Most understand that the Chained CPI will hurt seniors, especially woman who earned less during their working days and live a little longer than their spouses while facing their last years living alone.
But what may not be well known is that Chained CPI would be used not just for calculating Social Security and Veterans Benefits..... If the Government adopts Chained CPI for adjusting Income Tax Brackets, & wages grow more than the Chained CPI, your income rises faster than the Income tax brackets would. Over time many families would be bumped into the next income tax bracket. Currently the Income Tax Brackets are adjusted to CPI-U.
According to Congress’ Joint Committee on Taxation, if individual income taxes were indexed to the Chained CPI starting in January 2013, by 2021, 69 percent of the gains in revenue would come from taxpayers with incomes below $100,000, while those in the highest income brackets would barely be affected. For example, workers with incomes between $10,000 and $20,000 would experience an increased tax burden of 14.5 percent, while those with incomes over $1,000,000 would just see an increase of 0.1 percent.
Source:
Seniors dont have the same buying patterns as working wage earners and clerical workers, which is what CPI-W is tracking. CPI-W can't possibly represent Seniors buying habits.
Seniors spend more on housing and medical care than people still in the workforce who maybe decades younger and in the prime of their health. Substituting Medical care may be impossible in some situations, and I can't imagine how one can substitute a Nursing Home. 2 out of 5 seniors rely on Social Security as 90% of their retirement income, while in 2012 the average Social Security benefit for those 65 and older was less than $15,000.
In addition, there are fewer opportunities for substitution in these areas of consumption. Also, because the elderly are a less mobile population, they may find it more difficult to change their consumption patterns. If accuracy is the main concern to be addressed by altering the Social Security cost of living adjustment, then the BLS could construct a full elderly index that more accurately tracks the consumption patterns of the elderly. There is no basis for assuming that a Chained CPI more accurately measures the rate of inflation experienced by the elderly than the current measure,however there is no doubt that it will lead to a reduction in benefits.
Center For Economic And Policy Research
BTW, The Center For Economic And Policy Research was founded by Economist Dean Baker, who will be joining the blogathon on Friday @ 11am EDT.
The best thing for Social Security is a growing economy, creating jobs and raising the minimum wage regularly can go a long way to seeing Social Security thru to 2045 when 50% of Boomers born in 1964 will be dead. Once The Social Security Trust Fund gets past this point, assets will grow slowly and by 2062 assets will grow quickly.
As you can see once the Boomers are dead, the number of workers supporting a retiree will vastly improve.
"HandsOffMySS" Blogathon: March 25th thru March 29th, 2013
Diary Schedule - All Times Eastern Standard
IT IS TIME TO TAKE A STAND
Social security is a concept enshrined in Article 22 of the Universal Declaration of Human Rights which states that Everyone, as a member of society, has the right to social security.
A limited form of the Social Security program began, during President Franklin D. Roosevelt's first term, as a measure to implement "social insurance" during the Great Depression of the 1930s, when poverty rates among senior citizens exceeded 50 percent.
Let your voice be heard.
Members of the Daily Kos group Social Security Defenders have organized this bogathon to promote the truth about the financial condition of the Social Security trust fund, and the impacts of various so called reforms and fixes.
Understanding how benefits are calculated, the History of Social Security, where the Wisconsin Idea came from, and how over the years changes have been made to Social Security, all increase awareness and hopefully improve the discussion.
11:00am:Roger Fox
1:00 pm: Joan McCarter
3:00 pm: Roger Fox
5:00 pm: Jamess
10:00 am: Roger Fox
11:00am: joanneleon
1:00 pm: joe shikspack
3:00 pm: Arshad Hasan DFA
5:00 pm: Roger Fox
11:00am: poopdogcomedy
1:00 pm: teacherken
3:00 pm: priceman
5:00 pm: Bruce Webb
11:00am: Jim Dean DFA
1:00 pm: BernardPliers
3:00 pm: One Pissed Off Liberal
5:00 pm: floridagal
11:00 am: Economist Dean Baker
1:00 pm: VCLib
3:00 pm: Armando
5:00 pm: Liberal Thinking
Please remember to republish these diaries to your Daily Kos Groups. You can also follow all postings by clicking this link for the Social Security Defenders Blogathon Group. Then, click 'Follow' and that will make all postings show up in 'My Stream' of your Daily Kos page.
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5:45 PM PT: The Rec list for this dairy has some big names on it, thank you very much. I am honored.