Chained CPI – Harms Elderly and Bamboozles the Young

Democracy and Power 102: Voters are Rationally Ignorant

Harmfully, the vast majority of the voters are rationally ignorant of most government actions; bills, legislation, regulations and taxes that will ultimately impact their lives.

Why? Americans are working hard to make a living, raise a family and improve their community. Individual voters don’t have the time to know all our government’s transactions and it is impossible to stay abreast of all government’s actions.

Chained CPI – Harms Elderly and Bamboozles the Young

President’s Obama’s budget includes the chained-weighted Consumer Price Index, which would reduce the benefits received by Social Security recipients. The AARP, AFL-CIO, Moveon.org and many other organizations are vociferously opposed to any Social Security reductions.

Anticipating these strong and persistent objections, our President has made special provisions for the elderly and could possibly exempt other recipients. For example, at 76 years of age, a Social Security recipient would receive additional money. Among the other groups exempted from reduced benefits are the disabled, which proves, again, that politics always picks winners and losers and not the public. It’s not a matter of the reason for the exemption but the deep-pockets funding the decision.

The biggest losers in this game are young Americans. Why? The federal tax code has brackets. As a worker increases their earnings, he or she graduates to a higher bracket and an increased tax rate. Historically, wages grow faster than inflation, and this causes “bracket creep.” Taxpayers move to a higher bracket and an increased tax-rate faster than the rise of their standard of living. In other words, government stealthly takes more money from the American worker. Under the current CPI, the Congressional Budget Office (CBO) projects a tax increase of 30% over the next 25 years. The chained CPI would slow a corresponding bracket adjustment. And so…all Americans would have a higher tax rate and government would take more money from almost every taxpayer. Stealth robbery!

Let’s review the dynamics: Personal income rise faster than the corresponding tax bracket adjustments, and government receives 30% more revenue from the increased tax rates. Unbeknownst to everyone – especially the young, the chained CPI will quickly push taxpayers into a higher bracket and government will take more money.

Obviously, most Americans are completely unaware of these tax implications on a seemingly insignificant change in the CPI. However, the Federal government is aware. The Obama administration has intentionally linked the chained CPI to Social Security and our tax code. Plus, they excluded valuable groups – the disabled and others. They attempted to appease seniors by offering special concessions – an increase in benefits at age 76, etc. Then, by stealth action, they increased the tax rates that impact every working American.

Alas, the American voter is rationally ignorant and does not have the time or the energy to study all the transactions of our government. It is impossible to stay abreast of all government’s actions.

Unfortunately, there is no quick or easy fix to the problem. Government will always have the power and intent to obfuscate, manipulate and hide their machinations and intent. Worse, the bigger and more distant our government, the less knowledge and power voters will possess.

The goal of a free society must be to return the power of governance to local control. That is family, friends, churches and the local community.