By Brian Faler and Heidi Przybyla -Bloomberg News
PresidentÂ Barack Obama and lawmakers are considering cutting Social Security and increasing revenue by changing the way the government measures inflation.
Four senior congressional aides said lawmakers are discussing using an alternative yardstick to gauge inflation, known as the â€œchainedÂ consumer price index,â€ to determine annual cost-of-living adjustments for millions of Americans.
The idea may rile both Democrats and Republicans, because it could mean paring Social Security by $112 billion over 10 years, raising taxes by $60 billion and cutting pension and veteransâ€™ disability payments by $24 billion, according to estimates by the nonpartisanÂ Congressional Budget Office and the Joint Committee on Taxation.
Advocates say the change is needed because the governmentâ€™s current measure of inflation overstates how quickly prices rise.
â€œThere hasnâ€™t been any economist anywhere that says we shouldnâ€™t do that,â€ said SenatorÂ Tom Coburn, an Oklahoma Republican who was one of the so-called Gang of Six lawmakers that tried to develop a long-term debt plan. â€œWe need a CPI that truly reflects whatâ€™s happening in the economy, not whatâ€™s good for the politicians.â€
The idea, which was discussed both as part of a series of debt talks led by Vice PresidentÂ Joe Biden and by the Gang of Six, resurfaced yesterday during a meeting between Treasury SecretaryÂ Timothy Geithner and House Democrats, according to a congressional aide. Democrats pressed Geithner on the issue and he didnâ€™t rule it out, according to the aide.
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