Sunday, October 26, 2014

The Consumer Price Index is Rigged Against Social Security Recipients

Staff Writer, R.Patrick Chapman
Economics / Cost of Living 

The federal government is again cheating those people who rely on Social Security a real cost of living increase: 
Come January [2015], nearly 60 million Social Security recipients will get benefit increases averaging $20 a month, the third straight year of historically small pay hikes.

The 1.7 percent cost-of-living adjustment, or COLA, will also boost government benefits for millions of disabled veterans, federal retirees and people drawing disability payments for the poor.
But what if the numbers we are being fed are inaccurate because of a numbers game and political maneuvering?

That is where the Alternative Consumer Price Index comes in. Why can there be an alternative? 
Let's take a gander at the charts:

Consumer Price Index Has Been Reconfigured Since Early-1980s
So As to Understate Inflation versus Common Experience
  • CPI no longer measures the cost of maintaining a constant standard of living.
  • CPI no longer measures full inflation for out-of-pocket expenditures.
  • With the misused cover of academic theory, politicians forced significant underreporting of official inflation, so as to cut annual cost-of-living adjustments to Social Security, etc.
  •  Politicians look to expand further the concept of artificially-suppressed cost-of-living adjustments in current budget-deficit negotiations, through the use of the Chained-CPI (see Special C-CPI Supplement at end of this document).
  • Use of the CPI to adjust retirement benefits, private income or to set investment goals impairs the ability of retirees, income earners and investors to stay ahead of inflation.
  • Understated inflation used in estimating inflation-adjusted growth has created the illusion of recovery in reported GDP.
So the Consumer Price Index is rigged like a shell game. An accurate inflationary rate is nonexistent. What does that do to people who rely on the Social Security system:
"Seniors across this nation understand how important having an accurate measure of their real costs is to their day-to-day survival," said Max Richtman, who heads the National Committee to Protect Social Security and Medicare. "While there has been a lot of talk in Washington about the need to find a more accurate COLA formula, unfortunately that attention has largely focused on ways to cut the COLA even further."
Once upon a time, the CPI was used to calculate and maintain a constant standard of living. Now the CPI is used as a political and cost cutting tool. All the while, the CPI does not allow individuals on a fixed income to keep up with customary societal cost increases. 
The Boskin Commission Report, December 4, 1996, actually used steak and chicken for its substitution example. The examples used in arguing for changing the CPI clearly were tied to prices rising and resulting consumer demand shifting to a lower-quality product. Simply put, that was the destruction of the cost-of-maintaining-a-constant-standard-of-living concept and was the primary consideration of those seeking to change the CPI, although other issues would come into play. The drive here was as to get a lower inflation reading, irrespective of whether the data were “more-accurate.”

So buy chicken instead of steak, I mean, buy imitation chicken instead of chicken because the federal government has changed the definition of cost of living to: the cost the government does not want to show it owes the poorest and most vulnerable of the nation.

Because the bottom line is more important to elected officials than maintaining any acceptable standard of living for the elderly or disabled.

Kudos. That is a true Christian stance, not.

When it comes to increasing the salaries of Congress, all bets are on the fact that the CPI is not used, but is rather a self-congratulatory raise of ten percent or more. Maybe we should tie Congress's pay increases to the same CPI used for Social Security recipients. While we are at it, we should take away Congress's premium health care and give them Medicare, then we will see how fast that program is fixed for real usability.

Then perhaps debates over Chained CPI and other measures to decrease spending at the cost of people will end. Of course, we could just stop a war or seven. Maybe we could cut costs by halting defense spending on illegal actions against sovereign nations.

Now there's a thought.

Source: Shadow Government Statistics, CBS 5 News,