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View Diary: The deficit commission's conservative bias (325 comments)

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  •  Better explanation: (8+ / 0-)

    In the 90's we were looking at the prospects of only 2.x% growth, year-after-year.

    Changing the CPI calculation (geometric mean vs. simple average, and allowing substitution for goods in the "basket") accomplished several things:

    1. Anything indexed to the CPI would also experience slower growth, including interest paid on any CPI-linked treasuries.
    1. By understating CPI, the GPD numbers appear larger
    1. re: #1, this also means that entitlements would also grow more slowly than real inflation
    1. We were basically exporting inflation because the Dollar was the default currency at that point.

    But make no mistake, that was a serious cut to Social Security.

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

    by polecat on Thu Sep 02, 2010 at 07:12:41 AM PDT

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    •  hmm (6+ / 0-)

      I think I understand. I need to do some more reading. It's unfortunate, and probably justifies more than a bit of Clinton-bashing. God knows, I'll never forgive him for NAFTA and the Telecomm Act. This is just one more thing.

      That being said, however, if your calcs are sound, then shouldn't this be another justification for taking benefit cuts or retirement-age raising off the table altogether?

      If Health Insurance Reform can wait until 2015, then so can any changes to Social Security.

      by o the umanity on Thu Sep 02, 2010 at 07:22:08 AM PDT

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      •  Shouldn't be the table in the first place! (6+ / 0-)

        John Williams summarized the "CPI substitution: rather well:

        The Boskin/Greenspan argument was that when steak got too expensive, the consumer would substitute hamburger for the steak, and that the inflation measure should reflect the costs tied to buying hamburger versus steak, instead of steak versus steak. Of course, replacing hamburger for steak in the calculations would reduce the inflation rate, but it represented the rate of inflation in terms of maintaining a declining standard of living. Cost of living was being replaced by the cost of survival. The old system told you how much you had to increase your income in order to keep buying steak. The new system promised you hamburger, and then dog food, perhaps, after that.

        and another good article on it with useful charts to indicate the problem.

        Basically, we've been in a recession for 8 years.

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

        by polecat on Thu Sep 02, 2010 at 07:41:34 AM PDT

        [ Parent ]

    •  I thought SS (0+ / 0-)

      was pegged to wages, not CPI.

      The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt. --Bertrand Russell

      by denise b on Thu Sep 02, 2010 at 03:35:01 PM PDT

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      •  SS taxes are keyed to wages. SS benefits (0+ / 0-)

        are adjusted by CPI.

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

        by polecat on Thu Sep 02, 2010 at 05:09:08 PM PDT

        [ Parent ]

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