New inflation index could cut benefits, raise taxes

Just as 55 million Social Security recipients are about to get their first benefit increase in three years, Congress is looking at reducing future raises by adopting a new measure of inflation that would increase taxes for most families—with the biggest impact falling on those with low incomes. The proposal to adopt a new Consumer Price Index was floated by the Obama administration during deficit reduction talks in the summer. Now it is one of the few options supported by both Democratic and Republican members of a joint supercommittee in Congress working to reduce government borrowing. The committee of six Democrats and six Republicans is struggling to come up with a plan to reduce government red ink by at least $1.2 trillion over the next decade. Changing the inflation index alone would put them a sixth of the way there. If adopted across the government, the inflation measure would have widespread ramifications. Future increases in veterans’ benefits and pensions for federal workers and military personnel would be smaller. And over time, fewer people would qualify for Medicaid, Head Start, food stamps, school lunch programs and home heating assistance than under the current measure. Read the full story from The Associated Press here.