Monday, January 14, 2013

Dean Baker — The 3 Percent Cut to Social Security, a.k.a. the Chained CPI

And remember those pledges not to cut benefits for those currently retired? Oh right, no one meant that to be taken seriously.
The benefit-cutters' argument is another nice piece of DC humor. The argument is that the current index overstates inflation. However, there is an experimental index produced by the Bureau of Labor Statistics which shows the current index actually understates inflation for seniors.
That is just an experimental index, but if the concern really is accuracy, then the obvious answer would be to construct a full index to examine the cost of living for the elderly. But that suggestion just draws contempt from the Social Security cutters.
In order to avoid feeling too badly about their plan to cut Social Security, many of the cutters want to protect some programs for low-income people. For example, Supplemental Security Income (SSI) a program for the disabled and low-income seniors, will be protected. The word is that SSI will continue to be indexed to the current inflation index.
truthout
The 3 Percent Cut to Social Security, a.k.a. the Chained CPI
Dean Baker | Co-director of the Center for Economic and Policy Research
(h/t Kimball Corson via Heterodox Economics on FaceBook)

No comments: