The Chained CPI-U. How it will not only lower SS benefits, but all of our benefits.

[MadHound]

One of the details of the grand deal that Obama and the 'Pugs are trying to craft is the Chained Consumer Price Index, an alternative method of measuring inflation. It has been shown that the Chained CPI-U will mean lower COLA's for SS recipients, but the fact of the matter is that if Chained CPI-U becomes the accepted method of measure inflation, we're all screwed. Employers who base employee raises on the rate of inflation will be handing out less in raises. Not to mention the simple fact that we will be even less informed as to how bad it really is.

Here is an interesting analysis of Chained CPI-U's, straight from the BLS itself. I suggest that you read at least the introduction, if not the whole thing. As the authors state, they are dissatisfied with the current ways of measuring inflation because "In the case of a Laspeyres index, the effect is such that it is greater than or equal to the true cost of living. Indeed, it is well known that a Laspeyres index is an upper bound to the true COLI." And Lord knows, we can't have a method of measurement that gives us the upper estimation of inflation rather than the lower one(and remember, all measures of inflation are estimates).

So not only will this new method of estimating inflation lower COLA's for seniors, thus depriving them of benefits, but since it will now be accepted, official government practice, it means fewer and lower raises for those who are employed as well, thus depriving you of money as well.

Chained CPI's are simply another way of lowering labor costs in this country, but they are also a way of fooling the populace in general. The government can claim that under the Chained CPI method, inflation is running at only three percent, when in reality it is running double that, and most people, lacking in depth economic knowledge, will accept it at face value and move on, despite being troubled by the fact that gas prices continue to rise, along with everything else.

This is the proposition from the Obama administration, to essentially "cook the books" in order to pay seniors less in SS benefits. This is how we will see our wages further depressed, and how we will continue to be kept in the dark with Bozo bookkeeping.

This is the devil in the details of the Grand Deal that is being worked on. And looking at the details, yes, we the people get screwed over once again.

[xchrom]

1. Recommend

[newfie11]

2. kick

[katnapped]

3. That's OK

Obama won't suffer so that makes it OK. Rah Rah Democrats!

[Sirveri]

4. C-CPI-U isn't all that much different from CPI-U

It just means that if one good in a like category spikes, the weighting of the other good in the category will increase as people buy more of that good then the other.

The question is how this is formulated and how broad the categories are. I think most would agree, that if you compared a price change in naval and mandarin oranges, then one could reasonably be substituted for the other. To an extent you could even do this to a lesser capacity across the entire fruit spectrum, perhaps grandma will not make an apple pie because apples doubled in price while cherries stayed flat, so she'll make a cherry pie instead. So the real question becomes one of how these things are weighted, and how that weighting is verified. Do we track consumption numbers? If we don't track product consumption then how can we verify that chained weighting is accurate, and furthermore, how can we verify that ANY weighting is accurate. CPI is basically tabulated by having guys walk around with clipboards and jot down prices in the target stores they hit. These locations are known, and there is nothing to stop them from practicing collusion to cause CPI to change as they desire. I don't think they're actively engaged in this practice, but the potential is there.

In the case of OASDI COLA I believe it's based on CPI-W, which is a bit more prone to inflate than U. But ideally these programs should be based on a new index called CPI-E, E for Elderly, which tracks the costs primarily encountered by the elderly. Last I checked they didn't need to gas up the car to go to work every day, so why is their CPI standard weighted like they are a white collar or urban worker from the suburbs? Instead that weighting should be shifted more towards healthcare. Can we find out how these items are weighted, this data is likely buried somewhere on the bls website. Is this more accurate, I don't know. Are they trying to move towards a position of accuracy? Well who runs the BLS and what is their agenda? In the scheme of things, this may or may not be a big deal, perhaps if we hit the bigger issues of wealth inequality and stagnant unemployment, then issues of CPI won't really matter as much.

[MadHound]

5. Except for one major point,

While grandma can substitute cherries for apples, she can't substitute aspirin for her heart meds, and in many cases can't substitute generics for labeled meds.

Seniors are the ones hit hardest by inflation of any kind, and they generally have the fewest options to mitigate that inflation. They need medicines, they need health care, they are less likely to move when there is rise in housing costs, etc. etc.

As far as the whole notion of substitution, it's not just substituting cherries for apples, but low quality goods for quality goods. IE, substituting jeans from the dollar store for Levi's. What Chained CPI-U is doing is weighing changes in price, but not changes in quality of life. Thus, while my cost of living doesn't go down as I substitute low quality goods for high quality goods, my quality of life does go down.

Again, this is more cooking of the books, much like they did with CPI-W. It escapes me how, as with CPI-W, you can totally disregard the cost of living of the rural populace in your country. After all, it is twenty percent of the US population, and thus significant. But then again, the rural population experiences a greater cost of living in general, so we can't count that now, can we.

[DCKit]

6. I'm not looking to collect SS or Medicare for a good while, but I haven't been counting on it.

Everyone my age (48) and younger should be making their own plans.

This discussion needs it's own web-site.

[MadHound]

8. I understand that sentiment,

But the fact of the matter is that we were promised, in law, in writing, that we would be paid back in SS benefits the money that we paid into SS when we were younger. This is our money that they're taking away from us, which is why so many people are outraged.

Besides, while you, or I might not have counted on receiving SS, many people are. Not everybody had the luxury during their lives to save up for a comfortable retirement.

[DCKit]

9. I agree, to a point. We paid in and should benefit from our investment.

But I'm not rich, don't have assets, so I'm going to be struggling right along with the rest of my peers. I've only been realistic about how badly we're going to get screwed.

[jtown1123]

11. I think it's damaging to have that sentiment. If we're discouraged, then we won't fight

that was the whole point of CATO coming up with the "it won't be there for you" meme. You have to admit, it was pretty effective.

http://youtu.be/MPeEejtoT_o

[ThomWV]

7. K&R

[MadHound]

10. kick n/t