Capital Scene: Bread & Circuses

MY mother reports that as a toddler I touched a hot stove only once, displaying an early ability to learn from experience. (Of course, I wasn’t a blonde back then.) This ability is in surprisingly short supply among congressional Republicans. Still worshipping at the shrine of deficit reduction, some GOP congressmen are itching to make a technical adjustment in the government’s inflation index. The idea is that this would dramatically reduce the deficit over the next few years. But it would do so by raising taxes and reducing Social Security benefits. The Republicans’ only concession to their own political health is to insist that Bill Clinton lead the way over this particular cliff.

Economists agree that the Consumer Price Index, which measures consumer prices for a fixed market basket of goods and services, exaggerates the cost of living. As Ed Rubenstein explains in greater detail [see Right Data], because the CPI doesn’t allow for consumers’ tendency to substitute cheaper goods for higher-priced ones, the growing popularity of discount shopping, or the higher quality of new products, it overstates increases in the cost of living. It thus inflates the cost-of-living adjustments used to index Social Security and military retirees’ benefits, and incometax brackets, personal exemptions, and the standard deduction.

About the Author

Kate O'Beirne

Featured Tags

MY mother reports that as a toddler I touched a hot stove only once, displaying an early ability to learn from experience. (Of course, I wasn’t a blonde back then.) This ability is in surprisingly short supply among congressional Republicans. Still worshipping at the shrine of deficit reduction, some GOP congressmen are itching to make a technical adjustment in the government’s inflation index. The idea is that this would dramatically reduce the deficit over the next few years. But it would do so by raising taxes and reducing Social Security benefits. The Republicans’ only concession to their own political health is to insist that Bill Clinton lead the way over this particular cliff.

Economists agree that the Consumer Price Index, which measures consumer prices for a fixed market basket of goods and services, exaggerates the cost of living. As Ed Rubenstein explains in greater detail [see Right Data], because the CPI doesn’t allow for consumers’ tendency to substitute cheaper goods for higher-priced ones, the growing popularity of discount shopping, or the higher quality of new products, it overstates increases in the cost of living. It thus inflates the cost-of-living adjustments used to index Social Security and military retirees’ benefits, and incometax brackets, personal exemptions, and the standard deduction.