Chained CPI

Social Security Poster: old man

Social Security Poster: old man (Photo credit: Wikipedia)

My wife and I went grocery shopping today. Usually she shops alone since I am an impulse shopper. If I see it and want it, I put it in the shopping cart. Although retired, I can still afford an occasional steak, I just buy smaller ones and less often. While I was employed, I liked to buy from Pfaelzer Brothers or Omaha Steaks occasionally. No more. I enjoyed HoneyBaked Hams, but the local store has closed, and HoneyBaked by mail is too expensive because of the high cost of shipping. Although the Federal government has not yet imposed a chained CPI factor on our Social Security checks, I am already learning to live as if they had. Our local grocery has reduced the size of their hamburger patties from eight to seven ounces and kept the same price. When I can no longer afford meat I guess I’ll become a vegetarian, not by choice but by necessity. We started a small garden this year and plan to enlarge it next year. I suggested to my wife that we add chickens next year. We live on a third acre and our neighbors may not appreciate the rooster or the odors. Such is life in America in 2013.

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Chained wages

"Wake Up Walmart Campaign" requestin...

“Wake Up Walmart Campaign” requesting additional wages. (Photo credit: Wikipedia)

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.

Food up 20%

Child driving shopping cart in Japan

Image via Wikipedia

My method is not scientific, but it affects my family of two retired adults living on a fixed income. We shop carefully now, more so than in the past. However, a shopping cart of weekly groceries has gone from $100 in the recent past to $120 yesterday. Unless my simple arithmetic fails me, that is an increase of 20%, yet the CPI increase for Social Security for 2012 is only 3.6%. Something is wrong with the system of calculating the Cost of Living Index.