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Monday, January 14, 2013

An Informed, Thoughtful Editorial on Social Security from the Times

Posted by on Mon, Jan 14, 2013 at 8:03 AM

From the New York Times, of course, not the soporific suburban paper that deceptively puts the word "Seattle" in its banner:

At issue is the way inflation is calculated. The administration’s offer in the fiscal cliff talks — and the approach long advocated by Republicans — calls for using a new measure of inflation, called the “chained” Consumer Price Index, to calculate the COLA.

Unlike the gauge of inflation currently in use, the chained index captures the ability of consumers to adjust their spending across categories as relative prices change — for instance, spending less on fuel as gas prices go up and more on groceries as food prices go down. Such substitution causes the chained C.P.I. to rise more slowly than the current measure, which would result in a lower annual COLA and huge budget savings. The move to a chained C.P.I. would reduce benefits by some $135 billion over 10 years, and far more in later decades because of compounding.

The administration and other proponents of switching to a chained C.P.I. contend that it is a technical fix in the interest of greater accuracy, not a benefit cut per se.

But that claim does not stand up to scrutiny. The chained index is in many ways a better method of tracking price changes for the broad working population, but there is no compelling evidence that it is better for computing the Social Security COLA.

What is known is that elderly households tend to have lower incomes and lower expenditures than younger households, and that more of their purchases are for needs that cannot be met by switching to products and services in unrelated categories. That indicates that they do not have the same flexibility as younger households to respond to price changes while still maintaining their standards of living.

Ohmigod... a newspaper editorial board that actually attempts to understand and explain complex policy issues instead of just bludgeoning readers with regurgitated ideological talking points. How refreshing.

The editorial goes on to suggest that if lawmakers were truly serious about their claimed objective, they would have the Bureau of Labor and Statistics develop a "statistically rigorous index to track inflation as experienced by retirees." Except, if they did that, there's a good chance we might find that the CPI underestimates inflation's impact on retirees. And that would defeat the true purpose of this exercise: cutting benefits for old people.

 

Comments (13) RSS

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Kinison 1
I hate having to take down my "Sherman's March" posters down, even if they're nothing but quick and dirty photoshop jobs. Seahawks lost, but 2013 is going to be a much better year.
Posted by Kinison http://www.holgatehawks.com on January 14, 2013 at 8:33 AM · Report this
Pope Peabrain 2
I would love to hear your opinions on Sen Max Baucus and his culture of corruption. Who received special tax breaks during fiscal cliff talks? The same Goldman Sachs that robs the American people talks about how Americans must not expect a social safety net, must tighten their belts.
Posted by Pope Peabrain on January 14, 2013 at 8:59 AM · Report this
3
It's becoming rarer and more surprising whenever journalism actually invests a little energy, intelligence, and public trust into doing its job. There's nothing like doing a little homework before informing the public on an issue.

Thanks for posting this.
Posted by Brooklyn Reader on January 14, 2013 at 9:00 AM · Report this
TheMisanthrope 4
Ohmigod... a newspaper editorial board that actually attempts to understand and explain complex policy issues instead of just bludgeoning readers with regurgitated ideological talking points. How refreshing.

AHAHAHAHAHAHAHAHAHAHACOUGHCOUGHCOUGH.

Irony in the morning.
Posted by TheMisanthrope on January 14, 2013 at 9:05 AM · Report this
5
"And that would defeat the true purpose of this exercise: Cutting benefits for old people."

With people living longer and not having as many babies as they used to we're going to have a lot of old people and fewer workers to support them. We need to cut their benefits. Besides, the majority of senior citizens voted for Romney, give them the limited government they asked for.
Posted by Ken Mehlman on January 14, 2013 at 9:23 AM · Report this
rob! 6
If they indexed based on just the price increases of shoe polish, watch batteries, books of paper checks, and incandescent lightbulbs, a lot more seniors could afford their prescription co-pays and the electric bill, among other things.
Posted by rob! http://www.youtube.com/watch?v=QZBdUceCL5U on January 14, 2013 at 9:32 AM · Report this
7
@5 Life expectancy hasn't increased much after someone hits 65, when SS kicks in. We have seen a dramatic decline in deaths under 18.
We will not have fewer workers in the future, though the ratio of young people to old people may decrease.
We really don't need to cut anyone's benefits, at least not for the next couple decades. SS is good through 2040 or so.

Any economic forecasting beyond that is worth about as much as the talking points you regurgitated.

I'll regurgitate some of my own: http://digbysblog.blogspot.com/2010/07/k…
Posted by dirge on January 14, 2013 at 9:37 AM · Report this
rob! 8
@5, Romney won the 60-plus vote by 9 points, but the "white vote" by 20 points. Would you suggest that all whites be treated to the whole gamut of what Romney had in store for them?
Posted by rob! http://www.youtube.com/watch?v=QZBdUceCL5U on January 14, 2013 at 9:49 AM · Report this
auntie jim 9
These benefits are already paid for and demographics are changing slowly and by very little if you look at the overall picture. Longevity has improved mostly by reducing infant mortality, not by old folks living longer lives, and productivity improvements have far outweighed losses due to changes in the ratio of workers to retirees. You have to look at the Republican agenda: a bigger piece of the pie for the super rich and multi-national corporations, to get an idea of what is driving the decades of relentless propaganda to dismantle the New Deal, Medicare, Medicaid, and the Patient Protection and Affordable Care Act. (AKA Obamacare)
Just because the president offers chained cpi or some other barbaric cut in benefits when it is already obvious that the Republicans will refuse to make a deal no mater what he gives them doesn't mean he's really willing do it. It's just hard ball negotiations where the president is being just as stubborn as the tea baggers without looking unreasonable at all, because after all he is being the only reasonable adult in the discussion.
Posted by auntie jim http://www.gaysnohomish.org on January 14, 2013 at 9:55 AM · Report this
10
@7 OK, allow me to rephrase that. The ratio of people of working age to retirees is going to decrease because the baby boomers were to busy smoking pot and burning the American flag to pop out enough babies to support them in their old age. Also, older people tend to vote Republican, so give them the limited government that they want. A majority of voters 45 and older went for Romney in the last election. I'd say that old saw about "You made your bed, now sleep in it" applies.
Posted by Ken Mehlman on January 14, 2013 at 9:59 AM · Report this
11
@5, 10: That is what the Trust Fund (and its $2.6 Trillion or so) is for, to cover the gap between generations. Old people don't live forever, you know. This batch will die off and then, what? All subsequent ones will be screwed out of benefits but tax collections will stay at the same rate to build up an even bigger surplus? Which will get used for, what exactly?

There is no Social Security problem. When the accumulated surplus is spent down, the Trust Fund is depleted, then there'll be a problem we have to deal with. Come back then. thxkbai.
Posted by Brooklyn Reader on January 14, 2013 at 10:08 AM · Report this
keshmeshi 12
@10,

Since the cuts through chained CPI compound over time, it's not the current Republican elderly who are going to get fucked over, it will be the rest of us, who didn't vote against our own interests. And how exactly is chained CPI going to solve our current fiscal problems? Social Security isn't part of the regular budget. Is it your proposal that the government raid the Social Security trust to pay off our debts? How Republican of you.
Posted by keshmeshi on January 14, 2013 at 11:26 AM · Report this
13
Suburban? For a paper printed in Yakima, and with almost half your readers in the suburbs, that's funny.
Posted by gruezi on January 14, 2013 at 11:40 AM · Report this

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