WASHINGTON — Treasury Secretary Jacob Lew, appearing at a House committee on Thursday, took the brunt of bipartisan anger over the way the government measures inflation in President Barack Obama’s proposed budget plan for fiscal year 2014.
Lew was on Capitol Hill to defend “chained CPI,” the Consumer Price Index that affects how cost-of-living increases are allocated for Social Security and is a key part of the administration’s spending plan.
But he was quickly blasted.
“This isn’t a tax code for working families, this is a tax code designed to make money for accountants and tax planners,” said Republican Rep. Dave Camp of Michigan, the chairman of the White House Ways and Means Committee.
The so-called “chained CPI” has come under fire for slowing the growth rate of benefits for entitlement programs that are tried to the measurement.
Lew says there will be $230 billion in savings from the switch. “The chained CPI is a more accurate measure of inflation in that it does a better job of reflecting the substitution of goods in response to relative price changes,” he said.
“It reduces the rate of growth in the cost of living increases by about three-tenths of a percent,” said Lew.
The measurement would replace the current CPI and would decrease the rate of the cost of living, making Social Security checks smaller.
Rep. Xavier Becerra, D-Calif., said the elderly and disabled veterans would be affected by going through with plan and asked Lew to explain how those payments will not be cut.
While Lew did not explain, he acknowledged that the change would be felt. “I don’t want to be misunderstood. A reduction in the rate of growth has an impact—it is something very significant,” Lew said.