Comments for Thoughts on the Chained CPI, Social Security, and the Budget at http://www.cepr.net , comment 1 to 18 out of 18 comments http://www.cepr.net Tue, 21 May 2013 04:10:40 +0100 FeedCreator 1.7.3 http://www.cepr.net/index.php/blogs/cepr-blog/thoughts-on-the-chained-cpi-social-security-and-the-budget#comment-20796 Mary Bess: Good question. The primary reason is that the SS trust fund is funded with taxes. It has been ruled several times by the Supreme Ct. that the taxes cannot be specifically directed to certain beneficiaries. Rather, taxes are for the general welfare. All the FICA taxes, from a cash flow standpoint, flow into the Treasury's general fund, where they become indistinguishable from other monies. Don Levit - Don Levit Fri, 21 Dec 2012 04:43:43 +0100 http://www.cepr.net/index.php/blogs/cepr-blog/thoughts-on-the-chained-cpi-social-security-and-the-budget#comment-20788 If SS benefits are only to be paid out of its own revenue stream, why can't beneficiaries (and future beneficiaries?) sue the federal government (or the SS Trustees?) for tapping into that stream for other purposes or allowing that to happen? Thank you for all the informative articles you've written about SS and Medicare. - Mary Bess Thu, 20 Dec 2012 21:03:13 +0100 http://www.cepr.net/index.php/blogs/cepr-blog/thoughts-on-the-chained-cpi-social-security-and-the-budget#comment-20777 bmull wrote: The federal government used money from the trust fund to pay for tax cuts for the rich, two unnecessary wars, and a fat-cat-induced financial crisis. Actually, the Treasury spent the surplus on government expenses, lowering the deficits. Apparently, these expenses were not directed specifically at a few targets. The Reagan deal you spoke of, do you think it included Treasury borrowing the surplus? If that had not occurred the trust fund balance would be $2.7 trillion of intragovernmental equity, not intragovernmental debt. Don Levit - Don Levit Thu, 20 Dec 2012 05:31:59 +0100 http://www.cepr.net/index.php/blogs/cepr-blog/thoughts-on-the-chained-cpi-social-security-and-the-budget#comment-20776 This is outrageous. Don't touch medicare and don't touch medicaid but for God's sake don't change or touch Social Security. It has nothing to do with the deficit. The Republicans want their hands on it to put it in the stock market so all the elderly people will starve. - Shirley Royer Thu, 20 Dec 2012 05:22:11 +0100 http://www.cepr.net/index.php/blogs/cepr-blog/thoughts-on-the-chained-cpi-social-security-and-the-budget#comment-20766 I’m horrified by Obama's chained CPI plan. The present debate is not about fixing Social Security. It’s about a short-term budget deal. None of the new tax revenues (which as you mentioned are highly regressive) are earmarked for Social Security. If you look at Reagan’s 1983 deal, as bad as it was, at least it was a comprehensive plan which significantly improved Social Security’s finances. It did not muddle the crucial distinction between Social Security and the general budget mess. The precedent of cutting entitlements primarily to get the federal government off the hook for interest payments to the trust fund is a horrible one for Democrats to have set. The federal government used money from the trust fund to pay for tax cuts for the rich, two unnecessary wars and a fatcat-induced financial crisis. Now, they’re making the trust fund cut its outlays so it won’t need that money back on Obama’s watch. People making up to $400,000 meanwhile get to keep their Bush tax cuts, their dividend cuts, their estate tax cuts, and a number of other policy changes that would otherwise cost the rich disproportionately. Does that sound fair or does it sound like a scam? I have seen first-hand how important it is for seniors to be financially secure, so they can participate in the children’s and grandchildren’s lives. It’s very sad when they have to live far away in low-income areas and can’t afford even to buy Christmas gifts. FDR must be rolling in his grave. - bmull Wed, 19 Dec 2012 13:56:51 +0100 http://www.cepr.net/index.php/blogs/cepr-blog/thoughts-on-the-chained-cpi-social-security-and-the-budget#comment-20765 SS does not contribute to the deficit? The surplus principal has been lent to the Treasury over the years. The interest credited to the fund is done with additional debt. The trust fund balance is called intragovernmental debt, not intragovernmental equity. From a cash perspective, the shortfall since 2010 has been redeemed with general revenues, an immediate expense, and adding to the deficit. At trust fund exhaustion, the same financial dynamics will occur. The trust is not exhausted in 20 years. It is exhausted today. Don Levit - Don Levit Wed, 19 Dec 2012 09:24:57 +0100 http://www.cepr.net/index.php/blogs/cepr-blog/thoughts-on-the-chained-cpi-social-security-and-the-budget#comment-20764 This is a very helpful analysis of the Chained CPI issue. I also appreciate the facts on the Social Security issue in general. - John Donnelly Wed, 19 Dec 2012 09:00:38 +0100 http://www.cepr.net/index.php/blogs/cepr-blog/thoughts-on-the-chained-cpi-social-security-and-the-budget#comment-20761 I've been ranting about the travesty of "chained CPI" for years. This is the fallacy: If folks switch from steaks to burgers to make ends meet, that is not inflation, but the market's reaction to it. What do burger eaters switch to? Beans? And bean eaters? Dirt? From there, it's turtles all the way down, if you get my drift. The actual effect on the economy is the opposite: as the quality of food declines, people switch to quality and organics, and inflation actually increases! Moreover, as food budgets increase, this leaves less disposable income to feed the economy, and brittleness ensues, contributing to boom-bust vulnerability. - falk burger Wed, 19 Dec 2012 04:41:35 +0100 http://www.cepr.net/index.php/blogs/cepr-blog/thoughts-on-the-chained-cpi-social-security-and-the-budget#comment-20757 Nice write up, Dean. Very informative. - JSeydl Wed, 19 Dec 2012 03:34:49 +0100 http://www.cepr.net/index.php/blogs/cepr-blog/thoughts-on-the-chained-cpi-social-security-and-the-budget#comment-20750 A budget substitution is a one time event. The chained CPI is cumulative. How can such an inflation index possibly work to do other than require the impossible life style changes over 20 to 30 years? Once someone runs out of cheaper substitutions doesn't this just become a scam of bitter proportions? (Even if the first two or three years forces people to give up protein in their diet.) - Anna Lee Tue, 18 Dec 2012 13:43:04 +0100 http://www.cepr.net/index.php/blogs/cepr-blog/thoughts-on-the-chained-cpi-social-security-and-the-budget#comment-20749 I have never met anyone who felt that their experience of prices bore any relation to what the media and economists told us about inflation. These calculations always seem divorced from experience. Now I know inflation figures exclude gas and some other things because they are thought to be too volatile to measure usefully -- how am I supposed to think that inflation measurements are meaningful when they exclude the drivers of our personal economies? I'm being serious here, not just snarking. - janinsanfran Tue, 18 Dec 2012 12:20:11 +0100 http://www.cepr.net/index.php/blogs/cepr-blog/thoughts-on-the-chained-cpi-social-security-and-the-budget#comment-20739 I am appalled at the President's proposal. This President cares nothing for us. - ltr Tue, 18 Dec 2012 05:00:48 +0100 http://www.cepr.net/index.php/blogs/cepr-blog/thoughts-on-the-chained-cpi-social-security-and-the-budget#comment-20738 One of the nastiest features of the chained CPI brainstorm is that the oldest elderly will pay the most--if you live into your nineties, you could easily see your monthly check cut by 10 percent or more. - Jim Naureckas Tue, 18 Dec 2012 04:57:17 +0100 http://www.cepr.net/index.php/blogs/cepr-blog/thoughts-on-the-chained-cpi-social-security-and-the-budget#comment-20737 Social security is now paying out more than it takes in, so it certainly is in need of a fix. The trust fund is essentially meaningless since this deficit results in either more debt or higher taxes regardless. The most accurate measure for the CPI should be used, ignoring political considerations. - Dr Professor Tue, 18 Dec 2012 04:23:48 +0100 http://www.cepr.net/index.php/blogs/cepr-blog/thoughts-on-the-chained-cpi-social-security-and-the-budget#comment-20734 I agree with most everything you have said Dean. However, I do not agree that there is any scientific justification for adjusting the CPI down due to substituion bias. I have yet to find any valid scientific study which has established this. I would say the same thing about the hedonic adjustment and a switch to from an arithmetic mean (Laspereyes Index) to a geometric mean (Tornvquist). This move on Obama's part is nothing less than outrageous. - Dave Kingsley Tue, 18 Dec 2012 02:30:50 +0100 http://www.cepr.net/index.php/blogs/cepr-blog/thoughts-on-the-chained-cpi-social-security-and-the-budget#comment-20732 Obama is so disappointing. I only voted for him again this time because the alternative was pure evil. - Jonah Tue, 18 Dec 2012 01:35:37 +0100 http://www.cepr.net/index.php/blogs/cepr-blog/thoughts-on-the-chained-cpi-social-security-and-the-budget#comment-20728 I agree that the real story here is the fraud of bringing SS into this discussion, a fraud to which Obama will be a party. - David Mon, 17 Dec 2012 17:15:57 +0100 http://www.cepr.net/index.php/blogs/cepr-blog/thoughts-on-the-chained-cpi-social-security-and-the-budget#comment-20727 This is cutting for the sake of cutting. I think your point that Social Security by law can't contribute to the budget deficit is the biggest point, even more than the others. This is just a giant ruse on the American people. We have a budget problem (which we don't really, but that's another argument). So the fix? Cut the safety -- specifically the part that doesn't contribute to that deficit. What a scam. This is why rich people shouldn't be governing us. They cut programs that they don't need and don't particularly care about. Obama has multiple top selling books, he's a millionaire many times over, and he stands to make hundreds of millions giving speeches after he's done with his second term, a la Bill Clinton. So protecting money that is really important to people struggling to get by isn't his biggest priority. - Brett Mon, 17 Dec 2012 16:10:01 +0100