WASHINGTON (AP) — President Barack Obama’s plan to change the way the government measures inflation would lead to significantly lower Social Security benefits while increasing taxes, mainly on low-income families.
If it’s adopted across the government, the Congressional Budget Office says, the proposed new inflation index would reduce the federal budget deficit by a total of $340 billion over the next decade.
The change would have far-reaching effects because so many programs in addition to Social Security are adjusted annually based on year-to-year differences in consumer prices. Taxes would go up because of smaller adjustments to income tax brackets, the standard deduction and the personal exemption amount.
Obama is proposing the new measure of inflation as part of his 2014 budget plan, which is scheduled for release on Wednesday.