American homeowners continued to lose a great deal of wealth – $192.6 billion – due to the foreclosure crisis in 2012, and those losses had a disproportionate impact on people of color. Continue reading
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Take These Chains Off My CPI (Consumer Price Index)
The deficit crowd cheered when the President included a concept called “Chained CPI” in his 2014 Budget.
This is a proposal to change the way the Consumer Price Index (CPI) is calculated. This change is about as wonky as wonk-dome can get, but here’s a try.
Currently the CPI grows based on overall increases in the cost of goods. The new idea is to calculate how much consumers change their purchasing habits when prices rise. If there is an increase in the cost of Stella Artois, then some beer drinkers will switch to less expensive brews. Say they turn to my favorite, Tecate.
This tendency to switch choices will be calculated as a part of the new Chained CPI. So the effect of the change will be slowly to reduce the benefits paid out through programs like Social Security.
Now you may think that switching from Stella to Tecate won’t amount to much. But it keeps growing over time. The COLA for this year was 1.7 percent. If my monthly Social
Security check was $1,250 last year, it increased to $1,271.25 this year. Were the Chained CPI in effect it would be $1,267.50, amounting to $45 less a year. Again, that might not seem like a big reduction, but if the COLA is the same next year, the difference increases to $91.32 for the next year. And as the SSI checks get smaller and smaller, inflation will drive prices higher.
The cumulative effects of the change will have severe effects on the poor and the elderly. Two populations that already have few choices on how they spend their money, especially in the all-important areas of health care and pharmaceuticals.
There are also some very specific problems with the new plan, particularly for those who have no retirement support other than Social Security.
The change especially impacts women who tend to work less, earn less, and live longer.
Chaining the CPI may also amount to a subtle tax increase for the middle class, assuming that the new method will be applied to the way IRS calculates tax brackets. Over time, the brackets will rise more slowly and, as incomes gradually increase, folks will slip more quickly into higher brackets.
How the Numbers Add up, and not for the Best
The really big problem with Chained CPI, and the point of this essay is that reducing Social Security is simply a bad idea in general. The plain fact is that the growing income inequality, a severe recession and wage stagnation have created an enormous “retirement security gap.” This gap is the difference between what people should have saved for retirement and what they actually have.
The HELP Committee of the U.S. Senate estimates the retirement gap at $6.6 trillion. Half of Americans have less than $10,000 in savings. Then throw on top of this the $1 
trillion in student debt. Whoa. We’re getting into real money here. How are we going to close this gap?
The Solution is the Same Program They are Attacking
Well one obvious way is to expand Social Security and Medicare so that they can help fill up the bucket. Instead, our political leaders all seem intent on making the gap worse. The bucket isn’t full enough so let’s poke a hole in the bottom. “Let’s chain down that CPI!” say these deficit hawks.
Why? When Social Security has zip to do with the deficit (and Simpleton and Blows know it)? Besides, ‘fixing’ this problem will not make the austerity preachers happy. The “Fix the Debt” corporate tax dodgers and the right-wingers simply want to dismantle the social insurance system.
And the Democrats have taken the bait. Rather than support expansion of these vital programs, many Democrats, including apparently the President, have joined the rush to austerity in a recession and are buying into a compromise with an ideology that rejects physical fact, economic science, and the idea that government can be an instrument to advance the common good.
Give me a break!
There is much to appreciate in the President’s Budget, but the Chained CPI is not one of them. Beyond opposing this bad idea, progressives should
go on the offensive. Social Security and Medicare need to expand not shrink.
Tax Havens for Big Business? Small Business Owners Say ‘Not so fast’
Multi-Partisan small business owners spoke out earlier this month, further distinguishing their interests from those of Big Business.
Wednesday, in his post “Has the Budget Crisis Du Jour Got You Down?” Bill Daley pointed out that if Congress were to close one tax loophole on offshore accounts, it could be enough to create a ‘job stimulus’ program the country has not seen since the beginning of the Great Recession. Continue reading
Introducing Chain of Title in Colorado and other Protections for Homeowners.
A term that apparently means nothing to the banks of Colorado and the Alliance affiliate, Colorado Progressive Coalition is set to make the banks understand just what that phrase means. But for homeowners: it means a lot more.
A chain of title is the sequence of historical transfers of title to a property. The “chain” runs from the present owner back to the original owner of the property. In situations where documentation of ownership is important, it is often necessary to reconstruct the chain of title.
Survival Denied: Stories from Alaska Native Families Living in a Broken System
“The indigenous hunting and fishing practices of ALL Alaska Natives, including the harvesting and sharing of fish, game, and other resources and the ceremonies which accompany these practices provide for the SOCIAL, CULTURAL, SPIRITUAL, & ECONOMIC WELL-BEING & SURVIVAL of the Alaska Native community Continue reading
2012 Job Gap Report
“Broken Bootstraps: Falling Behind on Full-Time Work,” is the 14th annual installment of a joint study by Alliance for a Just Society and its affiliates in 7 states.
Unemployment rates in all states are still high. A modest $9.00/hr. minimum wage has been mentioned at the federal level. Even that income would leave most low-wage workers needing to utilize public assistance programs. Continue reading
Daley’s View: Whatever Happened to the Rule of Law?
Many years ago I heard with bemusement that Mafia like organizations were springing up in Russia following the collapse of Communism. The reports suggested that these associations were emerging because their organizers thought that Capitalism actually sanctioned criminal behavior and they were only following the new rules. Continue reading
One Solid Act for Homeowners: Can Obama do it in the First 100 Days?
It’s been five and half years since the largest economic collapse in 4 generations, and fiscal policy is still being executed in a way to favor the banks and not regular folks. We’ve subsequently seen a “jobless” recovery from our recession and are now seeing a “houseless” rebound of home market. But why?
It’s clear that the Obama Administration hasn’t done nearly enough to address the housing collapse. The HAMP program wasn’t nearly enough with too many hoops for homeowners and was voluntary for banks to participate. The latest solution put forth to address the 16 million homeowners who are currently underwater on their mortgages, writing down principal to market value, is being derailed by Ed DeMarco. He’s the temporary head of FHFA which oversees Fannie Mae and Freddie Mac, the largest loan holders in the country.
Writing down principal for folks would have ripple effect through the economy. First, it would stabilize communities by ending the foreclosure crisis, then it would ensure steady revenue streams for municipalities and states, and lastly it would kick start the home market again as those who are locked into paying more than their home is worth could feasibly sell their home if needed.
President Obama needs heed his mandate from the November elections and remove Ed DeMarco in his first 100 days in order to jump start the economy and make good on his campaign promises to get the economy back on its feet.
In fact, with the release of a letter from 45 Representatives in Congress demanding that President Obama name a permanent director of FHFA the White House needs to make this happen within the first 100 days.
See the New Bottom Line’s Response to the letter here:
http://www.newbottomline.com/new_bottom_line_applauds_congressional_demand_that_obama_fire_demarco
Daley’s View: Are we winning the fight for the expansion of Medicaid?
The Supreme Court ruled that the Medicaid expansion in the ACA would have to be voluntary. The entire future of this expansion seemed to be in doubt. Resource strapped states were fighting to cut programs not to expand them. The entire expansion of Medicaid was challenged by Governors calling for the program to be “block granted,” or they were just flat out saying ‘no’.
The winds are shifting.
What we advocates have done exceptionally well to get people realizing the overwhelming benefit to states in saving benefits, saving lives and saving money. Keep pouring it on, you are winning. Continue reading
Taking on Predatory Lending in Idaho
Thousands of Idaho residents are strapped for cash. The economic recession has devastated the lives of Idahoans across the state. As the need to make the dollar stretch increase, financial resources from traditional banks decrease.
Payday loan centers have seized an opportunity to profit from the misfortune of those in need. Predatory lenders have lined the sidewalks of low-income and communities of color with promises of instant cash and no credit checks. Having no available alternatives, residents are left to turn to payday loan centers for relief; but that relief keeps coming with a cycle of interest rates as high or higher than 520%. Continue reading
