This may seem a bit “inside baseball” to some, but believe me this effects each and every one of us. Manipulation of the CPI is one way the government can make things look calm and pleasant while inflation is raging. It amounts to outright theft from the poorest elements of our society to benefit connected elites.
The CPI or Consumer Price Index is the government’s official tool for monitoring inflation. There have been many questions over the years about its legitimacy since the CPI does not count food, energy prices or hosing cost. The government argues that these are “too volatile” to be included in the CPI, even though they directly effect the cost of living for every American.
In the housing market, instead of housing prices, they include a figure called “Owners Equivalent Rent” which goes down when interest rates are lowered. The result is an ever increasingly manipulated picture of what inflation looks like.
It’s estimated by some that programs directly linked to inflation like Social Security are making far lower payouts than they should be making because the manipulated CPI figures are estimating inflation at a lower rate than it actually is.
Now, as Republicans and Democrats prepare to negotiate on conditions to raising the debt ceiling, they are also talking about manipulating the CPI further to make inflation appear lower, which is expected to be more severe in the coming years. From the Dow Jones Newswire:
WASHINGTON -(Dow Jones)- Lawmakers are considering changing how the Consumer Price Index is calculated, a move that could save perhaps $220 billion and represent significant progress in the ongoing federal debt ceiling and deficit reduction talks.
That would impact an array of federal programs that are linked to CPI including the Social Security program and income tax brackets set by the federal government.
It is a rare proposal in that it would likely lead to both lower benefits paid to seniors and higher taxes paid by most people who pay federal income tax. As such, it could allow Republicans to argue they are tackling federal entitlement programs such as Social Security, and permit Democrats to say they are increasing taxes as part of any budget deal that is reached…
“It’s certainly something that is going to be considered,” said James Horney, director of federal fiscal policy at the Center for Budget and Policy Priorities, a liberal think tank. “There are questions whether it would be politically easy.”
Since we know that both parties are on board with this in principle, its clear that what they really mean is not if its politically possible with each other, but whether or not they can successfully pull one over on the American people. Will the media cover this in such a way as to enrage seniors or taxpayers? This is just another type of scam.
Inflation is the ultimate regressive tax because it hurts the poorest members of society the most, not just by devaluing their savings, but by reducing the value of government payouts. Connected elites can protect themselves much easier and can even profit if they have early access to the money — like bankers do.
