Friday, July 20, 2018

Administration Used Flawed System To Deny Annual C.O.L.A.

Credit: imagemax
The dollar buys less today than it did this time last year.

Enron style accounting cost seniors and the disabled their annual cost of living increase.

(Author's note: I wrote this article on Jan. 11, 2010 and am reprinting it here in response to a reply that was given on my article about N.Y. gubernatorial candidate Carl Paladino. This is an effort to try to explain the true facts of the annual C.O.L.A. I feel that it is as timely today as it was several months ago.)

The Obama Administration continues to use a misleading and inaccurate practice to base its yearly cost of living increases for seniors and the poverty stricken.

Health care debates, two wars raging overseas, the spectre of terrorism raising eyebrows once more in close call fashion on Christmas past. Enough of a headache to make any average Joe or Jane avert their eyes to the latest Consumer Price Index report that states that there was no need to give seniors and those who depend solely on subsistence programs such as S.S.I. and Food Stamps a yearly cost of living increase.

The move, expected to trim billions of dollars off of the annual budget allotted for just such programs, stems solely from a practice started during the Clinton years, and one which even the government's own General Accounting Office will not sign off on. It will also signal the first time since 1975, when Social Security benefits were indexed to inflation, that the increase will not happen.

Many Americans may have missed the announcement by the Obama Administration just before Christmas. In the 'news dump' just before the holidays, and with all of the other major events taking place with the health care debate, it would have seemed like such a minor happenstance. But to the more than 50 million poverty stricken Americans who depend on these programs to maintain a mere subsistence level existence, it probably felt like a punch to the solar plexus.

Claiming that the C.P.I. report indicated that there had been no rise in consumer pricing during the previous year, the Administration announced that there would be no cost of living increases for the year 2010 for those living on Social Security or the sister program for the disabled, S.S.I.

In 2006, noted financial expert Martin Weiss quoted the G.A.O. as refusing to sign off on then President Bush's budget due to the Enron style accounting practices. Once Bush left office, Americans were promised those days were behind us, but quite the contrary seems to be the case. Weiss noted in 2006 that the government under former President Clinton took the unusual step of fiddling with how the Consumer Price Index was calculated. In times past, the way the C.P.I. was calculated was to follow the yearly price of food, utilities, etc., over the space of the fiscal year, and watch to see how prices rose and fell during that time period. They would then use the overall average of rising/falling prices on certain items to calculate the yearly cost of living increase for recipients.

Looked at another way, let's take the price of a pork chop or steak for example. In years past, it was policy to follow that pork chop or steak throughout the year and watch to see how much the price of that item rose and fell. At year's end, adjustments for inflation would be made, and cost of living increases would be set accordingly.

Enter Bill Clinton and the Congressional Democrats back in 1995. Democrats, seeking desperately to portray themselves as fiscally responsible, turned their gun sights on the most vulnerable people in American society, namely our seniors and our disabled. Turning to Alan Greenspan, they came to a meeting with former Senator Edward Kennedy, a staunch proponent of a fair C.O.L.A., with Greenspan's new plan to stick it to America's poor by understating inflation in order to cut out the cost of living increases. In this way, the Democrats look good for saving the government money, and the nation, feeling as though something had been accomplished, wouldn't even notice that literally hundreds of billions of dollars was being poured directly into the coffers of corporate America.

Kennedy stood his ground that day, and the subject hasn't been broached since. Until after the good Senator's untimely demise that is. Within weeks of Kennedy's death, the announcement came that no C.O.L.A. was needed this upcoming year.

But even Kennedy couldn't do anything about the little known Boskin/Greenspan argument, used and implemented by former President Clinton to rearrange the C.O.L.A. by switching out simple straightforward arithmetic for so called 'geometric' calculating. Simply put by Shadow Statistics " The Boskin/Greenspan argument was that, when steak got too expensive, the consumer would substitute hamburger for the steak, and that the inflation measure should reflect the cost of buying the hamburger versus the steak, rather than the steak versus the steak. Of course, substituting the hamburger for the steak would reduce the inflation rate, but it represented the rate of inflation in terms of maintaining a declining standard of living. Cost of living was being replaced by the cost of survival. The old system told you how much income was needed in order to keep buying steak. The new system promised you hamburger, and then dog food, perhaps, after that."

So it has been since then. The annual C.O.L.A. hasn't actually represented the cost of living since Clinton, was used throughout the two Bush terms, and now, the 'change' President is using it also. (Funny. Isn't there another Clinton in this Administration?) Had true straightforward arithmetic been used instead of this playing with numbers game, the benefits payable to recipients would be double what they are now.

With the gall that only the wealthy and the arrogant can muster, the President stood at the podium just before the Holidays and told the nation that prices hadn't risen in the past year and therefore the poor and the infirm didn't need any little extra in their stockings this year. Soaring unemployment? Bah! Just a figment of someone's imagination. People looking for work having to settle for jobs that pay far less than their old ones? Nothing to do with the cost of living either sayeth the people who handed the keys to the Treasury over to the man who presided over the Federal Reserve Bank of New York when the entire system was systematically robbed and pillaged.

Cities like Buffalo, New York suffer from a thirty per cent poverty rate, with empty shelved food banks, and zero shelter space, but yet, still, no one wants to address the real issue here. Quick to shovel our entire national treasure into the morass of a failed and ruthlessly predatory banking system, our government has decided the poor can eat cake. Proclaiming the worst to be over by flouting figures from the latest unemployment report, they stand as one and bald faced lie to our faces when they say that 'only' 85,000 jobs were lost the previous month. Never taking into account the people who's unemployment benefits have simply run out, or who landed a part time seasonal gig, these charlatans, living off the sweat and hard work of ordinary Americans, go home for 'breaks' and 'vacations', and 'fact finding jaunts'. All on the taxpayer's dime. While they deny seniors and the disabled an extra couple of dollars to try to make ends meet, they spend and spend and spend every last dollar they can pull out of taxpayers, usually in the form of massive giveaways to their corporate sponsors. So, the next time you get that queasy little feeling in the pit of your stomach that something just doesn't add up with the government's accounting system, or find yourself wondering why on earth the corporate world continues to give itself millions upon millions in bonuses with taxpayer money while they can't help house the homeless, feed the poor, or give 'Grandma' a few extra bucks to keep her out of the cat food aisle of the grocery store, don't just sit in bewilderment. Do something. Get angry. Write to your Senator, your Congressperson, your President and voice your displeasure.

Because the last thing either the government or their corporate masters want is a riled up and angry populace disrupting their plans of ripping off the last few pennies left at our Treasury. Dollars to donuts, they'll pony up what is owed to those who paid into a system for all of their lives and are now being told they don't need the money they entrusted the government to hold on to for them. Lastly, one can also question as to why we are still using an obvious scam system to calculate what is being given those with the least among us, and what happened to the so called make up rebate checks the President said he'd send out to make up for the loss of the yearly C.O.L.A.?

(Author's note: Since this writing, the Administration has sent out 3 million checks for $250 each to recipients of Social Security who were caught in the so called Medicare 'Doughnut Hole'. They, and only they, recieved the rebate checks. The other 47 million or so recipients got nothing.)

About the Writer

Paul Wylie is a writer for BrooWaha. For more information, visit the writer's website.
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1 comments on Administration Used Flawed System To Deny Annual C.O.L.A.

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By lisawimmer on August 22, 2010 at 04:30 pm

I agree totally, with both the article and the comment by Ms. Haislip. Painting Social Security as some kind of welfare program is as outrageous as it is ridiculous. The fact that so many believe it only reveals the level of willing ignorance on the part of those who should know better.

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