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Richard (RJ) Eskow
Published: Thursday 13 December 2012
The “chained CPI” is opposed by the young and the old, the left and the right. So who’s the constituency for this thing, anyway?

Dear “Chained-CPI”: When You’ve Lost the VFW, You’ve Lost America

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The “chained CPI” is an attempt to camouflage deep cuts to Social Security and other benefits, along with tax hikes on middle class wages (but not for high incomes), in a forest of numbers and terminology.

Know who’s expert at camouflage? Veterans. And a whole lot of their organizations hate the “chained CPI.”

Sneaky … But Simple

The headline for Derek Thompson’s Atlantic piece calls the “chained CPI” “the sneaky, complicated idea that could end the fiscal cliff showdown.” There’s ongoing chatter that both parties might use it to solve their budget impasse, in large part because they think it’s too complex and wonkish for voters to grasp.

But while it is sneaky, it’s not that complicated. In fact, the “chained CPI” concept can be explained in one sentence: It calculates cost-of-living increases much more slowly than before, by subtracting the cost of the things you can’t afford to buy anymore.

See? I did it in 22 words and 113 characters – short enough to tweet.  I’ll bet you understood it even if you hadn’t heard of it before. And not only understood it, but sensed its implications: As a financially-strapped public downgrades from fresh food to canned food … to cat food … their benefits will keep plunging along with their way of life.

And yet hope springs eternal among policymakers. Last year the President even said that “most folks would hardly notice” if this cut to the government’s cost-of-living adjustment was enacted. Guess what:  The nation’s veterans noticed.

Standing Up

A wide range of organizations representing the nation’s veterans signed a joint letter to leaders in Congress which said “we are writing to express our opposition to changing the formula used to calculate the annual cost of living adjustment (COLA) because of the harmful effects it will have on veterans and Social Security benefits.”

The organizations signing on to the letter (17 in all) spanned generations, with the Vietnam Veterans of America and Iraq and Afghanistan Veterans of America. It includes former enlisted personnel as well as the Military Officers Association of America. Gold Star Wives, an organization of widows and widowers whose spouses died while on active duty, was represented. And so was the VFW, or Veterans of Foreign Wars, an organization that had traditionally been staunchly conservative.

Here’s a thought for politicians who might be considering the “chained CPI”: When you’ve lost the VFW, you’ve lost America.

Getting It Right

Their letter’s a cogent and very well-written analysis of this proposed benefit cut, which it rightly describes as a “misguided policy.”  Here’s a sample:

The average retirement benefit of a veteran receiving Social Security was about $15,500 in 2010 … A veteran with average earnings retiring at age 65 would get nearly a $600 benefit cut at age 75, and a $1,000 cut at age 85. By age 95, when Social Security benefits are probably needed the most, that veteran would face a cut of $1,400 – a reduction of 9.2 percent.

That’s absolutely correct. The chained-CPI would also raises taxes for most Americans, and in a very backhanded way: by forcing people into higher tax brackets much more quickly. Know what wouldn’t get a tax hike under the chained CPI?  Income above $250,000.

The veterans’ groups also quote Congressional Budget Office estimates of the chained CPI’s deficit impact: $208 billion over ten years through cuts to Social Security benefits, and through higher taxes – on everybody but the wealthy. (They’d pay a little more, but the tax hikes would strike hardest at those in the $30-$40,000 income range, and would generally affect those earning $100,000 per year of less.)

The veterans note that roughly half this amount, $112 billion, “would come from Social Security cuts, which veterans rely on very heavily for both retirement and disability benefits.”

“Another 11 percent of the savings,” the letter notes, “would come from VA benefits, civilian pensions, and military retirement pay.”

Eldernet

$208 billion also happens to be very close to my estimate of the amount our government will pay pharmaceutical companies for their bloated profit margins over the next ten years. We could probably save $150 billion of that through negotiation and competition among drug providers – but Congress has forced us to pay retail instead.

Think the elderly “won’t notice”? Older Americans’ viral email chains are dazzling to behold.  Once you get past all the crazy fonts in different sizes and colors – and the GIF cartoon animations of cute animals and oldsters playing golf – these emails keep them well informed about Social Security and Medicare. And they don’t need emails to tell them that their current cost-of-living adjustments can’t keep up with their expenses.

(That’s why economists have proposed the “CPI-E,” a higher adjustment for the elderly and disabled who rely on items like medical care and transportation, which go up in cost more quickly than most other items.)

Attention Must Be Paid

Let’s get this straight: The “chained CPI” takes money out of the pockets of veterans, the disabled, the elderly and everybody with a job – except the wealthiest of the wealthy. And we could get the money from Big Pharma and other health profiteers instead.

The “chained CPI” is opposed by the young and the old, the left and the right. So who’s the constituency for this thing, anyway?

Silly question.

The polls are clear: Our elected officials were called to Washington for a different mission. Any politician who thinks they can infuriate pretty much the entire electorate because they’ll have billionaire cash on their side just isn’t paying attention.

The good news is that our nation’s veterans have a lot of experience bringing recalcitrant recruits to attention.



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ABOUT Richard (RJ) Eskow

Richard (RJ) Eskow is a well-known blogger and writer, a former Wall Street executive, an experienced consultant, and a former musician. He has experience in health insurance and economics, occupational health, benefits, risk management, finance, and information technology.

In response to a petition I

In response to a petition I signed, my Senator, Dianne Feinstein explains to me the "benefits" of a "Chained-CPI" and how it will "save" Social Security over "112 billion" dollars during the next ten years. She goes to say that "government" will be "restricted" from using these "savings" for any other purpose. lol The author of this piece asks, "so who's the constituency for this thing, anyway?" My "Democratic" Senator...for one.

When you can't afford

When you can't afford hamburger, share the dog's Alpo. When you can't afford Alpo, eat the dog. Once the dog is gone, well, there are always rats roaming around garbage cans. Chained-CPI in a nutshell.

I think it is an abomination

I think it is an abomination for the hypocritical, ignorant, deceptive, poor leaders, in Washington to consider making the already badly constructed COLA calculation even worse.

How is it possible that a zero increase was calculated for two years during which time rent, food, utilities, medicine, and gasoline all increased dramatically?

I don't know about other people but those are pretty much my basic costs of living and when they go up and I don't get a cost of living increase, I have to wonder what idiot is doing the calculations!

I agree with PBillP65. Email this article to Obama, your senators and your representative. Also email it to the news anchors on your local and national news channels and ask them why they aren't covering this. Professional journalists are ethically bound to inform the public of the truth. If all they are doing is repeating talking points about manufactured crises like the "fiscal cliff" they are not journalists, they are nothing more than shills for politicians and corporations. Tell them that often enough and maybe they'll get the idea that it doesn't fly anymore!

dr DIAS's picture

"REPUBLICANS = INSANITY, not

"REPUBLICANS = INSANITY, not human values!"

Where is Robin Hood for the Middle Class, the Veterans, the Underprivileged, and the Poor?

Yes , pray to god as these criminal career Politicians steal you blind, by forcing those to choose between their prescription drugs to stay alive or starve by malnutrition to live on the streets without heat, shelter, or food. Some choice for those who have worked all their lives just to be told god will save and protect you! Where was god when Sandy destroyed over 100,00 homes, where was god when Katrina wipe out New Orleans? Where was god when 55,000 died and 75o0,00 wounded came back from Vietnam!
Yes, prey to god that these criminal career Politicians leave enough food, water, shelter and medical supplies so you can die in some sort of dignity! Yea, that will happen!

Solution is simple. Email a

Solution is simple. Email a copy of this story to your Congress person, two Senators and the President at the White House. Follow up with phone calls to tell them you are watching, you do understand the implications and you won't be voting for anyone, no matter what the party, who votes for these sort of changes.
I have. Have you?

Yes correct, except their

Yes correct, except their God's name is Satan, he is the God of this world. Babylon is his system.

"Any politician who thinks

"Any politician who thinks who think they caninfuriate the entire electorate because they will have billionaire cash on their side just isn't paying attention". This statement say it all. The republicans are definitely of this mindset and democrats straddle the line. Politicians like Clinton and Obama have been able to pay a skillful game of talking liberal/progressive but governing in the interest of the banksters.

Everyone knows the reason God

Everyone knows the reason God put poor people on this Earth is so that rich people would have someone to stand on the backs of. It's God's will that the poor should carry the burden and cover the tab for the rich.
The chained-cpi is our way of keeping God happy so that he'll let us keep on being the allmighty and powerful ruler of the world because if we didn't burden the poor with taxes and poverty, the rich wouldn't be as rich because God would be mad at them and then the rich couldn't go around expoiting other poor folk to make God even happier.
Keeping people downtrodden is why God said "Let there be Money!" in the first place. It's just a downhill spiral from God's graces if you don't take from the poor and give to the rich.
I hope this explains the neccessity for inequity. God is telling them to do it or else no more allmightyness for them.
No Doubt Hobama and friends are in the $250,000 and above tax bracket. Which is the dividing line between heaven and hell. Above 250k: God's Love. Below 250k: Satan's torment.
Elitist Socialism has given us a concrete here on Earth way of knowing who God does and doesn't love. Do you think commienism could have done that? I don't think so.

Now I understand and will bow

Now I understand and will bow down to the royal rich!

That's pretty funny,

That's pretty funny, actually, and sad that so many think that their material success is God's will. Well, it's sad people still believe in 'gods' in the first place. It reminds me of Star Gate--lol.

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