By law, Social Security benefits increase automatically to keep pace with inflation. When there is a period of no inflation, the law does not permit an increase in benefits. Based on the Consumer Price Index (CPI) published by the Department of Labor, there was no rise in the cost of living during the past year, so your benefit will remain the same in 2010. The CPI is the federal government’s official measure used to calculate cost-of-living increases.
I love that phrase, “the law does not permit...” It’s so passive and denies accountability. It’s the LAW. You can’t argue with the Law. But the law mutates over time.
When Dr. Moreau asked his half-man, half-beast creations in Island of Lost Souls (fabulous 1932 movie, don't see remake), “What is the law?” They answered, the law was “not to eat meat”, “not to go on all fours” and “not to spill blood. Are we not men?” [We are Devo.] We do all these things and we are men. Or women.
Back to no inflation: According to this logic, prices did not go up during 2009. Entirely contradicted by the cost of oil: an increase of 71% during 2009 to close at around $80 a barrel 12/31/09. "Who you going to believe, me or your own eyes?" [Chico Marx, Duck Soup.]
This doesn’t take into account the gradual diminution in the size of grocery staples while retaining the same price tag: a can of tuna went from 6 ounces to 5 ounces.
The Bureau of Labor Statistics reports on 8 categories that make up the CPI:
• FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks)
• HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)
• APPAREL (men's shirts and sweaters, women's dresses, jewelry)
• TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance)
• MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services)
• RECREATION (televisions, toys, pets and pet products, sports equipment, admissions);
• EDUCATION AND COMMUNICATION (college tuition, postage, telephone services, computer software and accessories);
• OTHER GOODS AND SERVICES (tobacco and smoking products, haircuts and other personal services, funeral expenses).
I don’t know who compiles this information, but my prescription and energy costs have gone up considerably. I live in New York City. If you want to get to work, you have to take the subway. Or else pay more. You're a captive externality paying the MTA debt service. The price of one trip went from $2 to $2.25.
I have to pay a higher co-pay for medical services. College tuition rose 6.4% for public in-state and 5.9% for private colleges.
This is jive bookkeeping. And it has a direct effect on spending not to mention people's lives. It's plain as the nose on Geithner's face that fixed costs are going up. As Bruce Krasting points out:
Given that fixed costs are actually rising for this group of consumers (the hell with COLA) the 65+ set might not be going to the Wal-Mart in Boca as much as they used to. A year ago we were talking of ‘green shoots’. This ‘shoot’ is decidedly brown.
Maybe government-compiled economic indicators are politically motivated. Gasp! I’m shocked, shocked…