A Bad Idea Is a Bad Idea, No Matter Who Proposes It

[KoKo]

A Bad Idea Is a Bad Idea, No Matter Who Proposes It

By: dakine01 Saturday April 6, 2013 1:26 pm

Let me state this right up front – Chained CPI is a bad idea. A very bad idea. Former Clinton Labor Secretary Robert Reich explains why here:

Even Social Security’s current inflation adjustment understates the true impact of inflation on the elderly. That’s because they spend 20 to 40 percent of their incomes on health care, and health-care costs have been rising faster than inflation. So why adopt a new inflation adjustment that’s even stingier than the current one?

Social Security benefits are already meager for most recipients. The median income of Americans over 65 is less than $20,000 a year. Nearly 70 percent of them depend on Social Security for more than half of this. The average Social Security benefit is less than $15,000 a year.

Scrap the Cap on Social Security

Dean Baker also explains why here (from The Nation 12/18/2012):

While this is a reasonable way to construct a price index, it may not be reasonable to apply the consumption patterns and the substitution patterns among the population as a whole to the elderly. The Bureau of Labor Statistics (BLS) has constructed an experimental elderly index (CPI-E) which reflects the consumption patterns of people over age 62. This index has shown a rate of inflation that averages 0.2-0.3 percentage points higher than the CPI-W.

The main reason for the higher rate of inflation is that the elderly devote a larger share of their income to health care, which has generally risen more rapidly in price than other items. It is also likely that the elderly are less able to substitute between goods, both due to the nature of the items they consume and their limited mobility, so the substitutions assumed in the chained CPI might be especially inappropriate for the elderly population.

My bold. Please note: IF YOU HAVE TO MAKE SPECIAL PROVISIONS FOR THE LOWEST INCOMES YOU ARE DOING IT WRONG!

I say again: IF YOU HAVE TO MAKE SPECIAL PROVISIONS FOR THE LOWEST INCOMES YOU ARE DOING IT WRONG!

The Center on Budget Policy and Priorities has a list of 10 basic facts about Social Security here. Facts #4, #6, and #7 are especially pertinent (though all are important):

Fact #4: Social Security benefits are modest.

Fact #6: Almost half of the elderly would be poor without Social Security. Social Security lifts 14 million elderly Americans out of poverty.

Fact #7: Most elderly beneficiaries rely on Social Security for the majority of their income.

I have not even mentioned the Veterans who will also be affected by Chained CPI. Their “skin” (in the game)is the blank check they wrote when they signed their name and swore the oath of enlistment.


http://my.firedoglake.com/dakine01/2013/04/06/a-bad-idea-is-a-bad-idea-no-matter-who-proposes-it/

[cantbeserious]

1. Yes - Obama's Idea Is A Bad Idea

eom

[ReRe]

2. K&R

this is what I think they should do with their "chained-cpi" business:

[forestpath]

3. K&R Not just bad - EVIL.

[Samantha]

4. I don't see it as a bad idea - I see it clearly as a Trojan Horse

Last edited Sun Apr 7, 2013, 10:04 AM - Edit history (1)

which is far worse than a bad idea.

I was just on another thread which totally insulted those opposed to the CPI chained COLA as being somewhat grossly uninformed and/or simply an Obama hater. I admire President Obama and have written a lot of complimentary things about him here. I do not agree with him on this issue in the least, and I make no apology for that.

But I have been researching this since I first read about it when Simpson-Bowles came out with its report. The facts that I have reported here have for the most part been statistical calculations issued by the General Accounting Office. I am going to crawl out on a limb here and say I do not think the General Accounting Office is an Obama hater or is uninformed....

And the fact remains that Social Security was created as an insurance program against poverty, not an investment vehicle. As a classic Dem, or an FDR Dem as some prefer to call it, I do not understand how a Democratic President can open the door to undermining this program under the guise of reducing the deficit when there is absolutely no connection between the two. Trojan Horse for ultimately abolishing the program over the long-haul. It is the same type of maneuver used to phase out the Post Office where legislative changes over time take an inevitable toll. Just another political slight of hand -- now you see it, now you don't.

Sam

[sabrina 1]

6. Excellent post, thank you!

[woo me with science]

10. Spot on. Thank you. nt

[Dragonfli]

12. Yes it IS clearly a trojan horse

More clear to some than others, while still others can't see past the fog generated by blind loyalty (such loyalty is called blind for a reason).

I agree with every point you made in your post.

[burrowowl]

13. Yup!

[Festivito]

14. Can it also be a trojan horse for our side?

That, later, we can not only bring back the current COLA calculations, but even improve them to what they once were: chained to current incomes which gives out far more than the Republican-reduced COLA calculation installed many years ago now.

[Samantha]

16. I am probably not the best person to ask this question

But I am going to say No. I think once a chained COLA is implemented, it would be here to stay. It not only impacts seniors, but veterans and government workers' pensions as well. Once those savings to the Government are achieved, I don't think it would be possible to undo them. Just my opinion.

Sam

[Festivito]

21. I think we can change whatever we want, whenever, later, that we want to.

We just have to get those pesky Republicans out of the way. Just my opinion.

Fes

[jsr]

18. Yep, like the guy who proposed it.

[neverforget]

19. You're definitely on to something there. SSI has nothing to do with the deficit or debt yet

Chained CPI is on the table for Obama. It doesn't make any sense to give something the Republicans want and the politics of hurting SSI are terrible.

[Iwillnevergiveup]

5. At a town hall today in L.A.

Rep. Becerra (CD-34) pointed out that the example that's been made is "If the price of beef goes up, you can always buy chicken" as a way of rationalizing chained CPI. But there are indispensable services (hospitals) that people don't price check but that must be available.

Seniors, disabled citizens and survivors will see a cut in benefits...period.

In the past 77+ years, S.S. has taken in $14 trillion and paid out $13 trillion.

[OldDem2012]

7. You mean like demanding impeachment for a president daring to publicly make a suggestion....

....about cutting SS even though he knows he will never see legislation to that effect?

[Dragonfli]

8. Promoting ideas that will harm many people is reprehensible but not an impeachable offence

If anyone proves it is a promotion purchased by wealthy supporters then it would be influence peddling which likely is, too bad there is no tape of agreements made in smoke filled rooms full of billionaires.

NOW you never did answer this response to your silly rationalizations: http://www.democraticunderground.com/?com=view_post&forum=1002&pid=2625636
care to here and now?

[Cleita]

9. Thanks KoKo

Unfortunately, those who can actually fix this won't.

[woo me with science]

11. Huge K&R

[treestar]

15. No one of the Democrats thinks it is a good idea

The trouble is getting the budget passed. It may be the best sacrifice to make in order to get a deal. Republicans hold the entire budget hostage every time. How many cliffs have we had? The sequester, the fiscal cliff, threat of government shut down every single time. Give them more power and they can get far more. Why is that hard for DUers to see? They stop blindly at the current "outrage" and "betrayal" and need the separation of powers explained to them for the 97,567th time.

[rhett o rick]

17. Stop bad-mouthing DU'ers. If you want Democrats elected you need to show

the voters what they stand for. The president should draw a line in the sand on SS and Medicare and tell the American public that the repukes want to cut those programs. That's what will get more Democrats elected. Not giving in, not cutting SS and Medicare as "the best sacrifice to make in order to get a deal."

[treestar]

20. The voters know the Republicans want to cut those programs

There are many voters that want that too - it is likely fine with wealthy seniors, so people should quit trying to play the pity card by using the term. They aren't all poor and their demographic voted Republican.