Because of the way that Washington does its numbers, Social Security recipients haven’t had a cost-of-living-adjustment (COLA) increase since fiscal 2009. And according to new projections, they probably won’t get one next fiscal year either.
The reason? Experts now predict a very modest yearly CPI increase of 1.2 percent for fiscal 2011, on which the following year’s COLA is based. And even this modest increase will be wiped out by an expected increase in monthly Medicare premiums that are automatically deducted from a Social Security check.
What I find so interesting (and disturbing) here is the way this projected COLA, which offers no needed refreshment to the tens of millions of elderly and disabled Americans for whom Social Security is the prime source of income, so neatly dovetails with the Tea Party agenda now taking over Washington. An agenda that involves going strongly after entitlements.
Though not all entitlements, of course. Not the entitlement of the well-to-do to retain their lower Bush-era income tax rates. Not the entitlement of Wall Street stock churners to be free of a Tobin Tax, a tax on economically meaningless transactions that would hit no one seriously but themselves. And certainly not the entitlement of corporations like GE to enjoy business tax breaks so outrageous that the company paid no tax at all on billions in profits last year. Entitlements such as these are still sacrosanct in Washington.
Its those nasty Social Security entitlements that the Washington crowd is now focused on chipping away. Their problem in this regard, however, is that they can’t stiff present and soon-to-receive Social Security beneficiaries directly because that’s still too politically dangerous. So the stiffing of these recipients takes the form of not giving them cost-of-living adjustment increases, the effect being when real world inflation is factored in, to reduce their benefits.
How is this stiffing managed? First note the 1.2 percent CPI increase now projected for all of 2011. During the last three months the CPI has actually risen at better than a 5 percent annual rate, and a fair number of structural trends make it seem inevitable that a 1.2 percent projected annual CPI rise is far too low.
For the Washington gamers this reality is largely irrelevant. The way CPI is computed has been so rigged over the years that no matter how much more it actually costs most people to live, the CPI will come in looking modest. And even if that rigging doesn’t do the job alone, enough extra can be extracted from Social Security checks via higher Medicare deductions to ensure the net income of these checks stays the same. (It can’t be lowered; they haven’t changed the law yet to allow that to happen.)
This post, of course, is just another leftist whine. Because who but a lefty could possibly care about the well-being of the elderly and disabled as long as the transcendentally more vital and deserving interests of the well-to-do, the volume traders on The Street, and the bonus babies at GE, are being preserved so diligently?
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