Once upon a time, American workers earned enough in wages to afford to purchase goods and services produced in America by American workers. Those days began to end in the 1980s. Americans began the long, slow decline in our standard of living by downsizing our expectations and our purchases, substituting cheaper goods where possible and borrowing against our paper assets in the stock market and our homes when we resisted downsizing. That is an example of chained wages, where wages do not keep up with the cost of living. Borrowing against our paper assets came to a screeching halt in 2007 at the beginning of the Great Recession.
Now some in Washington are advocating a chained CPI, a way to refigure and reduce the annual cost of living increase for retirees and other recipients of so-called “entitlements.” Using the rationale that less income will force Americans to further downsize our purchases, proponents of a chained CPI want us to substitute pet food for human food and later substitute no food for pet food. Instead of American made durable goods, we are expected to substitute Chinese made not-very durable goods retailed by big-box discounters. The current government calculated COLA adjustment to entitlement programs is totally inadequate. To reduce it further in order to save the 1% from paying additional taxes is a high crime and misdemeanor truly worthy of impeachment of any legislator who supports it.
- Andrea Coombes’ Ways and Means: What’s ahead for Social Security in 2013 (marketwatch.com)
- Everything you need to know about Chained CPI in one post (washingtonpost.com)