Some interesting leakage on on a proposal to slow the growth of social security benefits as part of the debt ceiling negotiations. It appears the idea being floated is to use an inflation gauge that is counts even less of real inflation than the consumer price index (CPI). For those of us who already think the CPI (which has been adjusted in myriad ways since the 1980s) undercounts inflation – a move to an even more skimp way to count inflation would be incredibly bemusing if not for the fact it is going to impose serious hardship on those at the lower end of the economic scale. Of course in our political system, those are the folk who do not have a lobbyist group nor offer much in terms of monetary contributions to campaign funds, so their interest are not really relevant to the powers that be.
Frankly I had never heard of the ‘chained consumer price index‘ until yesterday. If you have not – it’s probably time to learn. By using this measure the politicos can ‘cut’ social security benefits, without actually technically using the word ‘cut’. Genius.
Larger picture – the U.S. plan to deal with the massive deficits is to devalue the dollar … which will create ever more inflation. Which can be under reported even further using such snazzy measures as the ‘chained consumer price index’. Which will allow the powers that be to claim there is little to no inflation (hence you get no COLA inflation) as they devalue the country’s currency to pay off our debt. I love it when a plan comes together.
Did I mention it’s genius?