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View Diary: Chained CPI for Dummies (78 comments)

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  •  i admire your attempt (2+ / 0-)
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    glynis, nextstep

    but my experience is that trying to inject a discussion of actual CPI methodologies into this discussion is a losing effort. it requires diving deep into the weeds of how any index is calculated and whether they reflect real inflation rates. its so much easier to simply say chained-CPI=cat food. thus, a DKOS meme is born.

    •  Talk to Simpson and Bowles about that, (2+ / 0-)
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      Wendys Wink, Brown Thrasher

      But the 'cat food' meme has been around since pre-Clinton (Greenspan's 'substitution')

      This is not a new discussion.  And we have almost 20 years of evidence to back up our position... Before and after the cut.

      Happy little moron, Lucky little man.
      I wish I was a moron, MY GOD, Perhaps I am!
      —Spike Milligan

      by polecat on Sat Jan 05, 2013 at 09:11:07 AM PST

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      •  i see that being asserted here (1+ / 0-)
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        glynis

        but never explained in detail and directly connected to CPI methodologies, chained or other methods. this diary is a great example of that. with a title purporting to explain chained CPI for lay people, its just a mixed bag of myths and assertions.

        if there are good diaries on this subject that have been posted in the past I'd love to see them. i don't have a position on chained COLA yet, just lots of questions.

    •  Seeds, here's a simple clarification of what the (2+ / 0-)
      Recommended by:
      greenbell, polecat

      Chained-CPI achieves, from the LA Times' Michael Hiltzik:

      . . . But the sad truth is that the proposal to link Social Security inflation protection to the chained CPI isn't really about making annual cost-of-living increases more "accurate." That's mere window dressing. The goal is to cut benefits and thereby cut government costs. As has been the case throughout the discussion in Washington about the budget and the federal deficit, the guiding principle here has been to preserve benefits for the wealthy at the expense of everyone else.

      How do we know this? If you use the chained CPI instead of the standard CPI for the annual adjustment in income tax brackets, over time that will create an effective tax increase, especially for wealthier taxpayers. (That's because the bracket thresholds will rise more slowly relative to inflation than they do now.) The gain for the Treasury would be about $72 billion over 10 years, according to the congressional Joint Committee on Taxation.

      What do the agents of the wealthy say about that? Let's ask the right-wing Cato Institute, which cherishes both a sedulous admiration for free enterprise and a long-standing hostility to Social Security. Cato last year called switching to the chained CPI for Social Security a "sound and overdue reform." But when it came to using the chained CPI to adjust tax brackets, Cato called that "a very bad idea."

      One would think it only fair that if you change the inflation index for one government program, you should do so for all of them. It's a measure of the cynicism that guides debate in the nation's capital that an "overdue reform" that would take $112 billion from the needy can be regarded as "a very bad idea" if it costs the rich $72 billion — and that no one pauses to ponder the rank injustice involved. Must be that they can't make out their own words over the purring of those Mercedes engines.

      Here's the link to the piece.

      Mollie

      “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

      by musiccitymollie on Sat Jan 05, 2013 at 11:46:37 AM PST

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      •  thanks (1+ / 0-)
        Recommended by:
        glynis

        I am familiar with many articles like these. and this one raises good political points, such as the objective of conservatives to use  chained CPI in some cases but not others, which is clearly about right wing economic politics.

        my point is that we can discuss the politics, and we can discuss the policies. but when we simply assert that chained CPI must do X simply because we don't trust the people advocating it or don't agree with their political goals, we end up in a tangent that takes us away from an informed discussion.

        the link that glynis posted above for CBPP provides a better evaluation of the role chained CPI could play in policy. the BLS also has a good FAQ on chained CPI. both are better than most of the punditry and DKOS diaries I've seen.  

        •  Agreed. Actually, my major source of reference is (0+ / 0-)

          the President's own documents--his 2012-2013 Budget, his proposal to the Super Committee, and his own Fiscal Commission's proposal, which the Administration has repeatedly endorsed, The Moment of Truth.

          I've posted links to all of these at DKos repeatedly, and IMO, they tell the real story.

          The problem with reading an analysis like the CBPP's, is that if an individual is not familiar with the total percentage of cuts that are being recommended (and quite likely to be enacted), then the fact that there is a "5 %" bump-up at age 85, means very little.

          From The Moment Of Truth:

          RECOMMENDATION 5.3:  ENHANCE BENEFITS FOR THE VERY OLD AND THE LONGTIME DISABLED.

           Add a new “20-year benefit bump up” to protect those Social Security recipients who have potentially outlived their personal retirement resources.  The oldest old population – those over age 85 – is projected to expand rapidly over the coming decades: from 5.8 million this year to 19 million in 2050.  

          To better insure against the risk of outliving one’s own retirement resources, the Commission proposes a new “20-year benefit bump-up” that offers a benefit enhancement, equal to 5 percent of the average benefit, 20 years after eligibility.  The enhancement is phased in over five years (1 percent per year).  Eligibility is defined by the earliest eligibility age (EEA) for retirees and the determination of disability for disabled workers.

          Even Representative Jan Schkowsky (IL) acknowledges that some beneficiaries stand to lose up to 35% of their monthly benefits, if all three (3) cuts are enacted (as recommended in The Moment of Truth).  Here's the link to her Reuters Op-Ed entitled, "The Sham Of Simpson-Bowles."

          Here's an excerpt:

          For future retirees, all these changes taken together would reduce the average annual benefit for middle-income workers – those with annual earnings of $43,000 to $69,000 – by up to 35 percent.
          So somehow, we're all supposed to be 'relieved and grateful' that a handful of seniors who live until age 85 may recoup 5% of their monthly benefits, after having already had up to 35% of their monthly check cut?

          Personally, I don't think so.

          Mollie

          “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

          by musiccitymollie on Sat Jan 05, 2013 at 02:10:08 PM PST

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        •  there's also (1+ / 0-)
          Recommended by:
          Seeds

          one from BLS on common misconceptions that I found informative.

          •  Thanks for the link. I'll bookmark it, and check (0+ / 0-)

            it out.

            Mollie

            “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

            by musiccitymollie on Sun Jan 06, 2013 at 12:24:57 AM PST

            [ Parent ]

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