“Chained CPI” is a phrase floating around the Social Security debate that is important to current and future Social Security beneficiaries. Chained CPI would change the way cost of living adjustments (COLA) for Social Security and other other government programs are calculated. The COLA increase that is applied to Social Security, food stamps, Supplemental Security Income, and other programs is determined by the increase in the consumer price index (CPI). The formula has been changed over the years to attempt to make it a more realistic reflection of increases in the price of consumer goods, according to economists. The chained CPI assumes that when prices increase for one product, people substitute a less expensive product.
Chained CPI = Cut to Social Security. That simple.
