A number of the DC elites are talking about changing the way Social Security checks are adjusted for inflation. This is a great idea, as long as any such adjustment measures the things the elderly actually spend money on. Let’s do it! Let’s change the way we adjust Social Security for inflation because inflation hits older people much harder.
Washington’s elites are all Very Seriously concerned that even though Social Security currently has a huge trust fund, the program might “go broke” many, many years in the future. (Never mind what this says about our country’s priorities — do we ever hear that the military budget will “go broke?”) This discussion of Social Security is for some reason so important to these Very Serious People that it overrides discussion of the climate emergency, the national jobs emergency, the crumbling infrastructure, and almost every other national problem except that our wealthy and corporations are taxed far too much. (Please click the links in this paragraph.)
To address this Very Serious problem of Social Security possibly running a bit short of funds way off in the future, the geniuses in DC are proposing to change the way the program’s payments are adjusted for inflation, bringing in something called “Chained-CPI.” Rather than get into how it works, I’ll sum it up. If they do this it means big cuts in what people receive in the future.
However, there is an actual problem with the way the program is adjusted for inflation and that is that the things the elderly have to spend money on have a higher inflation rate than the rate used for the program’s adjustments.
So if the DC elites are really going to change the way inflation is measured when it comes to adjustments for the elderly, why not help Americans rather than hurt them? Why not correctly measure inflation in the price of things the elderly spend money on?
A New York Times editorial addresses this proposal. In Misguided Social Security ‘Reform’ the editors first address the chained-CPI,
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.
… 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.
… And because of the way it is calculated, the chained C.P.I. would also result in delayed upward adjustments in the COLA in times of accelerating inflation. Such delays would translate into real benefit cuts, leaving retirees worse off.
And the right way to adjust for the way inflation hits the elderly?
“If, as the administration says, the aim is to set the COLA in the most accurate way possible, then the obvious approach is to have the Bureau of Labor Statistics develop a statistically rigorous index to track inflation as experienced by retirees. A more informal index from the bureau that looks at the effects of inflation on the elderly shows that the COLA is too low, not too high, in part because of medical costs. But the number of households sampled is too small to be sure.”
So yes, let’s change the way inflation is measured for the Social Security adjustments. But let’s be sure that we correctly measure how prices change for the things the elderly spend money on.
How about we help people, instead of hurt them?
Johnson also is a fellow at the Commonwealth Institute and a Senior Fellow at the Institute for the Renewal of the California Dream.
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