No. of Recommendations: 28
It appears that everyone that is currently receiving Social Security benefits will be a loser in the fiscal cliff agreement. It is being widely reported that SS will change from the current inflation measure CPI-U to "chained CPI." The net effect will be about a 0.3% lower inflation rate used to calculate the yearly increase in SS benefits.

If you think that the current CPI is already understated, this is NOT good news. This is being labelled as a "spending cut" by both sides.

Washington has been trying to convert over to the chained CPI for several decades. The main difference is how much "substitution" is used in the calculation. The theory is that as one item gets more expensive, consumers will switch to an alternate item. The most common illustration is going from steak to chicken. The current CPI-U already allows for some substitution, aka hedonics, so I am not sure how they decided on using more.

Details:

http://www.govexec.com/pay-benefits/2012/12/gop-fiscal-cliff...
Print the post Back To Top
No. of Recommendations: 6
...as one item gets more expensive, consumers will switch to an alternate item. The most common illustration is going from steak to chicken...

Wonder what is the next cheaper item they will switch to when seniors discover that the price of Cat Food has become too expensive?

Just sayin'

;-)
Print the post Back To Top
No. of Recommendations: 3
Wonder what is the next cheaper item they will switch to when seniors discover that the price of Cat Food has become too expensive?

Dog person

I was shopping for cat food last week and noticed that the 'tuna' cat food was 69 cents a can but she wastes a lot of it. Real tuna that she snarfs down was on special at 79 cents a can but the kicker is that cat food has a 15% sales tax while human food doesn't. In truth we have mostly always bought the human food tuna for her (it doesn't stink up the fridge) but I found the math interesting.


Any <almost never eats tuna himself> mouse
Print the post Back To Top
No. of Recommendations: 24
Is every possible avenue for cutting spending going to be attacked because someone will be worse off?

Peter
Print the post Back To Top
No. of Recommendations: 1
...the 'tuna' cat food was 69 cents a can... Real tuna was on special at 79 cents a can but the kicker is that cat food has a 15% sales tax while human food doesn't.

She's a lucky cat... or not.

Perhaps the discounted "real" tuna was caught off the US West Coast, down current from Fukushima.

Not to worry, though. Forbes ran a story that says the Fukushima-irradiated Pacific tuna is not dangerous to humans. Of course, the article didn't say anything about whether it was safe for cats.

http://www.forbes.com/sites/monteburke/2012/05/31/could-the-...

;-)

P.S. Sometimes I think the cat eats more than my DW or I. She never tires of reminding me she's hungry - the cat, that is.
Print the post Back To Top
No. of Recommendations: 3
Is every possible avenue for cutting spending going to be attacked because someone will be worse off?

Peter



What a silly question, of course they are... especially if you go after the old people who have nothing better to do on election day then to stand in line and boot someone's butt out of office?

We won't get into the gutless politicians discussion again will we? In truth ours have it a bit easier as they can hide behind the party discipline thingy.


Any <the internet and news reporters have made democracy so much more difficult> mouse


http://ca.news.yahoo.com/blogs/canada-politics/rob-anders-wi...

Rob Anders wins ‘least valuable politician’ distinction in annual Hill Times survey

.By Andy Radia | Canada Politics – 19 hours ago.

And, not surprisingly, Alberta MP Rob Anders was voted as the least valuable politician.

In terms of Canadian political gaffes in 2012, it's Anders and Toronto mayor Rob Ford 1 and 1A.

This year, Anders gained notoriety for falling asleep at a meeting about homeless soldiers, for telling a reporter that Thomas Mulcair helped to hasten Jack Layton's death, and for suggesting that the goal of a transgender rights bill was to give transgender-ed men access to women's public washroom facilities.
Print the post Back To Top
No. of Recommendations: 10
the goal of a transgender rights bill was to give transgender-ed men access to women's public washroom facilities.

That doesn't make any sense at all. The women's facilities always have longer lines.

Peter
Print the post Back To Top
No. of Recommendations: 0
That doesn't make any sense at all. The women's facilities always have longer lines.

Peter



Absolutely, which is probably why he won the "least valuable politician" award?


Any <Women will never rule the world until they learn to stand up> mouse

http://www.youtube.com/watch?v=8eplARuQmfQ



Question: Are we sufficiently in the weeds on this one?
Print the post Back To Top
No. of Recommendations: 4
It appears that everyone that is currently receiving Social Security benefits will be a loser in the fiscal cliff agreement.


yoda

One of our rather famous Prime Ministers (well OK he wasn't that famous but he lasted ten years in the position and happened to be PM when Paul Martin was Minister of Finance) once said in a speech that if you wanted to get the economy moving find ways to give money to the poor. "Rich people just save it, poor people spend it right away".

Just a thought but maybe that would work better than handing it out to the banksters who blew up the system in the first place?


**** absolutely not signed ****

http://en.wikipedia.org/wiki/Jean_Chr%C3%A9tien
Print the post Back To Top
No. of Recommendations: 0
The theory is that as one item gets more expensive, consumers will switch to an alternate item. The most common illustration is going from steak to chicken

The problem is that once you've switched to chicken, you can't keep switching to chicken, but that is how they figure it.
Print the post Back To Top
No. of Recommendations: 2
Wonder what is the next cheaper item they will switch to when seniors discover that the price of Cat Food has become too expensive?

Cat.
Print the post Back To Top
No. of Recommendations: 0
I never realized what a huge impact Social Security had on the nation's deficit.....


Jim
Print the post Back To Top
No. of Recommendations: 5
Is every possible avenue for cutting spending going to be attacked because someone will be worse off?

Probably.

I heard about this originally on NPR several days ago. Evidently the effect will take a while to be noticed. If you can imagine a graph showing the projections for CPI and chained CPI, the lines diverge slowly. After several years they are moderately far apart, but initially it's only very slight. If it more accurately reflects the true effects of inflation I would debate whether or not folks are actually "worse off" as a result.

However, I am coming to the conclusion that spending cuts in general are a bad idea. Some exceptions, of course. But it takes money to run a sophisticated modern society and to provide the services and benefits that society demands. If we cut spending we lose those services and benefits, which often is intolerable. The answer appears to be that we simply must raise revenue so the expected/demanded services can be provided. People should not be focusing on the taxes themselves, but rather what they are getting for their money (e.g. healthcare, parks, bridges that don't fall down, safe food supply, etc). Cutting spending impacts some or all of those things.

1poorguy
Print the post Back To Top
No. of Recommendations: 0
Doesn't dog food cost more than Spam?

**** Not Signed ****
Print the post Back To Top
No. of Recommendations: 0
Doesn't dog food cost more than Spam?


Only if you don't count the medical costs of a dog bite?


**** Not Signed ****
Print the post Back To Top
No. of Recommendations: 2
I never realized what a huge impact Social Security had on the nation's deficit

They've been using its surpluses for years to hide how far out of balance the budget has actually been.

The same old "borrow against the future" scheme, by treating it like a "pay as you go" plan. Which works fine when you're in a growth period and you do have more coming in than going out. But it means there's no money left to cover everyone when more needs to be going out than coming in.

It's why insurance companies are required to justify their reserves.
Print the post Back To Top
No. of Recommendations: 2
And why we in the middle have been taxed above the pay as you go rate to build up a supposed surplus. While the wealthy have many many many untaxed dollars. The mistake was assuming perpetual growth. That is a mistake economists have been trained to make, and it is as dumb now as it was then. Dumber perhaps as we've more experience with its failures.

(sorry about the inadvertent pre-post)

BJ
Print the post Back To Top
No. of Recommendations: 3
I never realized what a huge impact Social Security had on the nation's deficit.....

Jim, 15% of your paycheck (1/2 that you saw deducted + the 1/2 your employer could have paid you but had to give to the government) didn't get spent by you. It was supposedly put into the Social Security Fund.

But our politicians, in their infinite wisdom, raided the fund to pay for pet projects leaving behind IOU's.

Now your retirement funds have all been spent and the IOU's are coming due. Of course the politicians want to borrow the money to pay the IOU's too.

Desert (borrowing to pay interest) Dave
Print the post Back To Top
No. of Recommendations: 1
Wonder what is the next cheaper item they will switch to when seniors discover that the price of Cat Food has become too expensive?

Did that ever actually happen?

I tried checking Snopes once without success.

I figured no one would eat cat food while beans are $2 a pound.
Print the post Back To Top
No. of Recommendations: 1
But our politicians, in their infinite wisdom, raided the fund to pay for pet projects leaving behind IOU's.

Sounds like what the idiots Harry and Lloyd do in the movie Dumb and Dumber when they had a suitcase to return that had a million dollars in it...
Print the post Back To Top
No. of Recommendations: 0
Print the post Back To Top
No. of Recommendations: 0
Lots of political news sources cover this sort of event; not sure why its germane to this forum. Then again that also goes for every other METAR post on best-of today, so you're at least in good company.
Print the post Back To Top
No. of Recommendations: 4
Is every possible avenue for cutting spending going to be attacked because someone will be worse off?

I thought "cost of living" meant, you know, "cost of living."

I didn't realize it meant "lower standard of living, every year." So if I start out with steak and then "substitute" with chicken, does that mean that a few years later I substitute again, and again, and then again, at what point am I ending up with Alpo?
Print the post Back To Top
No. of Recommendations: 1
PeterRabit says

Is every possible avenue for cutting spending going to be attacked because someone will be worse off?

What do you think?
Print the post Back To Top
No. of Recommendations: 3
cf What do you think?

I have this silly idea that we will realize that we have all been living beyond our means and agree to make some changes. In a perfect world the pain of the changes will be spread as widely as possible.

In the worst case we will all have more wealth than 99% of all the humans who have ever lived. We should be able to fashion interesting and comfortable lives if we work diligently.

Peter
Print the post Back To Top
No. of Recommendations: 1
I didn't realize it meant "lower standard of living, every year." So if I start out with steak and then "substitute" with chicken, does that mean that a few years later I substitute again, and again, and then again, at what point am I ending up with Alpo?

"Lower standard of living, every year" is exactly what is meant.

I don't mind substituting Beans & Rice, but I'd probably not enjoy meat by-products like Alpo or some other pet foods.

What do you "trade down to" if Beans & Rice becomes too expensive?

:-|
Print the post Back To Top
No. of Recommendations: 3
Peter says

I have this silly idea that we will realize that we have all been living beyond our means and agree to make some changes. In a perfect world the pain of the changes will be spread as widely as possible.

You are an optimist. I wouldn't call it silly.


In the worst case we will all have more wealth than 99% of all the humans who have ever lived. We should be able to fashion interesting and comfortable lives if we work diligently.

I heartily agree. I think it would be great if every American went to Mexico City for a good close-up look at the slums there, and then had it pointed out that Mexico is a rich country.
Print the post Back To Top
No. of Recommendations: 3
Jim, 15% of your paycheck (1/2 that you saw deducted + the 1/2 your employer could have paid you but had to give to the government) didn't get spent by you. It was supposedly put into the Social Security Fund.

Has anyone with a lick of sense agreed on a salary thinking they take home their gross?

And, funny enough, it does get spent - by retirees, which you will be one day. Unless you keep working and refuse your SS check.
Print the post Back To Top
No. of Recommendations: 2
The average couple that postpones taking their SS to age 70 will receive about $1.2 million over their life expectancy - using today's dollars.

Are you really trying to say that if they instead get $1,150,000 that they will have to eat dog food?
Print the post Back To Top
No. of Recommendations: 0
...as one item gets more expensive, consumers will switch to an alternate item. The most common illustration is going from steak to chicken...

The theory is sound but has limits.

In many cases, a product that is directly comparable to what you would have bought five or ten years ago is *not available* - it has fallen off the low end of the market or of what regulations allow.

And of course it doesn't apply well to people who were already straining to afford the cheap alternative.
Print the post Back To Top
No. of Recommendations: 0
Is every possible avenue for cutting spending going to be attacked because someone will be worse off?

You have to ask?
Print the post Back To Top
No. of Recommendations: 0
The theory is that as one item gets more expensive, consumers will switch to an alternate item. The most common illustration is going from steak to chicken

The problem is that once you've switched to chicken, you can't keep switching to chicken, but that is how they figure it.


Just switch to...

(wait for it...)

Rat meat!

Oh wait, that won't work.
Rat meat costs four times more than chicken or pork and twice that of beef

On the other hand if they know how to tan hides they could have their fur coats and eat them too.
She is fattening them up with bamboo to be eaten or [and] turned into fur coats

Read more: http://www.dailymail.co.uk/news/article-2250607/Rodents-fat-...
Print the post Back To Top
Advertisement