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View Diary: Is chained CPI a cut? (42 comments)

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  •  Yes. (5+ / 0-)

    Another edition of simple answers to simple questions.

    •  KISS (1+ / 0-)
      Recommended by:
      andalusi

      Keep it simple, stupid. Often the most compelling argument is the simplest. Emotional appeals are divisive by nature as we can see currently on site, I'm simply arguing we move away from it.

      •  Your argument is a poor one (7+ / 0-)

        if the goal is to avoid cuts to Social Security.

        If that is not your goal, then your argument is fine.

        Most of us think cutting Social Security at this time is a terrible policy idea irrespective of the accuracy issue.

        To be clear, there is not real factual argument as to whether it is a cut, obviously it is.

        Your diary is really about what is the more accurate measure of inflation.

        But I think you acknowledge that Chained CPI would of course be a cut.

        •  Bingo (3+ / 0-)
          Recommended by:
          Armando, wdrath, JFactor

          Yes chained CPI is a cut but as you can see not all agree and unfortunately there are some who argue its not. My diary is about an accurate measure of inflation and I should've made it more clear.

          Obama can implement c-CPI on the basis that it is cost reduction, that's my belief. He cannot win the argument that it is the best measure and serves the purpose of COLA.

          People who are worried about inflation are already buying the items that have the best value so chained CPI really only reflects wealthier citizens who have lost purchasing power.

          •  bbrake - If it weren't a cut, it wouldn't save the (1+ / 0-)
            Recommended by:
            badger

            government any money. Then it wouldn't be in Obama's austerity budget.
               Some people don't agree and argue that it isn't, but they are obviously wrong.

            •  Yes (1+ / 0-)
              Recommended by:
              wdrath

              Which is why my point is let's move away from arguing about if it's a cut, people have made up their mind. Let's instead educate people about COLA and what it is supposed to represent. From there it is quite easy to show why c-CPI is an awful idea.

              •  I completely agree (1+ / 0-)
                Recommended by:
                bbrake

                However, on this site unfortunately that kind of thinking is not very prevalent. It's easier to make the emotional argument and engage in black and white thinking (touching SS is the devil no matter what etc.)

          •  Inflation 101 (0+ / 0-)

            We measure inflation quite well every day.  When a qt of milk cost a dollar on Monday and the same quart costs $1.05 on Friday thats 5 % inflation which you can then adjust for on an annual basis if you like.  My point is that this is really quite simple and we do it all the time so I don't understand your reasoning.

            However the this is not how the government calculates inflation for seniors and hasn't since the Reagan administration.  It is already chained.  Our "special senior discount" rate doesn't account for food.  See above example.  It doesn't account for energy.  My local electric company is cleared for a 5% increase this year.  It doesn't account for medical cost and we know how that is going.  

            The grand theory of c-CPI is that seniors will switch to less expensive alternatives.  The obvious problem is that there is no alternative for what my electric company charges.  I've conserved energy for years both for cost and environmental reasons and there are limits.  I have no control over medical cost and governmental policies such as Medicare Part D's give away to the drug companies are part of the problem not part of the solution.  I don't eat a lot as it is and never was much into fine dining as it is.  I keep joking about my upcoming Cat Food Cookbook but it gets less funny every day.  

            There was a time not so long ago that seniors actually did choose between eating cat food and paying the rent or buying medication to keep them alive.  Now cat food costs as much as people food so we aren't even granted that.  You can measure your personal inflation every time you go to the store just like you can calculate your mileage every time you fill your tank.  I have to believe that the US Treasury can do the same.  

            Unlike your above example inflation is meaningfully measured as a percentage.  Your office supplies, apples and oranges, example is a 20% increase and any company foolish enough to budget for a 20% increase in paper clips wouldn't survive.  The government took my FICA tax money and built up a trust fund to cover our retirement for the next 37 years based on figures they arrived at in the mid 80s.  In 37 years us baby boomers will no longer be a drain and along the line there is plenty of time to normalize the equation for that.  If the US government doesn't survive it will not be because they can't afford either paper clips or our retirement.  The money for the retirement is already in the bank.  Based on their own calculations the money is there for almost 4 decades.  There is no shortage.  There is no crisis impending or otherwise.    

            In the meantime my healthcare costs will have increased by approximately 15% this year.  Food prices are projected to rise 6% or more.  Energy 5% and I only got a 1.9% increase in Social Security with the already chained CPI.  

            You tell me whether the current CPI is appropriate.  I guess it depends on what you consider appropriate which is more than likely directly proportionate on how close you are to retirement and how likely you believe you are to being chained to Social Security for a substantial portion of your income thereafter.

            When you pay the same and get less from it you are taking a cut.  When your FICA tax stays the same or increases and your benefit at retirement decreases that is a cut no matter what the rate of inflation.  

             

            A bad idea isn't responsible for those who believe it. ---Stephen Cannell

            by YellerDog on Tue Apr 09, 2013 at 11:30:45 AM PDT

            [ Parent ]

            •  Agreed (0+ / 0-)

              If you read the my other comments yellerdog it would help. Inflation is different for different groups. C-CPI is not representative of seniors costs. So let's argue for a COLA that is.

              From what I've read SS is solvent until the 2020's. Reform must happen but you shouldn't screw with what should be an absolute. COLA should represent inflation for seniors not whatever is politically expedient. I don't think SS should be cut rather I'm in the camp it should be increased.

      •  Destitution is divisive ! (0+ / 0-)

        More meta from the Comfortable Class.

        If it doesn't at least keep pace with inflation, IT IS A CUT.

        A effective cut still bleeds, no matter how you want to frame it.

        Meh.

        The "extreme wing" of the Democratic Party is the wing that is hell-bent on protecting the banks and credit card companies. ~ Kos

        by ozsea1 on Tue Apr 09, 2013 at 10:05:33 AM PDT

        [ Parent ]

        •  Not arguing c-CPI is not a cut (1+ / 0-)
          Recommended by:
          wdrath

          Im arguing that it is a terrible measure of inflation and fails its primary purpose. Whether it cuts or increases its still wrong.

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