Just a little history for those not following the fraud in Social Security: In the recent negotiations, just about the only thing the administration and Republicans could agree on was the introduction of a new measurement device for inflation, which would be applied to the Social Security program. To summarize, over time the new measurement of inflation would have payment increases at a level lower than the rate of inflation, cutting cost (as well as the program’s payouts to seniors and the disabled).
UPDATE 9-16-11: It appears the president has abandoned talks to enact this new method of tracking inflation with regards to Social Security. We are leaving this article up for posterity and the belief that this will yet be implemented in a future presidency. Read more about it here.
For example: lets say you receive $1000 from Social Security every month. The rate of inflation for the year is 3 percent. Theoretically, you should see a payment increase equal to the rate of inflation, in this case you should now receive $1030 every month. There’s been some controversy over the years with critics charging that SS recipients should be receiving much more in payouts, but aren’t because the government has consistently underrepresented inflation, essentially robbing people.
The proposed plan would link SS to a new measurement of inflation called the Chained CPI, which measures inflation at a lower rate than the other measurements (which many say is already too low). I always imagine a giant rock chained to recipients’ ankle. This probably wasn’t intentional. The BLS defines it this way:
“If the price of pork increases while the price of beef does not, consumers might shift away from pork to beef. The C-CPI-U is designed to account for this type of consumer substitution between CPI item categories.”
Of course, this has little to do with the rising costs that effect seniors and the disabled. This change would cut benefits across the board a little bit every year. Theoretically, the program could face irrelevancy over time as a result of this measure.
Going back to our example, if your receiving $1000 a month and inflation is at 3 percent, but the chained CPI only measures it at 2.5 percent, you’re now only receiving $1025. Lets assume the following few years have the same average inflation rates. 10 years later, you are receiving $1280, but if your rate of increase had been linked to the real inflation numbers, you’d be receiving $1344. You can see that over time, this eats away at the program’s effectiveness.
The near universal acceptance of this plan among establishment politicians should say something about their intentions toward the supposedly sacred cow that is Social Security, even among current recipients who they’ve promised will not see their benefits cut in any way — an explicit lie as we see with the introduction of the chained CPI.
For the record, according to Calculated Risk, Social Security is on track for a rather large 3.5 percent increase in payments this year, but the chained CPI was not used and won’t be until at least next year.
