THOU SHALT NO CHEAT THY ELDERS = Chained CPI = COLA

[Coyotl]

8. Chained CPI Will Reduce Your Social Security Benefits

http://www.economicpopulist.org/content/chained-cpi-will-reduce-your-social-security-benefits

There is a war on social security and America is losing the battle. One constant in the fiscal cliff negotiations is the agenda to cut your retirement benefits by a ruse, a lowering of the inflation adjustment. Congress and the Obama administration are out to do the old switcheroo and swap out the current CPI-W inflation measurement tool for one called chained CPI. Using Chained CPI instead of CPI-W will reduce the adjustment for inflation.

Every year social security is adjusted to keep up with inflation. As we noted in our CPI overview, chained CPI cuts benefits by reducing the cost of living adjustments, known as COLA, to social security benefits. COLA is designed to keep up with inflation, yet chained CPI assumes, wrongly, one can substitute some goods for others as prices increase. We confirmed that the current proposal is to simply swap out CPI-W for chained CPI and use the same formulas to calculate the annual COLA adjustment to account for rising prices. We overviewed the formula to calculate cost of living adjustments earlier. Below is a graph of the current COLA adjustments.



......

Let's assume someone in year 2000 had an monthly social security benefit of $1000. Below are the COLA increases for this person using the current COLA adjustments using CPI-W and then the COLA adjustments using chained CPI. By the time 2013 rolls around this person is now short $49.7. When one is only getting $1000 a month, not enough to live on, those 50 bucks makes a world of difference. While the traditional inflation adjuster, CPI-W has increased benefits 34% over 12 years, chained CPI has only increased 29% over the same time period. That's 5% less in benefits with the same price increases by using chained CPI instead of the current CPI-W series for COLA. The situation only gets worse the longer one collects benefits and the smaller one's start amount social security benefits were. In other words, the very aged and the poor are hit most. The Chained CPI ruse is also regressive in other words.


.......