Do Unto Them What They Want To Do Unto You

Let’s Apply The chained-CPI concept of Raising Revenue to How We Pay Our Government Officials

Those least able are being asked to make a greater sacrifice than others who are able

Those least able are being asked to make a greater sacrifice than others who are able

Some of you who have been keeping up with budget talks, especially the so-called “fiscal cliff” arguments, may be aware of one of the measures being discussed to reduce the deficit.  It’s called the chained-CPI method of figuring cost of living raises (COLA) for, among other things, people who receive benefits from social safety net programs

Sophie Quinton’s article in the National Journal sums up nicely what the chained CPI is.

Here’s how the new metric would save money: Social Security, federal pensions, and military and veterans’ benefits are indexed to rise each year with inflation; so are tax brackets, exemptions, deductions, and credits. But experts say the consumer price index the government currently uses overstates how rising prices affect household spending.

The Bureau of Labor Statistics has come up with a more accurate measure, which accounts for consumers’ tendency to switch to cheaper categories of products when prices rise. Rather than looking at a fixed set of goods—as the standard formula does—the new measure looks at how the set of goods changes, and then “chains” two consecutive months of consumption data together.   

The chained CPI rises a little more slowly than the current measure. So if the chained CPI were used to calculate cost-of-living increases, it would mean smaller increases to Social Security checks each year. If the chained CPI were applied to the tax code, it would move taxpayers into higher tax brackets faster.   SOURCE

SSW_ChainedCPI_benefit-cut

There are at least ten things wrong with this method as Daniel Marans explains over at FDL news and they all impact the most vulnerable segments of our population, especially the elders on fixed incomes.  I know we are all expected to contribute our fair share to lowering the deficit, but as Lambert Strether notes, this is hardly a “fair share” for some of us.

A “sacrifice” where some give up luxuries and others give up necessities is in no way “shared.” A marginal sacrifice for the rich is not commensurate to core sacrifices for the rest of us. But the tropes of official Washington carefully brush this reality away.   SOURCE 

Let’s not forget either that it was the spending of drunken sailors in the GOP under Bush/Cheney, along with conservative Democrats that started putting us in the fiscal hole.  Spending that was aimed at benefitting wealthy corporations rather than those now being asked to saddle this undue burden on their source of income.  Now is not the time to hit the poorest amongst us with benefit cuts and especially on the backs of those Social Security beneficiaries whose source of benefits DO NOT contribute to the deficit.  Even the conservative’s darling, Ronald Reagan, pointed this out when he was President.

As much as those who continually and falsely shriek that the deficit is the biggest threat to our children’s future, there are ulterior motives behind this bogus pronouncement as Paul Krugman and others have duly noted:

Contrary to the way it’s often portrayed, the looming prospect of spending cuts and tax increases isn’t a fiscal crisis. It is, instead, a political crisis brought on by the G.O.P.’s attempt to take the economy hostage. And just to be clear, the danger for next year is not that the deficit will be too large but that it will be too small, and hence plunge America back into recession.   SOURCE 

The point of all this being that many of those who live off of our taxes rather handsomely seem too eager to reduce certain benefits that impact the poorest amongst us while leaving other areas alone, like the Defense budget.   Why voters keep sending some of these yokels back to Washington is the height of foolishness but that seems to be where we are at these days.   Voters appear ready to “throw the bums out” with the exception of their bum.

But most people would be in agreement I think if we started measuring “the bums” income by their performance and adjusting it accordingly.  Clearly our representatives would be inclined to perform their duties more fully if the people had a direct means of rating their performance and legislation was in place that allowed the IRS to deduct their wages based on their performance.  Likewise, their income would be raised based on how their constituents felt they were benefitting them as a whole.

MAYBE WE NEED TO CHANGE THIS?

MAYBE WE NEED TO CHANGE THIS?

Once a year people could vote on-line or by mail, registering their opinions on how effective they felt their representatives were performing.  A rating system on a scale of 1-10 could be devised and unless they scored anything better than a 6, their pay would either remain unchanged for scores of 4-6, and lowered incrementally with scores lower than 4.  The voters would be given the means to make their selections either on-line or by mail.  At the end of each year, when employers are handing out W-2’s, attached would be a form that scored their congressperson’s performance along with a pre-paid postage envelope.

Too many people never make it to the polls on election day because they feel their vote never makes an impact.  To a certain degree they are right.  But having this direct means of effecting their representative’s wages with very little effort or expense on their part would see many of these people coming out of the wood work to express their views.

There of course would be those political blocs trying to influence their assessments similar to what we already have in the form of non-profit entities that we get regularly inundated with from TV and radio ads, postal mailings, e-mails and social network sources.  The concern here is not unlike the one we currently face where the Citizens United court decision that allows unhealthy amounts of money to overwhelm the means by which we get information from.

stack-of-money pic

We may just have to trust that the electorate will make the call that best serves their needs.  Where there are those who may not like certain specifics on how their congressperson votes but are ideologically linked to them that prevents them from voting them out of office, they may be more inclined to use this more precise method of conveying their wishes while still supporting them in their elective status.

It’s time to reverse the worry element, where congressional and state legislative leaders need to lose sleep about their source of income being reduced rather than those of us they are supposed to fairly represent.  Polls routinely show strong support for social safety net programs, especially regarding Social Security benefits.   If this support gets expressed in how the income of our state and national representatives will be determined we just might find that the concept of democracy, that was intended when this union was formed over 225 years ago, will once again have its proper place in how we are governed.

one person one vote

BONUS Here’s a little quiz that asks, How much do you know about the ‘fiscal cliff’? 

 

RELATED ARTICLE:

Ruth Marcus: Let the Elderly Just Eat (Cheaper) Cake!

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9 responses to “Do Unto Them What They Want To Do Unto You

  1. When I read about the CPI, I was really discouraged that President Obama was considering it. It is patently unfair. Yes, the rich can do without their luxury items – or not. They don’t have to change their buying behavior all that much. I hate the CPI idea and hope it doesn’t gain ground. As far as performance reviews for our representatives, they – the Republicans at least – seem to be totally unaffected by their lousy approval rating in 2012. So, let’s dock their pay for every percentage point they drop. I love your idea. They all believe they’ve gone to DC to do the peoples’ work and what have WE got in return? Brinkmanship and disaster. We desperately need a new Republican party and if they plan to have a future at all, they ought to be seriously considering it.

    • “They all believe they’ve gone to DC to do the peoples’ work and what have WE got in return?”

      As Sherry noted below, the secure Republicans in their gerrymandered districts act as if they speak for the “American people” when in effect they are only speaking for the 60% or better that voted for them in their district.

      You would think they would know that this doesn’t represent the will of the majority who re-elected Obama and decreased the seats for the GOP in both the House and the Senate, but then again there always has been something delusional about these people.

  2. The problem is that the GOP doesn’t have to pay much attention to the electorate. They have been very busy over the last few years gaining control of state houses and from that they have gerrymandered the hell out of their states so that they have a firm control over the House. I just saw a recent article that said that overall the dems (regarding congressional seats,) won the day with like 1.3 million votes. They would have do win by 6% points in order to overcome the gerrymandering that leaves so many GOP seats in utter safety. This is a big problem as I see it in getting the idiot Tea people to budge. They come from districts that actually approve of what they are doing. Sigh,….we remain dysfunctional.

    • ” They would have do win by 6% points in order to overcome the gerrymandering that leaves so many GOP seats in utter safety.”

      This can change but it will take another generation or two for the voter base to change in those districts. Of course, it will have to reflect different values than what currently allows this constituency to keep their extreme right candidate in office.

  3. Personally, anything on FDL needs to be taken with serious grain of salt. They’re part of the “hair on fire” brigade. Chained CPI is not technically a “cut,” in that the base rate is actually going up. There’s a good analysis over at The People’s View.

    There has been discussion for years about modifying the methods used to calculate the CPI, because it uses figures for seniors that don’t match reality. Let’s also not forget that there were a couple of years recently when raises didn’t happen because the CPI didn’t budge.

    • Norbrook,

      Thanks for turning me on to Mr. Chakrabarti blog, “The People’s View”. It looks like something I would be interested in following. And though I might agree with both you and he that there are a zealous group of liberals out there that need to be taken with a “serious grain of salt”, I would take exception in this case to the article I utilized in my post from FDL. The points that the author made in this post are pretty objective and sited by other credible liberals in my view like Krugman, Dean Baker and Yves Smith over at her naked capitalism blog. In fact it was from Smith’s blog that I was directed to the FDL post of Daniel Marans.

      Let me correct a misperception here too you raise. Though I would agree with the assessment that the chained CPI’s results are in not in fact a true benefit cut based on how such benefits are initially assessed, it will in reality actually reduce those benefits payments each month over time for a large number of people who rely solely on SS benefits to pay their rent, utility bills, food and lastly but by no means least, medical expenses.

      It is this last expense where the chained CPI does the most harm to the poorest of the poor benefit recipients and as you and Mr. Chakrabarti have duly noted has an unequal impact on seniors compared to most other groups. The AARP, who was cited in the National Journal source I used, has a problem with the chained CPI being used on SS COLA’s. I think we can both agree that the AARP is hardly a “hair on fire” screamer and are in fact often the targets of such liberal screamers.

      In the NJ article it states the following: ““If you’re going to say that you’re doing this for the sake of accuracy, then let’s be fair,” said Cristina Martin Firvida, AARP’s director of government relations for economic security. Because health care costs are rising faster than inflation, and seniors spend a lot of money on health care, cost-of-living adjustments should reflect that, she said.

      AARP favors an experimental metric, the CPI-E, which attempts to calculate the spending habits of the elderly. The problem with that metric is that it wouldn’t do much to slow the growth rate of Social Security payments; in fact, it could actually make payments grow faster.”

      The fact that “it could actually make payments grow faster” is more a factor I believe with the continuing increases in health care costs and that is not something seniors in large part cannot control. However, having said that I think seniors, like most other people tend to allow the health care system do more for them than necessary and can assist in reducing overall health care costs by eating right and exercising. But I digress.

      The central point of my post regarding the chained-CPI was that in our attempts to reduce the deficit, which many economists believe is less important now than when our economy is more healthy, is that this idea of “fairness” where all parties should be willing to bite the bullet conceals that some contributions expected by the poorest of the poor are hardly fair in comparison to those whose reduced income and resources doesn’t threaten their ability to advantage the necessary health care they need like it does some others.

      Though not a factor in how social safety net benefits are originally determined, the chained-CPI hurts the poor in this country and where it does with those who depend solely on this money to sustain them, it disregards the fact that SS benefits DO NOT contribute to the deficit, which I believe is the primary reason that such a method is being considered in the first place. Keep in mind too that benefit payments will be further reduced as Medicare premiums, that are taken out of SS benefits, will increase over time.

      Again, thanks for the turn on to the “People’s View” blog. Chakrabarti appears to be, as I am, a fan of the Dean Baker’s website, Center for Budget and Policy Priorities as well as the Center for American Progress. I will definitely make it a part of my blog reading. I do appreciate also that though we tend to be on the same page with most issues that you are willing to challenge my position on this. But with all due respect, in this case we are going to have to agree to disagree.

      • A few points: First, and foremost, the chained CPI was not a part of the fiscal cliff bill which just passed. It was a proposal offered as part of the overall negotiations. What made the hysteria on the left pathetic was that they a) hadn’t any clue about what was or was not in the bill, were reacting to a proposal, and screaming doom prior to that. So yes, there were clouds of smoke from burning hair.

        Second, in the chained CPI proposal were mechanisms which would avoid the doom and gloom about the lower levels. What is being proposed is that the overall raises might be lower, so calling it “a cut” is incorrect.

        Third, while it doesn’t contribute to the nation’s deficit, Social Security does have a structural deficit. If there are not adjustments, and increased revenues – irregardless of whether the economy improves – then there will be a major cut in benefits. That’s about 2 decades from now, although it could be sooner.

        You’re also overlooking the impact of the ACA on Medicare. The overall growth in those is already declining rapidly, and I should point out that Medicare is a separate tax. You’re talking about Medicare supplemental plans, which also have cost reductions due to the ACA.

        The reason I said I take anything on FDL with a serious grain of salt is that I’ve watched them – their owner, bloggers, and commenters – for several years. They’re basically the liberal version of Free Republic.

      • “First, and foremost, the chained CPI was not a part of the fiscal cliff bill which just passed.”

        I knew that when I posted my piece. The fact that it would be a part of any future consideration in reducing the deficit was my main concern.

        “Second, in the chained CPI proposal were mechanisms which would avoid the doom and gloom about the lower levels. What is being proposed is that the overall raises might be lower, so calling it “a cut” is incorrect.”

        You’re engaging in semantics Norbrook. I think many on the “screaming left” are aware that it isn’t a true benefit cut but the bottom line is the same. It reduces necessary revenue needed for many of the elderly to cover rising health care costs. Calling it a benefit cut helps get the attention needed to address this potential threat to those who rely on these funds. Spank them if you must for sounding alarmists but give them some credit for making this an issue that needs to be part of the narrative as we move forward on deficit reduction.

        “Third, while it doesn’t contribute to the nation’s deficit, Social Security does have a structural deficit. If there are not adjustments, and increased revenues – irregardless of whether the economy improves – then there will be a major cut in benefits.”

        I agree totally but that seems irrelevant to the point I was making with the chained-CPI in determining COLAs. Making necessary adjustments to ensure future benefits is a separate matter of how those adjustments will still be impacted by lower benefit amounts.

        “The reason I said I take anything on FDL with a serious grain of salt is that I’ve watched them – their owner, bloggers, and commenters – for several years. They’re basically the liberal version of Free Republic.”

        Again, I don’t totally disagree with this view. I think if you review my posts you will see very little to nothing from such groups like this, including The Daily Kos and MoveOn.org. But the reaction that you seem to be expressing, as were many in the comments sections of Mr. Chakrabarti’s blog, seems itself over the top. There is, IMO, a clear distinction between the fringes on the left and those on the right. One side seems passionate about the concerns of society, especially the powerless, where the other tends to think more of the self and those on the high end of income earners they fantasize themselves becoming a part of.

        In politics there has to be give and take and those who you, and even I, are critical of, who seem to go to far, often disregard that. We can both agree that calm, rational approaches serve us all best, but it is the fringes that keep us on our toes to make sure we don’t wander off too much toward the center lest we cross a line that begins to forget how we are all in the same boat. Extremism can raise our consciousness without driving us beyond rational approaches.

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