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pipoman

(16,038 posts)
1. I would love to see Bob do a dissertation
Thu Apr 25, 2013, 08:08 AM
Apr 2013

on how a purchased lapdog of the 1% who is appointed to an administration position, say...labor secretary, would screw over EVERYBODY..

zipplewrath

(16,646 posts)
2. He never loved him anyway
Thu Apr 25, 2013, 08:20 AM
Apr 2013

I'm sure Robert never loved Obama anyway.
And he really doesn't understand chess, more of a checkers guy obviously.
Besides, Obama doesn't really mean it, he just had to put it on the table.
Oh, and what's the matter with Reich anyway, does he want to lose the congress in 2014?

pinqy

(596 posts)
3. Two errors right off the bat
Thu Apr 25, 2013, 08:28 AM
Apr 2013

First he says "The idea is that when prices go up, most people substitute lower cost items."
That is inaccurate. The idea is that when prices change, people tend to substitute to similar items that don't change as much. It's the relative change, not the relative cost, that's the factor. And it's not really an idea, it's a fact. People change their spending patterns based on relative price changes. And it works both ways. At $11/lb, I don't normally buy crab meat. But when it's on sale for $9/lb, I will, and buy less beef or pork or chicken. That's a substitution and is captured in the chained CPI.

Next he says "This makes no sense for seniors because they spend 20-40% of their incomes on health care and they can't substitute lower cost alternatives." That's not an issue with the chained CPI because it measures actual substititutions. If they're not making any, then it won't be reflected in the chained CPI. And he's forgetting about generic versus brand name in prescription medication. That's a substitution people make.

Fuddnik

(8,846 posts)
6. Yeah, Chained CPI is Reinhart- Rogoff for seniors and veterans.
Thu Apr 25, 2013, 09:11 AM
Apr 2013

Cherry pick your data. Eliminate all data that might conflict with what you want to accomplish and voila! We're screwed.

Let's see. My major substitutions would be homeowners insurance for a cheaper cardboard box. Health insurance for death. One co-pay on a prescription just jumped from $40-to $80 per month. I'll substitute it for an empty bottle. What can I substitute for electricity?

Petrushka

(3,709 posts)
10. Crab meat @ $9 per lb.? A substitute for $11 crab meat (OR for beef/pork/chicken) in chained CPI??
Thu Apr 25, 2013, 10:11 AM
Apr 2013

Did you, perhaps, forget the sarcasm smilie? I ask because, as a senior, I'm waiting for one of those first-of-the-month advertisements saying, "Buy any 10 items for $10 & get the 11th FREE" . . . AND hoping imitation crab-legs are again included in the selection of items on sale.

pinqy

(596 posts)
12. Here's how it works
Thu Apr 25, 2013, 10:46 AM
Apr 2013

You have to include quantity (as portion of spending) in a price index as a 100% price increase for a pack of gum is much less significant than a 0.1% increase in the price of a car. So the amount spent on an item as a percent of total spending is the weight. The current method assumes the same weights from one time period to the next, while the chained CPI uses an average of the 2 periods.
So if beef was 30% of meat spending in period 0 and the price has gone up 5% then that would be a 1.5% upward push on the meat index. But what if beef had dropped to 29% as substitution occurs? Using that weight, beef would have a 1.45% impact on the meat index. A chained index would put the weight at 29.5% and the impact would be 1.475%

And if crab prices go down 20% and % of meat goes from 1% to 1.5%, that would be a -0.25% on the overall index.

Petrushka

(3,709 posts)
13. To senior citizens & others living on limited incomes, "Here's how it works" is beside the point---
Thu Apr 25, 2013, 01:47 PM
Apr 2013

---especially after you said that Robert Reich was in error, that his saying "'The idea is that when prices go up, most people substitute lower cost items.'...is inaccurate." Then, you back up your contention with a ludicrous explanation involving $11 and $9 crab meat . . . as if people living on limited incomes would or should think you were serious. And . . . now . . . (**sigh**) . . . "Here's how it works," you say? Oh, dear! You apparently are serious!

Oh, well . . .

Sorry, pinqy, but this senior citizen thinks Mr. Reich is correct because, plain and simply: Every dollar declines in value when there's a price increase.


JDPriestly

(57,936 posts)
14. 1) The CPI already accounts for cost changes in items the average consumer buys.
Thu Apr 25, 2013, 05:28 PM
Apr 2013

It does not need an additional adjustment for seniors' benefits that accounts for it even more. Thus your first argument is a waste of time.

2. The CPI is not based on what seniors really buy. It is based on what everybody buys. So the fact that the health care costs rise will affect the costs that seniors face but will not affect the amount of the rise of the chained CPI. Thus your second argument makes no sense.

The CPI should be left as it is. It should not be chained.

The point of the video is that seniors are, on average, dealing with incomes lower than anyone else already. We seniors cannot afford further cuts. The very few seniors who high incomes would see their incomes reduced if taxes were raised on the high income earners in all age groups.

Why pick on us seniors? Why pick on veterans? Why not raise the minimum wage so that Social Security will take in more revenue? Why not do what Robert Reich suggests and raise the cap without raising maximum benefits? Those would be simple fixes.

Obama should stop picking on seniors.

 

Demo_Chris

(6,234 posts)
18. This is a magnificent song and dance to distract from the real issue...
Fri Apr 26, 2013, 01:55 AM
Apr 2013

The POINT of Chained CPI is to create the illusion that inflation is less than it actually is. That's why they are doing it. Obviously people make adjustments to spending to compensate, they either do that or they ultimately starve. What chained CPI does is it uses these purchase changes to support the claim that prices never actually increased at all.

Let's take a grocery basket. In it is a box of Craft Mac and Cheese selling for $1. Over the course of a year that box of Craft Mac and Cheese increases to $1.49. Under any sane and objective measure of inflation you would conclude that the price of Kraft Mac and cheese has increased by 50% -- a massive increase. Enter the magic of chained CPI.

They simply find a box of mac and cheese, in this case Fukushima Select brand "Mak and Cheez" that's still selling for a buck and voila, there was no inflation. And when that goes up they do it again, and again, and again. Using this logic you can claim anything you like. You can claim chinese brown label horse droppings with extra lead and polymers are the equivalent of Alaskan King Crab.

But over time what happens is this: with every year and decade that passes the actual value of social security compensation falls further and ever further behind where it is today. Eventually the compensation becomes worthless. Worse, and this is the point of doing it in the first place, once this is pointed to younger workers -- once they understand that their guaranteed social secuirty check isn't going to buy they chinese horse droppings with extra lead and polymers -- there will be no argument against privitization.

The choice will be between a guaranteed nothing, and a chance at something. And then Social Security dies. That's it.

pinqy

(596 posts)
19. What you're describing has nothing to do with the Chained CPI
Fri Apr 26, 2013, 09:05 AM
Apr 2013
Let's take a grocery basket. In it is a box of Craft Mac and Cheese selling for $1. Over the course of a year that box of Craft Mac and Cheese increases to $1.49. Under any sane and objective measure of inflation you would conclude that the price of Kraft Mac and cheese has increased by 50% -- a massive increase. Enter the magic of chained CPI.

They simply find a box of mac and cheese, in this case Fukushima Select brand "Mak and Cheez" that's still selling for a buck and voila, there was no inflation.

When the Economic Assistant (EA) first goes to an outlet, s/he has a list for that outlet of specific items...in this case "macaroni and cheese." The EA notes what different varieties (brand, size) and asks the manager about proportion of sales. The EA then weights the different types proportional to sales and uses random selection with greater probability assigned to those brands/sizes that sell more. Once that's done, each month the EA will collect the price of the exact same item (Kraft Mac and Cheese, single box, 3 packets or Fkushima Mak and Cheez 6 pack etc) every time. There is no ability to change that selection and any attempt to do so will be flagged in Washington and reviewed by an analyst. If the item is not available (sold out) during the visit, the EA has a choice to just not collect or replace the item with a close substitute. Either way the decision will be reviewed and corrected if the EA made the wrong decision.

Chained CPI deals with overall weights, not individual item selections. If Mac and cheese made up 0.01% of spending in month 1 and 0.015% the next month, current measures would weight the price change of mac and cheese as 0.01%. The chained CPI would weight it as 0.018% And vice-versa if the % of spending went down.

Dan de Lyons

(52 posts)
5. There's a bottom to the ladder of choices
Thu Apr 25, 2013, 08:57 AM
Apr 2013

Chained CPI assumes that cheaper choices will be available indefinitely.

Nobody seems to have caught on that many of us seniors are already at the bottom of this ladder of choice, already using the cheapest toilet paper, already eating the food we find in the bargain bags in the veggie section, and we have no cheaper choices.

What is cheaper than corn meal mush?

JDPriestly

(57,936 posts)
15. +1000.
Thu Apr 25, 2013, 05:31 PM
Apr 2013

Our cars are 20 and 17 years old respectively. We buy the cheapest gas and the cheapest meat and vegetables we can find, and when it comes to meat, I learned how to stretch it from my mom (a Depression teen) and that is what I do.

We eat beans. We already live on a very low budget. Never eat out.

That's how seniors live on Social Security. Obama should not cut our meager benefits.

Note: We pay our taxes, and WE VOTE.

 

Alva Goldbook

(149 posts)
17. In other words...
Thu Apr 25, 2013, 11:02 PM
Apr 2013

Obama wants to screw over your mom or your granny. Why? Who knows why. If we eliminated the FICA cap, social security would be solvent forever. In fact, we could probably cut FICA taxes in half and it would still be solvent forever. But we're not going to do that. Why? Because payroll taxes is something that primarily the working class pays. Meanwhile, we let billionaires get away with 15% capital gains tax rates.

Why is it that when Republicans vote for Republicans they get crazy Republicans, and when we vote for Democrats we get slightly less crazy Republicans?

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