Last week, the Congressional Republicans and President Obama warned that if a new debt ceiling is not reached, veterans’ pay and Social Security pay would be threatened. In addition, President Obama and Republicans also proposed a new inflation index. The index would cut disability pay by $23 billion over 10 years.
Currently, the traditional Consumer Price Index (CPI) is said to increase with the rate of inflation. The new chained CPI is said to reduce payments during economic downturns to reflect spending during that period.
The theory rests on the assumption that consumers buy cheaper goods during hard times. Instead of buying Heinz 57, maybe you buy Generic Catsup. Since the consumer spends less money, they need less money. Therefore, if the consumer needs less money, then the amount of money they receive from Social Security of Veterans Disability should be less.
Now, there are obvious problems with this technique. The most blaring issue is my own question as to what the government will do with the money it was supposed to pay out to these individuals. Normally, people would spend the additional funds on goods within the economy. Instead, the government will take the leftovers and hand the money to whom? Perhaps Wall Street bankers and crony capitalists.
Aside from those, the government is clearly using slight of hand. Obama and the Republicans claimed the money would be a savings. However, it seems like they are stealing from the benefits promised to veterans and elderly Americans. After all, if the money is not paid out and instead saved, then someone gets less money on the other end. We, the people, will get less.
But we all know who will not miss out, our political marionettes and the puppet masters who run them.
Congressional Budget Office: “Using a Different Measure of Inflation for Indexing Federal Programs and the Tax Code.” Pg. 5.
NY Times: “Democrats Oppose Talk of Cuts to Social Security”