CPI Shaving?

John K. Taber jktaber at onramp.net
Sun Sep 20 14:02:59 PDT 1998

Max Sawicky wrote:
> It should be noted that the CPI adjustment,
> which did originate within the BLS, subject
> to the external pressures Brad notes, reduces
> the actuarial shortfall in the Social Security
> trust fund. The summary number was 2.1 and
> now it is more like 1.8. That means 1.8%
> of taxable payroll channeled into the fund
> starting today, in the form of either tax
> increases or benefit cuts, eliminates the
> 75 year shortfall.

Max, for heaven's sakes, explain this to me in terms that I can explain to my fans in soc.retirement. There, several of us are under the impression that Katherine Abraham was jumped in a dark hallway.

What is the "CPI adjustment?" Is this is, or is this ain't a shaved CPI? Or, is the "adjustment" not the CPI, but a diminished chord of the CPI used to compute COLA?

And "summary" number. What's that? You say was "2.1". Was that the CPI? So it was lowered to 1.8. Is that the shaved (umm, adjusted) CPI? If so, it was reduced 0.3% No? Yes?

> Further adjustments, which are likely, will
> reduce the shortfall more. This doesn't
> prevent some people, present company excepted,
> from saying, simultaneously, that the Trust
> Fund is in trouble and the CPI is way overstated.

[snip, mentioned CPI-1]

And what is CPI[sub 2]? The CPI for indexed bond holders? Boy, I can see it now:

A CPI for you and a CPI for me

And we will raise a fami-lee

Of CPIs.

> EPI has a paper by Howard Chernick and Ed Wolff
> on the effect of CPI reduction on benefits.

Is this paper at the EPI site? If not can you slip it to me?

[snipped rest]

-- Those are my principles, and if you don't like them, I have others.

--Groucho Marx

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