Nov 12, 2013

Why Chained CPI Is Almost Pointless In One Chart

Effects of beginning chained CPI in December 2014.  From Office of Chief Actuary, SSA


Anonymous said...

how is it "almost pointless" looks to me like it buys 2 more years of benefits.

If you're looking for a miracle fix that will solve all the problems forever, it's not going to happen. Changes are inevitable and they will all probbaly be somewhat small. However, when combined together, they may help sesure the future of SS benefits. Doing nothing just quickens the inevitable failure of the system.

Anonymous said...

I should also note, in light of recent paranoid posts, I made the comment above and I work for SSA.

Anonymous said...

Would Chained CPI be the only change, or would it usher in more and more changes?

Cash shortfalls have averaged $50B per year since 2010. These shortfalls are not a surprise and were supposed to be accounted for by the trust fund.
Which of course was borrowed and spent.

So, the feds are running around like chickens with their heads cut off in a quandry as to what to do.

Anonymous said...

Raising the cap to include 90% of all wages (it is now 83%)would get it back to the standard set in the 1980's under Reagan. This plus chained cpi would solve the crisis for another 50 years til 2083. Seems like a no brainer compromise.

Anonymous said...

"The system" isn't going to "fail".

It's a paygo system.

There is no "trust fund".

And Charles is just pointing out that Chained CPI does nothing to solve the "problem" on any timeframe that means anything.

Because the "problem" is demographic in nature.

And it hits Japan and South Korea first, anyway.

The solution will be to increase taxes and/or reduce benefits.

The benefit reduction here is nominal.

Don Levit said...

Assets to expenditures provides a skewed ratio, for the assets, on a cash basis, are unfunded.
As previously pointed out, on a cash basis. the trust fund is running deficits.
So, the cash to expenditures ratio is already negative.
What could be more accurate than cash accounting, for a present year snapshot?
Don Levit