PORT WASHINGTON, N.Y. (MarketWatch) — Along with the Republicans and the Federal Reserve, you may be able to add President Obama to the list of those who don’t give a hoot about seniors.
In his new budget, the president appears to be heading in the same direction. He wants to reduce Social Security benefits at a time when, if anything, seniors need an increase.
His idea of cutting these benefits is a sop to the Republicans. The chief executive evidently hopes that they will accept another round of tax increases in order to lower Washington’s budget deficit going forward.
This gambit is misguided, unfair and may also be illegal. It makes it seem that the president either doesn’t know or doesn’t care about the needs of our senior citizens.
As everyone must know by now, Obama wants to change the price index used to calculate the annual rise in seniors’ cost of living. He wants to switch from the consumer price index (CPI), to something called the chained CPI.
The current CPI measures the cost of a fixed market basket of goods and services purchased regularly by a typical working household. By contrast, the chained CPI alters the weights of the items in the index to reflect changes in consumers’ buying patterns as relative prices change.
For example, if the price of meat goes up one month and the price of fish goes down, people will buy less meat and more fish. This means that their cost of living will go up more slowly, and thus their cost of living a
But as far as seniors are concerned, the current COLA does not begin to cover the rise in their cost of living. This is because once someone retires, their expenses as a percentage of household income change.
Retirees buy fewer cars, houses and electronics — the prices of which are steady to falling — than do their younger, employed counterparts. On the other hand, they spend more on health care, food, energy and local taxes, for which prices, guess what, are actually rising faster than the current CPI.
STW - This is quite interesting isn't it? The basis for chained CPI is that consumers react to increased prices in one item by substituting another product - makes real world sense. Of course with health care there isn't quite the same flexibility, but under Obamacare that shouldn't have mattered since the key rationale for the program was lower costs.
Did the Libs buy a false premeise and a classic "bait and switch?"