Debt Ceiling: COLA vs Chained COLA

In May of this year, just a few short weeks away, Congress is going to debate the debt ceiling once again. They are apparently also going to tackle one aspect of Social Security and that is the Cost of Living Adjustment as part of the entitlement talks in the debt ceiling debate.

The term for this is one we’ll be hearing about shortly and it may be part of our lexicon before summer even arrives. It is chained cost of living.

To explain this would be very boring and not easily understood. I’ve been reading about it for days and it’s a bear to understand. However, this example may make it a bit easier to understand and not be quite as boring. This really is an oversimplification of the way it works and will work if this passes, but hopefully I’m explaining it well enough to make it easier to understand.

First of all, Cost of Living or COLA is figured annually. So the number will change from year to year. If you look at the history of Social Security, you’ll see that the average COLA since 1938 is 2.8% per year. However, some years paid more and some years there was none. For instance, in 1980 the COLA was 14.3%. So you know there were years that it was at zero.

The Cost of living is figured by looking at urban wage earners and clerical workers spending habits. The cost of bread, milk, meat, gasoline and housing to name a few. If the cost is higher this year than it was last, COLA rises. If it’s basically the same, there is no increase.

The Chained Cost of Living will change one of the parameters. Instead of using the urban wage earners and clerical, it will use the elderly. The elderly is a smaller sampling of the population of this country than urban wage earners and clerical. That’s one drawback.

The elderly don’t use as much as those still young and working. Food for instance. They don’t eat as much and they save money. They are on a fixed income. So where you may go to the store and buy a loaf or two of bread for $1.78 each, they will buy an off brand for $1.00. They get less slices, less quality and spend less because again, they don’t eat as much.

A younger person will likely have a family and maybe buy a couple of gallons of milk in a weeks time where a retiree might get a half gallon of milk per week and again, buy the off brand because it’s cheaper

Then there is housing. A house worth $100,000 a couple of years ago may have lost 50%-60% of it’s value making it now worth $40,000-$50,000. How many elderly buy brand new houses? Not many. Their houses are paid for, or they’ve sold them and moved into smaller homes, cheaper homes or even gone to renting.

So while younger people will spend money to take care of their families and even waste money on junk food or things they don’t really need, but have just in case, the elderly are more frugal.

All of these factors and more will cause the increases to Social Security from COLA to be lower. So those on Social Security will get a lower increase in the years that there is an increase.

There is one other factor that is less mentioned but still out there. Social Security’s increase with the COLA is figured on the current amount you’re drawing from Social Security. Under the new system, it will be added to the amount you began with.

Here’s an example. You started drawing Social Security at age 62. You’re now 65. You have been getting an increase to your social security the past two years due to COLA. So you’re check at age 64 went up by 3.6% and this year it went up by 1.7% over last years figures because of COLA.

If we were under the Chained COLA your cost of living would be based on the amount you began drawing Social Security that first year. So if you started drawing Social Security at age 62 and you were receiving $1,000 per month, and got a 2% COLA increase, your check would be for $1,020 at age 63, and then they’d figure next years COLA on the $1,020. But if we’re under the Chained COLA, if you got that $20.00 increase the first year, the next year when they figure the Chained COLA they will figure it based on $1,000, not the $1,020 that you’re now receiving.

That may not seem like much of a difference now, but what happens ten years from now? Instead of receiving $1,400 per month after ten years of COLA, you’re now receiving $1,100 because of the Chained COLA.

Social Security was originally designed to be a supplement to whatever you’d done for your own retirement. But it’s evolved over the years and is now designed to keep a retiree above the poverty level. The Chained COLA could easily keep that from happening.

There are changes that could be made to make Social Security more solvent, but do we have to do it at the expense of our seniors?

You’re welcome to comment.

Brett

Which Kind of Terrorist

As the events in Boston unfolded on television on Monday, the natural inclination is to believe that it was a terrorist attack. So much misinformation, as is usually the case, was coming out over the airwaves. As many as 12 dead and 86 injured. Two bombs went off in the span of about 15 seconds. Then they reported that two other bombs were found and dismantled. Another bomb was set off at the JFK library. Most of all of those reports turned out to untrue. The only thing that turned out to be accurate was the two bombs and their timing, but that could be seen on video.

The date? April 15. Also known as tax day. The even Patriots Day. A holiday in Maine and Massachusettes and Boston where they run the Boston Marathon. The actual holiday is April 19, but it’s celebrated on the third Monday of April each year.

The holiday is for the “shot heard round the world” which was the opening of the American Revolution at Lexington and Concord. The date is also significant in a couple of other ways. April 19, 1993 is the day that the Branch Davidian “compound” was attacked by the Federal Government killing many women and children along with the leader, David Koresh. David Koresh believed that the government would eventually come and kill him and his people.

Another event is April 19, 1995. Timothy McVeigh pulled a truck up to the Murrah building in Oklahoma City, Oklahoma, which was loaded with explosives. Many were killed including children in a day care.

It wasn’t long after the bombing in Boston took place that it didn’t “feel” like a terrorist attack from Al Queda. They seem to prefer going after  numerous targets at once, or at least attempting to.

Now we hear people saying they hope it turns out to be a Right Wing Extremist. Oh that term. I could do a mile long rant on that term and comparing it to Left Wing Extremist, but I won’t. At least not yet.

McVeigh apparently had a problem with the government. So he blew up a government building or a building that housed a government agency. He didn’t seem to care about the non governmental people in that building. His cause was more important to him than some innocent people.

Koresh worried about the government attacking him, but he didn’t worry about brainwashing a bunch of people and fathering children by numerous women under his control.

People that bomb abortion clinics may really have a beef about abortion, but they don’t seem to mind certain other lives be it doctors, women getting abortions or girls confused and scared and finding out their options getting killed in addition to the unborn babies that may about to be aborted who’s lives they are supposedly wanting to protect.

These aren’t sick people in my opinion. That gives them an out. Instead, I believe that their cause and reasoning is more important to them than the results of their selfish reasoning. That’s pretty much the definition of terrorist isn’t it? Kill people for your beliefs regardless of any collateral damage and in spite of their beliefs against death or those that they have decided to protect and guide for whatever reason to make others afraid to go against your own personal belief?

You're welcome to comment. 

Brett

Debate vs. Filibuster

Watching Face the Nation this morning both Senators John McCain and Chuck Schumer were on discussing immigration reform. They are part of the "gang of eight" which is trying to come up with Comprehensive Immigration Reform.

During the discussion it was said that they would be doing things differently. When the gang of eight puts together their compromise and can agree on it, they will send it to committee for markup. This means the members of the committee will then chop up whatever the gang of eight comes up with and once agreed in committee it would be sent to the Senate floor.

Apparently, they have an agreement with Senator Harry Reid, the Senate Majority Leader, where amendments will be allowed. The bill will then be up for amendments and each amendment will be debated until debate is shut down and the full Senate will vote on the bill.

The host of the program also asked about Senator Ted Cruz' threat to filibuster it if it comes to the floor in an attempt to shut down debate and kill the bill.

When you watch the Senate at work on C-Span, you see a Senator standing up and giving his speech on whatever the topic is at the moment. They rarely show anyone else on the screen and usually when they do, it's the staff of the speaking Senator, or it's the President (or his appointed representative by the majority party leader, again, Harry Reid). You rarely, if ever, see other Senators until just before the current Senator speaking, winds up his remarks and the next one is about to take over.

In other words, in the United States Senate, the chamber is open, but nobody is listening. It's not debate, it's a place for speeches. Nobody's mind is being changed because nobody is there. Nobody is taking apart arguments because nobody is there. Nobody is debating because they've made up their minds before debate ever begins and those decisions are made by party, not by the individual and certainly not be a Senator that is acting on the wishes of his/her constituents. They decide by party and by polls.

On the other hand, filibusters are noticed. A filibuster is when a Senator will get up and start speaking and not relinquish the floor to anyone that could break or would break the filibuster. This makes news. This is what's noticed.

Several weeks ago, Senator Paul mounted a filibuster. The news was not the topic. I'll bet most don't remember that it was about the use of drones on Americans. But the fact that Senator Paul controlled the floor for some 11 hours. This doesn't happen any longer. The way they conduct a filibuster now is they shut down debate under threat of a real filibuster.

Is it any wonder why we don't trust our elected officials any longer? They don't do things honestly. They don't even believe that other Senators are really voting correctly because they go out in the press and tell the press that the "extremists" or the "Tea Party Extremists" are controlling them.

If you are of a different mindset, you're attacked as being extreme or under the control of someone.

The American people form their opinions and state them. The United States Senate, and even the House and the White House wait until the polls come out to tell them what they believe in.

Immigration reform will not be debated. It will be amended. The amendments will have nothing to do with immigration reform. At least not all of them. Someone will stick a study as an amendment to the bill that will create a study to see how high flies can fly, or frogs can jump.

Our government is out of touch with reality.

You're welcome to comment.

Brett