If the circus surrounding the so-called fiscal cliff has taught us anything, it is that politics revolves around the question of how wealth and power should be distributed in our society, i.e. who will be the winners and who will be the losers.
Some sectors of liberal America are celebrating the tax deal that emerged from Capitol Hill in the immediate aftermath of the phony fiscal cliff deadline. A New York Times headline crowed, “After Fiscal Deal, Tax Code May Be the Most Progressive Since 1979.” Households with income above $400,000 (less than 1 percent of total U.S. households) saw their tax rate rise from 35 percent to 39.6 percent.
More sober critics note that these incremental increases fail to meaningfully address the fact that America’s super rich have cornered a larger share of the nation’s wealth than at any point in time since 1929, and will continue to pay far less than their fair share.
Not only do the new U.S. tax hikes fail the equity test, they fail to make a sizeable dent in the national debt.
So now Washington is gearing up for February’s budget negotiations. And a corporate friendly-group called Campaign to Fix the Debt has set its sights on so-called entitlements — to the delight of the mainstream media.
Jonathan Alter, of Bloomberg View, was among the first to roll over — no doubt waiting for a belly scratch from Michael Bloomberg, his boss and the billionaire co-chair of Campaign to Fix the Debt. On January 3, Alter wrote, “Democrats must learn to live with — and vote for — changes in entitlements. They should keep in mind that reforms such as a chained consumer price index (chained CPI), which alters the inflation calculation applied to Social Security … do not threaten the social safety net.”
What do well-paid pundits like Alter know about social safety nets?
If chained CPI were applied to Social Security, it would change the way inflation is calculated and thereby lower the rate at which an individual’s Social Security benefit increases. Consequently, chained CPI would save the government billions — at the same time that it would deny Social Security recipients billions in cost of-living adjustments.
Such cuts to “entitlements” threaten the livelihoods of America’s old people who rely on Social Security checks for food to eat and a place to sleep, like the 21 percent of America’s single or widowed women over 65 who live in poverty — meaning they survive on less than $10,788 a year.
The theory behind chained CPI is that people adapt to the pressures of inflation by changing their buying habits. In July 2011, Marc Goldwein, a policy director of the Simpson-Bowles fiscal commission (he is now with the Committee for a Responsible Federal Budget, a “partner” of Campaign to Fix the Debt), explained the gimmick this way to National Public Radio:
“One of the problems of inflation is it doesn’t account for the fact that when the price of apples goes up, you buy oranges or bananas.” Or to put it in a way that some of the old women shopping at the Aldi grocery story down the street from In These Times would better understand, “When the price of Alpo goes up, you buy Purina.”
Joel Bleifuss, a former director of the Peace Studies Program at the University of Missouri-Columbia, is the editor & publisher of In These Times, where he has worked since October 1986.