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View Diary: The business case for why chained-CPI is theft and breach of contract. (92 comments)

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  •  Why it's not a breach of contract (1+ / 0-)
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    Social Security benefits were not originally linked to inflation. COLAs were added in 1975, and the COL/CPI Index was adjudged at the time to be the best measure to avoid having to reindex benefits every few years. The COL Index has its own problems, much as chained CPI does, when it comes to reflecting real expenses; it would include the cost of a new car, for instance, but not the cost of heating oil or food.

    In any event, social benefits are not individual contracts. That's why it's called the "social contract". Analogies to breach of contract based on individual agreements don't really work. And Congress, having the enabling power to make the legislation creating the benefit, also has the ability to change the basis of the benefit -- as they did with the original COLA legislation in 1974-75.

    We should be grateful it works this way, because otherwise an individual (or her or his estate) might use the same logic to argue breach of contract if their lifetime benefit proved to be less than what they put into it.

    I don't think chained CPI is a good idea, in and of itself, but at the same time we ought not to be looking at the structure of the benefits program as sacrosanct as much as the social contract element of providing a guarantee against poverty among the elderly (which is, and always was, the basis of the program). The rest is details, and we ought not to confuse specific contractual arrangements with that larger social contract pledge.

    Changing from CPI COLA to chained CPI by itself is not in the spirit of the social contract if it's not necessary to save the program. But social contracts are continually negotiated, at least in our Constitution (other nations have social contracts written more explicitly into their guiding documents and Constitutions, I will note) by the legislative process. I urge some moderation of language in this otherwise well-written piece.

    Some people are intolerant, and I CAN'T STAND people like that. -- Tom Lehrer

    by TheCrank on Wed Apr 24, 2013 at 07:24:04 AM PDT

    •  Because inflation was not originally seen to (3+ / 0-)
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      JerryNA, sturunner, goodpractice

      be a huge issue.  

      What happened with the huge inflation rates in the 1970s was that the elderly were literally being starved of money to live. The cost of living was shooting up so fast and their benefits had an increasingly wider gap.

      So, COLA.

      I think the diary is well-written.  It raises people's consciousness and the exact language we can all haggle over, but they are breaking their word -- the long-term working folks expectations -- about what to plan for in retirement.

      It is wrong. Morally. Socially. Politically. Economically.  It is simply wrong.

      Continuing to concentrate more money in the hands of the rich will slow the economy even more. That's all that has happened for 30+ years since Reagan:  the creeping stagnation of our skilled jobs and our overall economy.  

      Throwing a few nicely done overblown bubbles into the punch bowl doesn't keep the punch bowl full.  

      "The law is meant to be my servant and not my master, still less my torturer and my murderer." -- James Baldwin. July 11, 1966.

      by YucatanMan on Wed Apr 24, 2013 at 11:45:36 AM PDT

      [ Parent ]

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