Chained-CPI Madness

[Part of this is wrong. Initial Social Security benefits are based upon wages. They aren’t set and then adjusted upward by the CPI. Sorry for this error. -FM]

Poor RetireeI’m getting sick of having to talk about this stuff. The chained-CPI change is even worse for future retirees than it is for current retirees. According to Greg Sargent at The Plum Line, the Center on Budget and Policy Priorities is willing to go along with the chained-CPI madness “if it is offset with a small increase in Social Security benefits for longtime beneficiaries.” Remember: the CBPP is a liberal group. But does that also mean that they are brainless?

If we use chained-CPI for Social Security, it will mean that the cost of living adjustments will be at least 0.3% too low every year. For current retirees, that means that in ten years, they will see about a 3% reduction in their real (inflation adjusted) benefits. This comes to roughly $100 per month. This is important and we should not accept it. The CBPP is suggesting that we adjust very old retirees’ benefits up. There are two problems with this.

First, if we know that the chained-CPI is wrong—that it won’t allow benefits to keep up with inflation—why are we doing it? The answer, as I’ve already discussed, is that those in power in Washington want to cut benefits. But they are cowards and don’t want to be seen as doing so. So they use this convenient backdoor to gut Social Security.

The second problem is that this will affect future retirees even more. Think of the poor sucker retiring 75 years from now. His Social Security check will be worth about half what a current check is worth. There is nothing that the CBPP is proposing to fix this.

Can it be possible that Democrats don’t understand that not increasing Social Security benefits with the rate of inflation is just a long term plan to destroy the program? The Republicans have tried for years to destroy the program in other ways. They have failed. This way is sure fire, it just takes a long time. Accepting chained-CPI is like a time bomb that conservatives want to put into law.

And note: this doesn’t just affect Social Security. It affects everything. In particular, it will push people with low incomes into higher tax brackets. So it is (yet another) regressive tax increase. This is madness!

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

0 thoughts on “Chained-CPI Madness

  1. Remember who Obama’s economic advisors are. It wouldn’t shock me at all if these people don’t seriously believe that, in the very long run, a transition to privately-run Social Security is a worthy goal. Unlike Republicans, they won’t pimp for it today, or next year. Maybe they even believe that in 25 years the stock market will have figured everything out and be a perfectly safe place for investments.

    Either that, or this is just another case of kicking the can down the road, and doing so at the expense of the most vulnerable (with the least political influence), as always.

  2. @JMF – I never forget who Obama’s economic advisers are. Or his war advisers. In Obama we have a good ol’ fashioned Republican. But he’s getting push back from Democrats. What’s more (I’m going to write about this shortly), I don’t think there will be a deal because Boehner doesn’t have the votes. This is bad because it puts Obama in a weaker negotiating position later. So much for his red lines about $250k and the debt ceiling. Our president is the weakest fucking negotiator ever.

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