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View Diary: White House said to be considering smaller fiscal cliff package (217 comments)

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  •  If toilet paper gets too expensive and people (7+ / 0-)

    resort to leaves, then the cost of living has gone down.

    That's the simplest way to explain chained CPI.

    "Furthermore, if you think this would be the very very last cut ever if we let it happen, you are a very confused little rabbit." cai

    by JesseCW on Fri Dec 21, 2012 at 03:08:19 PM PST

    [ Parent ]

    •  In practical terms (4+ / 0-)

      what this means is that when milk reaches $6 or $7 dollars a gallon, there will appear a variety of cheaper "milk drinks" containing a few percent milk and lots of additives. Poorer people will switch to "milk drinks", and economists will use the price of the "milk drink" instead of "milk" in their "standard basket" to claim that inflation has gone down.

      In other words, it's bait and switch -- which is legal when professors of economics do it.

    •  LOL I learned to live on less than (2+ / 0-)
      Recommended by:
      JesseCW, MikePhoenix

      $200 a month by sleeping in a tent in the woods, showering at the local rec center and getting wifi at McDonalds... so you only need $200 a month to enjoy the American Dream!

      It's CPI magic! Let's reduce the minimum wage to $1.75 an hour, dividends for everybody! Woo Hoo!!!

      You can do whatever you want to us, but we're not going to sit here and listen to you badmouth the United States of America.

      by Eric Stratton on Fri Dec 21, 2012 at 03:24:44 PM PST

      [ Parent ]

    •  OK. Now the next question: (1+ / 0-)
      Recommended by:
      JesseCW

      The buying habits of seniors is different from the average bear. There has been talk of creating a separate CPI which only focuses on what seniors buy. It seems the chained CPI really forces contraction. So why don't they use the one that really mirrors seniors' expenses?

      •  Because if they did, SS benefits would increase (4+ / 0-)

        substantially.

        The more SS pays, the less people will put in 401(k)s and IRA's.

        "Furthermore, if you think this would be the very very last cut ever if we let it happen, you are a very confused little rabbit." cai

        by JesseCW on Fri Dec 21, 2012 at 03:34:10 PM PST

        [ Parent ]

      •  Because the whole point of CPI (0+ / 0-)

        is to underestimate how rapidly standard of living is decreasing for people who depend on CPI.

      •  One of the things about the chained CPI is that it (1+ / 0-)
        Recommended by:
        kj in missouri

        is intended to apply not only to SS, but also to veterans' benefits and a lot of other things as well, which have some inflation factor, including taxation categories, which accounts for the tax rise mentioned. The other things it affects have not gotten a lot of coverage, because mostly 'entitilements are limited to SS, Medicare and Medicaid and not, for example, veterans' benefits. But the chained CPI is apparently a bigger in scope deal than the discussion of it I have seen here before this thread.

        And I wrote yesterday about CPI-E in a comments thread concerning what the NYT had said, that it was not used because it was 'experimental' and got a return post which indicated without a link that the result of CPI E was that it cut seniors more than this one did if used for prior years.

        So it's kind of a fuzzy issue, but one where a lot of money is at stake in a lot of places, with a value someone claimed at $130B, so it is in any event worth watching.  

        I did not see it in the short plan O described today.  

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