By Alden L. Benton
If you live on a fixed income, especially Social Security, the Super Committee tasked with cutting more than a trillion dollars from the federal budget over a 10-year period, is going to make your life far more difficult.
Hidden behind closed doors in secret meetings, the super committee is planning a “technical change” in the way the government calculates inflation.
In reality, this “technical change” will raise taxes and limit Social Security Cost of Living Adjustments (COLAs).
Instead of using the Consumer Price Index (CPI), the “technical change” institutes the Chained Consumer Price Index method (CCPI).
The CCPI assumes that if an item in the CPI’s food basket increases in price, the consumer will choose another, cheaper item. If the price of pork increases, will the consumer buy Spam because it is cheaper? Perhaps.
However, this does not work where there are not acceptable lower-cost alternatives. If you need a triple heart bypass, you cannot opt for a single or double bypass because it is cheaper. If you need a hip replacement, a set of crutches, while cheaper, is not a viable alternative.
This proposal artificially lowers the calculated rate of inflation. By doing this, the government can effectively cut Social Security benefits with unrealistically low COLAs.
Indexing Income taxes to inflation prevents bracket creep. This proposal indirectly increases taxes by underestimating inflation, thus falsely increasing your income and pushing you into a higher tax bracket.
CCPI is a double whammy for everyone, but especially those trying to live on a fixed income. As prices increase, your COLA will adjust more slowly, if at all. If inflation does push up your income, you will pay more in taxes as well as higher prices.
The manipulated inflation rates created by the CCPI will cost seniors and taxpayers money. Lots of money.
Inflation is a tax. It is a tax on everyone, but those at the low end of the income scale suffer the most.
Stop the lies and deceit!
Call, write, email or FAX your Congressional Representative or United States Senator and tell them to find an honest way to calculate the effects of inflation, inflation caused by the deceitful and failed policies of the federal government for more than 35 years.
Enough! Don’t let them fool you again, and if they have the audacity to implement this, remember their names in November 2012.
©2011 Alden L Benton/Independence Creek Enterprises.
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