THERE GOES MY COLA

President Obama has averted the budget crisis--that is, it has been postponed for two months.  A welcome increase in tax revenues from the wealthy has been agreed upon, but it isn't nearly enough.  True, the President  probably couldn't have gotten a better deal, but that doesn't change the fact that the deal is definitely not ideal.

The showdown has been merely postponed; the far-right hand has been strengthened.  There will have to be 110 billion in cuts, half from domestic spending and half from defense spending.  And the President has already said that he is very willing to compromise.

There goes my Cola.

The Cola, as you probably know, is the cost of living adjustment for Social Security recipients.  It is based on the CPI, the consumer price index.  I feel it in by bones--my older, Social Security-receiving bones--that the present Cola will be negotiated away, "saving" billions.  The new Cola will most likely be based upon the so-called chained CPI, which is always lower than the CPI. (In 2012 the CPI was 1.8%, while the chained CPI was 1.6%--Social Security recipients, however, will only get a 1.7% in 2013.)  

Here's how the chained CPI works.  Say you're a business executive and want to buy a Lambergini; you notice that it costs a lot more than it did during the previous year to buy one.  So you settle for a Lexus.  If enough executives do that, the effect of the inflated price of a Lambergini on the CPI is lowered, since not as many people are buying them anymore.

As you might have guessed, the world of chained CPI is not the world of retirees. Even the (unchained) CPI underestimates the effect of inflation on retirees, since health care costs have been rising at a higher rate than that of the CPI.  What are retirees supposed to do?  Instead of owning--with monthly payments--an automobile that is not fancy but at least runs; are we to trade in our trusted vehicle for a jalopy with a Ryan voucher?  Not a present option, thank God.  So, thanks to the greed of the health care industry, we keep the same trusted vehicle, but must pay monthly payments that rise every year at a rate more than the rate of inflation

Republicans have won the debate.  We are in the midst of a job crisis, not a debt crisis.  Even the President agrees that cuts--in addition to all the previous ones agreed upon--have to be made during this period of high unemployment.  Cuts that make the rich richer and the poor poorer.

There goes my Cola. What will tycoons say?  Don't worry.  Be happy.  Watch TV--especially Fox News.  And, of course, have a Coke!

For one third of social security recipients, 90% of income comes from their monthly check.  For one half of recipients, over 50% of their income comes from Social Security.  These facts have not prevented a right-leaning New York Times columnist for blaming much of our budget problems on "boomer greed."  Boomer greed, indeed.

Republicans have convinced the public that Social Security is a major budgetary problem.  It isn't.  Any shortfall can be easily fixed.  (The Social Security payroll tax is figured on 83% of income; it used to be 90%.  Income above $113,000 isn't taxed at all.  A few minor adjustments and the system is solvent.)

Social Security payments are only 5% of GDP.  They are expected to rise only to 6% by 2030, then will fall after that.  (I have heard a Republican claim that we can't afford to pay for seniors who will take benefits for thirty years; the average number of years people receive benefits is, however, only 16.)

Boomer greed!  True, some recipients are more solidly in the middle class thanks to their monthly check.  But most of the money received is spent, stimulating the economy.  Many recipients, after all, have to partially or even fully support underemployed or unemployed children and grandchildren whom the system has so egregiously failed.

Social Security is not the problem.  The problem is that one percent of the country has 40% of the wealth.  The problem is that the wealth of the richest Americans is 288 times the median wealth;  in Germany it is only a factor of 10.  The problem is that a CEO in America earns 475 times more than an average worker, while in Germany the factor is 12.

We live in a winner-take-all society, and the winners, you guessed it, are making the laws.  That's the problem.

Our democracy is seriously threatened by the second gilded age, the era  in which we are living. Anything that counters this problem is, in my opinion, very much welcome.  Social Security is progressive; it strengthens the middle class and helps the poor.  It is precisely for this reason why the Republicans hate it so much.
.
I will console myself with the fact that President Obama just might not cut Social Security benefits--Some consolation!  If he doesn't agree to cut Social Security, he will probably agree to make unfair cuts in Medicaid and/or in Medicare.

The one percent will most likely continue to have their way

Don't worry.  Be happy.  And, of course, have a Coke!