Digby (Remember Her?) ....."Ok, So What Do We Do Now?"

[hfojvt]

14. well I decided to look at the last decade

here are the colas http://www.ssa.gov/cola/automatic-cola.htm

2001 - 3.5%
2002 - 2.6
2003 - 1.4
2004 - 2.1
2005 - 2.7
2006 - 4.1
2007 - 3.3
2008 - 2.3
2009 - 5.8
2010 - 0
2011 - 0
2012 - 3.6

so $1.000 a month has grown to $1,361.14 a month by 2012.

Now some might think that is a huge growth, and think that if it was reduced to $1,300 that that would not really be a "cut". Because, after all $1,300 is still more than $1,000.

But that is not what really happens. Consider, for example, the price of gas. In 2000, gas was selling for, let's say $1.25 a gallon. (I think it was less, but it was increasing from the low of 89.9 in late 1999 and I remember it increased just in time to hurt Gore in the election even though it was probably higher than $1.25 when Clinton was elected in 1996. I remember that too, because it was right when I bought my 2nd car in 1996 and gas was about $1.30.

Anyway, that $1,000 in 2000 would buy you 800 gallons of gasoline. By 2012, $1,000 would only buy about 300 gallons of gasoline.

The same is true, although I cannot remember prices, of things like bread and milk and any number of other items. Some items held steady. For example, I remember buying a Trek bicycle in 1990 for about $300 and then a new one in 2002 for $300 and then another one in 2004 for $275 (because they had a sales tax holiday)

So $1,300 in 2012 would only be equivalent, in general, to $975.03 in 2000. http://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1300&year1=2012&year2=2000 If the COLA does not keep up with inflation, then you are going backwards even as the nominal value of the check goes up, the real (non inflation) value is going down.

However, it does appear that past COLAs for Social security have been beating the rate of inflation. At least for the period from 2000-2012. The $1,000 growing to $1,361.40 beats the inflation rate of $1,333.3. Or, put another way, the real value of $1,361.40 in 2000 dollars is $1,021.11.

But the COLA has probably not been keeping up with the increasing costs of food, gasoline and medicine.