Monday, April 18, 2011

Cost-of-Living Sham

Why does Congress even have to vote to NOT receive their annual COLA (cost-of-living adjustment) in their $174,000-a-year annual salaries, if their wasn't any increase in the cost of living?

A cost-of-living index is a theoretical price index that measures relative cost of living over time. It is an index that measures the differences in the price of goods and services - and allows for substitutions to other items as prices change. But isn't comparing the price of TVs to the cost of electricity like apples to oranges?

Employment contracts, pension benefits, and government "entitlements" such as Congressional salaries and Social Security benefits can be tied to a cost-of-living index, typically to the Consumer Price Index (CPI). A Cost of Living Allowance (COLA) adjusts salaries based on changes in the cost-of-living index. Salaries are typically adjusted annually.

For the last 3 years during the Great Recession America's seniors and the disabled got nada, zip, nothing. Those who rely on Social Security have not seen any increases in their paychecks for 2009, 2010, and 2011. Several important parameters affect all Social Security programs. They determine these parameters every year by the cost-of-living adjustment and the national average wage index (The national average wage index for 2009 is $40,711.61. The index is 1.51 percent lower than the index for 2008).

The U.S. Department of Labor's Bureau of Labor and Statistics calculates the Consumer Price Index (CPI) for two population groups, one consisting only of wage earners and clerical workers and the other consisting of all urban consumers. In addition, a Core CPI  which excludes volatile food and energy prices and a Chained CPI are also widely used measures of consumer inflation.

On April 15, 2011 the Bureau of Labor and Statistics reported: Over the last 12 months the all items index increased 2.7 percent. Gasoline and food prices continued to rise and together accounted for almost three quarters of the all items index increase. The all items index rose 2.7 percent in the last 12 months, the largest increase since December 2009.

The New York Times reports: Higher Energy Costs Push Up Producer Prices - "Nearly 90 percent of the increase in producer prices last month can be traced to the climb in energy prices."

The energy index has now risen 15.5 percent over the last 12 months, with the gasoline index up 27.5 percent. The food index has risen 2.9 percent with the food at home index up 3.6 percent. The index for shelter rose slightly, as did the index for medical care. Several transportation indexes posted significant increases, including new vehicles, used cars and trucks, and airline fares.

In contrast, the index for apparel and the index for household furnishings both might pay less for a 52" flat-screen TV.

When the government conveniently excludes the basic staples for most ordinary people (food, energy, and shelter) then the all items index will have only increased 1.2 percent, instead of  2.7 percent (1.5 percent higher that what the COLAS are based on.)

Why would Social Security COLAS be based on the price of a 52" flat-screen TV and not on food or heat - things that disabled and elderly people need just to live?

Congress draws a $174,000-a-year annual salary. If their heating, electric, or food costs doubled overnight, it would only be a minor adjustment in their monthly household budgets. But for a disabled or elderly person trying to live on $12 to $24 thousand a year, any rise in heat and food costs could be devastating.

It's ludicrous that Tea Party fanatics like Paul Ryan wants to reduce benefits for the elderly, disabled, the unemployed, and the ill - but why deny them a measly COLA so that at least they can maintain their standard-of-living on their paltry incomes, and allow them to live in dignity, not as pathetic paupers. Who gives a goddamn if members in Congress like Paul Ryan gets a raise....they should be taking a pay cut in this "shared sacrifice" that they expect the old people and the rest of us to endure.

From an article in the Huffington Post today: "But even worse are the harsh sacrifices that Republican plan imposes on working families. The Republican plan ends the Medicare guarantee, transforming it into a system that will provide seniors with less coverage each year, and raises their health care costs. It also dismantles Medicaid, putting many seniors' nursing home care at risk and cutting off care for the poor and disabled. Republicans have made their priorities very clear: they put their high-income tax breaks directly on the backs of the elderly and the middle class. And at the same time, Republicans spend so much on those tax breaks that their plan does not balance the budget for decades -- decades during which our debt will continue to grow."

Also today from the Huffington Post: "Gang Of Six Looking At Social Security Changes, Not Raising Tax Rates"

Congress needs to raise taxes on the rich to help pay for our social programs, even if the bastards don't need them for themselves. Congress also needs to change this COLA policy for our disabled and seniors (like me), and include a fairer indexing of the REAL costs associated to actually "living". I can't eat a frigging TV set.

1 comment:

  1. Updated September 16, 2011 - "Reports released Thursday showed weakness in the jobs market and an uncertain outlook for manufacturing." (DAH! Anybody who's still breathing could have told me that!)

    "The inflation figures for August reflected the volatility in prices for items such as food and energy. Prices for gasoline moderated, with a 1.9 percent rise in August after a 4.7 percent jump in July. Food prices rose 0.5 percent compared with 0.4 percent in July. When those components were stripped from the index, the core C.P.I. showed that prices rose in August at the same rate as in July, 0.2 percent. (Why would anything that we actually need to live - such as housing, energy, and food - ever be stripped from the index?)

    "The latest figures show that inflation is set to outpace wage growth, which would be a significant blow to potential economic growth because 70 percent of the economy is based on consumer spending." (Such as housing, energy, and food.)