Santa, please bring me the chained CPI!

TUESDAY, DECEMBER 18, 2012

The way we the peasants get governed: Is it possible that a budget deal is nearing completion?

Needless to say, no one knows. But Jonathan Weisman presented this outline in today’s New York Times:
WEISMAN (12/18/12): The two sides are now dickering over price, not philosophical differences, and the numbers are very close.

Mr. Boehner had offered the president a deficit framework that would raise $1 trillion over 10 years, with the details to be settled next year by Congress’s tax-writing committees and the Obama administration. In response, Mr. Obama reduced his proposal to $1.2 trillion from $1.4 trillion on Monday at a 45-minute meeting with the speaker at the White House. That was down from $1.6 trillion initially.The White House plan would permanently extend Bush-era tax cuts on household incomes below $400,000, meaning that only the top tax bracket, 35 percent, would increase to 39.6 percent. The current cutoff between the top rate and the next highest rate, 33 percent, is $388,350.

On spending, the two sides are also converging.

The White House says the president’s plan would cut spending by $1.22 trillion over 10 years, compared with $1.2 trillion in cuts from the Republicans’ initial offer. Of that, $800 billion is cuts to programs, and $122 billion comes from adopting a new measure of inflation that slows the growth of government benefits, especially Social Security. The White House is also counting on $290 billion in savings from lower interest costs on a reduced national debt.

Of the $800 billion in straight cuts, the president said half would come from federal health care programs; $200 billion from other so-called mandatory programs, like farm price supports, not subject to Congress’s annual spending bills; $100 billion from military spending; and $100 billion from domestic programs under Congress’s annual discretion.

To make all this happen, Mr. Obama proposed fast-track procedures to help Congressional tax writers overhaul the individual and corporate tax code and make changes to other programs.
If this is accurate, future Social Security benefits would get reduced due to the new measure of inflation.

Around the web, various people are forming their view of this general outline; for Paul Krugman’s take, just click here. We will simply offer a few thoughts about the way this possible deal has possibly been reached:

Whatever one may think of this possible deal, this is feudal governance. There aren’t three regular people in the country who have given a second’s thought to the idea of “switching from the regular CPI to the chained CPI.” Very few people have ever heard of the chained CPI.

An election season just came and went with no one ever asking Obama what he would accept, or refuse to accept, in a budget deal. The fiscal cliff was never mentioned in any presidential debate. In particular, Obama was never asked about the possibility of lowering future Social Security benefits through a switch to the chained CPI.

No one would have understood the question if it had been asked. Almost surely, that would include the "journalist" who asked it.

Within our major newspapers, there has been nothing resembling a real discussion of this admittedly complex possible deal. Our society doesn’t work like that. It would be astonishing to imagine the Washington Post or the New York Times conducting a real discussion of, let us say, the chained CPI and its effect on future Social Security benefits.

Our political culture is more feudal than that. At junctures like this, our leaders meet in “quiet rooms,” usually at 3 in the morning as some deadline looms. They spring their deal when the world is asleep.

Then they rush to vote.

As this happens, no one has the slightest idea what the new policies mean. Nor has any major news org made any real attempt to examine such topics.

Make no mistake—this is in part the doing of the liberal world. We liberals are now told that we have a liberal news channel. But there has been no real attempt on that One True Channel to thrash out these topics. Instead, we get handed various furies about cultural issues. Did you see Lawrence play all those (pathetic sad) race cards last week?

Yes, he actually said this:
O’DONNELL (12/13/12): Grover [Norquist] has controlled the Republicans in the House and Senate so long that he now thinks he is actually one of them. That is one desperate and delusional, highly delusional anti-tax fanatic.

NORQUIST (videotape): We, the Republicans in the House and Senate, will make him actually make those spending restraints in order to get the continuing the resolution out, a week, two weeks, a month. Obama will be on a very short leash, fiscally speaking, over the next four years.

O’DONNELL: Now, "very short leash" is a common phrase in this kind of situation. So I don’t want to think that Grover deliberately used that phrase to create the imagery of Barack Obama as a dog or a slave. But Grover actually specializes in deliberately vicious hate speech—hate speech against anyone who takes a responsible approach to financing the federal government.

And so I’m sorry to say that Grover is not above suspicious on that phrase about the short leash.
Lawrence didn’t want to think that Grover was using that phrase to picture Obama as a slave! But he just couldn't help himself.

(There was much more that night before Lawrence was done. In our view, O’Donnell comes close to being a very bad man.)

So it goes on The One True Channel as we liberals get thrilled and distracted. These thrills give us the false idea that a group of fiery liberals are looking out for our interests. On the larger stage, the shootings in Newtown only provide added cover for the negotiators as they move toward the possibility of reducing Social Security benefits. Whatever one thinks of the discussions which have emerged from the Newtown killings, they provide one more way to avoid discussing the future adjustments which may or may not emerge in a last-minute, hurried, un-discussed budget deal.

Everything is done this way within our political culture. We live in a very unintelligent political culture. But as long as we liberals keep getting our tribal gruel, we liberals don’t seem to notice.

Santa, how does the chained CPI really work? Children may find it in their stockings this year without anyone having asked!

One final point about the all-encompassing silence: We have been told, again and again, that everyone has to feel some pain as part of a budget settlement. Within your largest news orgs, have you seen anyone attempt to report the way the gains of the past twenty years have all gone to those at the top?

Have you seen any news divisions report the way tax burdens have shifted downward on the highest earners? No, you haven’t seen your big news orgs do that—and you never will.

By the way, did you ever see that type of reporting on The One True Channel? Not really! Instead, you were handed a very bad, very rich man talking about racist Grover.

This is the con game in which we all live. Question: Do the transient thrills about “short leashes” make up for the defeats?

13 comments:

  1. While I share Somerby's assessment that O'Donnell is a know-nothing blowhard, even a stopped clock is right twice a day. Norquist, Rove, and Abramoff (Remember him? Along with Grover and Karl, all present at the creation of the student conservative movement in the 80s) each have a lot to answer for given their fulsome embrace of the racist South African regime. Here's a link, but I recommend reading Thomas Frank's Wrecking Crew in its entirety if you want the whole sordid story.

    http://www.democracynow.org/2008/8/8/the_wrecking_crew_thomas_frank_on

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  2. I'm with Bob on O'Donnell. I saw that silliness about Norquist. I also saw that insane attack he made on Alan Grayson way back when he was just starting, and I never heard what that was all about. But I did stop watching for the most part.

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  3. I think Big Eddie goes into the disparity a lot. Agree with you about O'Donnell though

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  4. Because a change is being discussed, the word "reduced" sometimes means "increased, but not as much".

    E.g. "future Social Security benefits would get reduced due to the new measure of inflation" really means future SS recipients would continue to get annual increases, but these increases would be slightly smaller than under current law.

    And, "The White House is also counting on $290 billion in savings from lower interest costs on a reduced national debt" means the national debt would continue to increase at an alarming rate, but it would increase less than it would without this agreement.

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    1. Uh, no. A common misconception, but an error nonetheless. Social Security benefits may increase over time in nominal dollars, but not in inflation-adjusted dollars - that's the whole point of the CPI adjustment. Switching to "chained CPI" would mean that the real value of benefits would actually be reduced over time.

      To be clear: a switch to chained CPI is not a case of benefits being "increased, but not as much". Social Security benefits do not increase over time, in terms of purchasing power - which is all that matters when you're on a fixed income. If your Social Security payment buys you 30 days of rent and food when you're 65, it will still buy you (roughly) 30 days of rent and food when you're 70 or 80, under the current system. If we switch to chained CPI, then your benefit payment might only buy you 27 or 23 days of rent and food when you're 70 or 80 (the exact magnitude of the proposed cut is not yet known, but it's probably something on that order). That is a real reduction in benefits.

      -eb53

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    2. DinC: Because a change is being discussed, the word "reduced" sometimes means "increased, but not as much".



      It's unbelievable that you keep pulling this shit on this specific site, where I first read "Socrates Reads" over 15 years ago.

      ********************************************
      A remarkable anecdote casting light on this matter was included by humorist/commentator Al Franken in Rush Limbaugh is a Big Fat Idiot, a best-seller combining humor and satire with policy analysis and personal anecdote. Franken describes Gingrich's performance at Ross Perot's Dallas convention in August 1995, at which Gingrich delivered his standard presentation in a typically aggressive and personal matter. Gingrich, quoted by Franken:

      Now most of you probably do math well enough that you know if you're at 4800 here at you're at 6700 here, that's called an increase. Now I want to go real slow for a minute because we've got a lot of reporters who are listening...
      Now I don't want to be too negative, but you might even have one or two liberals who show up who claim that going from 4800 to 6700 is a cut. Now, this is not because they're bad people; this is an early sign of the educational dysfunction which has hit our society.

      By late 1995, this abusive tone—in support of an indefensible presentation—had become a trademark of the Speaker's appearances promoting the GOP plan.

      After the evening's session, Franken is luxuriating in a Hyatt lounge with CNN's Robert Novak, NewsHour correspondent Margaret Warner, and House Budget Committee chairman John Kasich (R-OH), a key member of the GOP leadership. In challenging Kasich on the Speaker's argument, Franken—a humorist—manages to display the technical competence which completely eluded the press corps all year. And this evokes a reaction so remarkable that I reprint the anecdote in full:

      At one point Novak was extolling Gingrich's "masterful" speech, and I objected, especially to the patronizing crap about the $4800 versus the $6700. So I turned to Kasich:
      "By the way, are those constant dollars?"
      Margaret jumped in. "Of course they're constant dollars. They wouldn't be that dishonest."
      "Sure they would," I said. Turning back to Kasich, "Are those constant dollars?"
      "Al..." Kasich's voice has a touch of annoyance, "we're increasing funding for Medicare."
      "But the $4800 to $6700, has that been adjusted for inflation?"
      "Al, the dollars are going up."
      "I just want to know if those are constant dollars."
      "Al, we're going from 178 billion [total Medicare budget in 1995] to 283 billion [total Medicare budget in 2002]." Kasich gave the others an exasperated look. When will this guy stop?
      "Look. Gingrich is going like, 'Hey, you're a fucking moron if you can't see that 6700 is more than 4800.' I just want to know how big a moron am I. Are those constant dollars?"
      A pause. Then. "No, Al, they're not constant dollars."
      Kasich slumped in his chair and admitted, "I guess we're being a little intellectually dishonest about this one." And I took a few victory laps around the table.
      Margaret was slightly embarrassed and begged me not to repeat the part about her assuming it was constant dollars. I knew she was kidding, however. She's a terrific journalist and she knows a good story.
      http://www.dailyhowler.com/socrates/soc_frame.html

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    3. eb, I was using words in their normal sense. Suppose you were earning $100,000/year and got a raise of $1000. Would you run home and tell your loved ones that you just got a salary cut of $1000? That would be true, in terms of spending power, since inflation is around 2%. But it's not what the words mean.

      And, when I get more SS money next year than I got last year, I'll call that an increase, whether or not it keeps up with various measures of inflation.

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    4. Even if SS benefits did not decrease in real-money terms, they are held static with respect to any real expansion of the economy and overall improvement in standard of living. At best retirees are frozen into the standard of living when the benefit level was last set by Congress.

      Benefits should be indexed to the time-averaged nominal GDP. Or at least this should be the starting point for negotiations, not constant real money.

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    5. Attention class, I will now present today's short lesson in Why DavidInCA Is A Scumbag.

      What people who will retire in some years would like to know:

      ** Will Social Security provide as much value to me as it does to retirees today? **

      What people who will retire in some years couldn't give a sh!t about:

      ** Will I receive the exact same number of dollars as retirees do today? **

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    6. DinC, is there no limit to your mendacity? I use the word advisedly, since you clearly DO know what the facts are -- taking, as you do, a great deal of trouble to obscure them, for reasons unknown (are you paid to do this? are your activities in the service of an unacknowledged agenda)?

      Let's take your example. I might or might not run home to announce that my $1000 increase isn't really an increase, because it won't keep up with inflation.

      But if the discussion specifically concerned, as it does here, reducing SS benefits, and the way those benefits are adjusted every year for inflation, I certainly WOULD refer to any reduction in benefits as a "cut", relative to what I would receive had that adjustment not taken place. In the same way, for example, that "conservatives" refer to the expiration of the Bush tax cuts are an "tax increase", despite the fact that the program was sold to the public on precisely that feature -- that the tax cut was temporary, and would expire.

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    7. Now, a lesson in using words in their normal sense.

      If current SS law provides some level of expected benefit and that benefit will be *lower* under some proposed change, the normal way to explain that is as a *reduction* in benefits.

      Deceitful scumbags notwithstanding.

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    8. David in Cal: without getting into the weeds, I'll just note that using words in their normal sense may be quite misleading under some circumstances. Specifically, when discussing economics, simply comparing a dollar today to a dollar tomorrow can be profoundly misleading - precisely because most people take your comparison in the "normal sense", but the number of dollars is not in and of itself the issue at hand - it's what you can buy with them that matters.

      To work with your example, if I get a 1% raise and my rent goes up 2%, I might have to run home and tell my loved ones that I got a raise, but it's not enough to keep up with inflation (as reflected in our rent) so we're going to be evicted next month. Your depiction omits the second clause. I think it's a significant omission.

      -eb53

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  5. Yay! I'm so happy that I may get a .5% raise in April 2013. After all, my salary will be rising. If I can just get half a percent every year, it won't be too long until I'm rich.

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