I got an email this morning from one Aldo Baker, of Democracy for America, who asks that I spread the word about the attack on Social Security and the true facts, which he claims you can see here. I’ll confine myself to one aspect of the current assault on Social Security: the push to impose the so-called chained CPI. As they explain, the current cost of living increase formula assumes a more or less static basket of goods and services, and raises benefits as the cost of those goods and services increases. The chained CPI, on the other hand, DFA explains, works like this:
Assuming when prices for one thing go up, people will settle for cheaper
substitutes (ie: if beef prices go up, they’ll buy more tuna fish and less
beef)
Here’s their infographic on the subject:
Now, much ink has been spilled in various blogs demonstrating that this is nothing more than a cut in benefits, as indeed it is, but unless I’ve missed something, there is something else about the chained CPI that has not elicited much comment. That is, the chained CPI only achieves the desired effect (a cut in benefits) if economic conditions are such that people are forced to buy more tuna fish (and later, cat food) instead of steak. If that rising tide were lifting all boats, the sales of steak would remain constant. People are forced to buy tuna fish only because their incomes are not keeping pace with prices, and that, of course, is a result of federal policies that have produced rising inequality. The chained CPI will accelerate the phenomenon it pretends to measure by further impoverishing the only significant segment of the bottom 99.9% that was previously at least somewhat protected. The elderly who might have been able to afford a steak now and then will be eating solely tuna, much like their children and grandchildren. Taking that money out of the economy will further depress it, helping to create or continue conditions under which the working generations will have no choice but to work at jobs at which their wages continue to stagnate or decline in real terms. This will force them to substitute cat chow for the canned stuff, which in turn will justify further cuts to social security, which in turn will further depress spending, further depressing wages. Of course, when 99.9% of us lose, it’s a sure thing that .1% of us will win, and really, isn’t that what it’s all about?
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