Dean Baker: The Washington Consensus Wants To Cut Social Security Benefits With A Chained CPI

[Yo_Mama]

36. Some of the data behind the article

CPI-U index:
http://www.bls.gov/news.release/cpi.t01.htm

CPI-W index (this is currently used to figure SS COLAs):
http://www.bls.gov/news.release/cpi.t04.htm

C-CPI-U index (the chained index proposed for use for SS COLAs):
http://www.bls.gov/news.release/cpi.t07.htm

The current annual changes:
CPI-U: 2.9
CPI-W: 3.1
C-CPI-U: 2.6

Obviously this will leave many SS recipients in dire straits over time. I heartily second Baker's opinions - this has been widely suggested and keeps popping up.

Because many social security recipients are living on a small income, more of their total incomes goes to basics such as food and medicine.

The current annual changes for food at home:
CPI-U: 4.5
CPI-W: 4.6
C-CPI-U: 4.4

If DU'rs are wondering why CPI-U and CPI-W are different, when they use the same methodology, they are constructed using a sample of consumers with different incomes. The consumers with lower incomes are used for CPI-W. When you take a sample of consumers with lower incomes, they spend more on things like food and energy, so the weighting for inflation components is different.

Weighting for food:
CPI-U: 15.256
CPI-W: 15.940
C-CPI-U: 15.084

I think what I have given here is proof enough that adjusting the incomes of persons living on 1K a month using C-CPI-U would basically be a cruel fraud.