New inflation gauge would cut benefits, hike taxes
WASHINGTON- Tweaking the way the government measures inflation sounds like an obscure method to help reduce budget deficits, but over time it would lead to significantly lower Social Security benefits while increasing taxes, mainly on low- and middle-income families.
If adopted across the government, annual increases in Social Security payments would be smaller and, over time, fewer people would be eligible for anti-poverty programs. Taxes would increase slowly because annual adjustments to income tax brackets would be smaller, pushing more people into higher tax brackets.
House Republicans proposed the new inflation measure as part of a 10-year, $2.2 trillion plan to avoid the so-called fiscal cliff of tax increases and spending cuts due at year-end. President Barack Obama has supported the idea in the past but was non-committal on Tuesday.