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Generational Dynamics Web Log for 19-Dec-2012
19-Dec-12 World View -- 'Chained CPI' proposal enters the farcical Fiscal Cliff negotiations

Web Log - December, 2012

19-Dec-12 World View -- 'Chained CPI' proposal enters the farcical Fiscal Cliff negotiations

Russia sends warships to Mediterranean for evacuations from Syria

This morning's key headlines from GenerationalDynamics.com

Domestic violence revealed in ancient Egypt
'Chained CPI' proposal enters the farcical Fiscal Cliff negotiations
Russia sends warships to Mediterranean for evacuations from Syria
Hugo Chavez battles respiratory infection, following cancer surgery
Taliban terrorists kill six female polio vaccination workers in Pakistan

Domestic violence revealed in ancient Egypt

The lid of the sarcophagus of Ramses III

The lid of the sarcophagus of Ramses III

After two years of scientific and archaeological research, Egyptologists have solved the mystery of the death of Ramses III, the Pharoah who ruled from 1187 to 1156 BC. Based on papyrus transcripts, combined with an examination of the body itself, scientists have determined that Ramses III was killed by his second wife Queen Tiya, who wished to put her son, Prince Pentawere, on the throne. However, at the trial following the murder, Queen Tiya and other officials were sentenced to death, and Prince Pentawere was ordered to kill himself. Al-Ahram (Cairo) and Fitzwilliam Museum (PDF)

'Chained CPI' proposal enters the farcical Fiscal Cliff negotiations

Long-time readers are fully aware of what a farce have been the past two years of negotiations among European leaders on bailing out Greece. Every few months, they get together and announce a "nuclear option" solution that solves the problem of Greece once and for all. Investors, who I've truly come to believe are mostly total morons (at least when they're investing their own money, and not someone else's), push the markets up for a couple of days, thinking that the mid-2000s real estate and credit bubbles are going to return. Within a couple of weeks later, it becomes clear to everyone, even the morons, that the solution actually did nothing but postpone the crisis without resolving the underlying problems, thus making the next crisis round even worse.

The same pattern is appearing in the negotiations to avoid the "fiscal cliff" on December 31. If there's a deal, it looks like President Obama will get his way and there will be tax cuts for "the rich," which will accomplish nothing, but there will be no cuts in the entitlements that cause the actual problem. So the crisis would be avoided for a while, and would come back again later, worse than ever -- just like Greece.

The latest sign of farce is the discussions over the Chained Consumer Price Index (CPI). The Chained CPI grows the computed inflation rate slightly slower than the ordinary CPI. Since things like Social Security increases and tax brackets are indexed to the CPI, they would rise more slowly as well.

The CPI is computed by measuring how much the cost of each item in a basket of goods increases each year, and averaging the results. So if the price of an apple goes from $1.00 to $1.20, that's a 20% increase in the price of apples. But the Chained CPI computation would say that if the price of apples goes up 20%, then people will switch to oranges instead, if those are going up only 5%, and the lower 5% figure will be used in the Chained CPI computation.

Thus:

Social Security cost of living increases would decrease. Payments would still increase each year, but by 2020 they'll be 5% less than the would have been.

Tax brackets will increase more slowly, meaning that people will be pushed into higher tax brackets more quickly, and have to pay more taxes.

So government payouts would increase less quickly, and tax collections would increase more quickly.

Now, no one really wants to see Social Security cut. I don't, because I'll probably be on it before too much longer. But I also know that there's no choice, and that Social Security and Medicare are probably going to be thrown out completely when the real financial crisis arrives. I'm all for reviving those "death panels" we used to hear about a couple of years ago -- just put us out of our misery when the time comes. You'll be doing us a favor.

The Chained CPI concept is favored by the White House and some Republicans and Democrats in Congress, because it has these advantages:

It will raise taxes and cut entitlements.
Nobody's heard of it.
Even fewer people understand it.
The name "Chained API" is weird.
Therefore, no one will complain about it.

Well, it turns out that the last item is untrue. Democratic Senators Dick Durban and Harry Reid are strongly against it because it cuts social security increases.

Or let's see how radical feminist chick Bryce Covert puts it:

"As Brad DeLong put it yesterday, “’Chained-CPI’ is code for ‘let's really impoverish some women in their 90s!’” This change would end up reducing benefits by about .3 percent each year and will hammer elderly women. ...
This hurts women more than men because they are more likely to live longer and to be poor while they do so. The NWLC reports that a woman is twice as likely as a man to get to age 95, scrounging for ways to pay for two weeks of food."

So, we're talking about a debt of $16 trillion dollars and growing rapidly, and we have to listen to this feminist chick get hysterical about a 0.3% cut, when in fact we're going to be forced into a 50-100% cut before too much longer.

So this brings us back to the fiscal cliff negotiations. Taxes are going up on "the rich" because President Obama wants that, even though it accomplishes nothing. But cut Social Security benefits by 0.3%? That's hammering elderly women, so we can't do it. We can't do anything else, either. It's a farce and a disaster. Washington Post and Bryce Covert (The Nation) and Moment of Truth Project

Russia sends warships to Mediterranean for evacuations from Syria

Russia's navy has sent five ships -- three warships and two support ships -- from Russia's Baltic Fleet to join Russian naval forces in the Mediterranean off the coast of Syria. There are some 20,000 Russian citizens in Syria, and according to the Russian military, the warships are being deployed as a contingency for the possible evacuation of Russian citizens from Syria, in case of the collapse of the government of Syria's president Bashar al-Assad. However, Debka reports that the warships are ill-suited for evacuation purposes, and that they're being positioned to send troops into Syria in case chemical or biological weapons are used by either side. In that case, there will be forces from Russia, the U.S., Israel, Jordan and Turkey, and possibly other countries as well, in Syria. Russia Today and Debka

Hugo Chavez battles respiratory infection, following cancer surgery

Venezuelan president Hugo Chavez, who underwent lengthy, complex cancer surgery in Cuba on September 11, has now been found to be suffering a respiratory infection. According to Cuba's Information Minister, "The general condition of the commander-president is stable after he was diagnosed with a respiratory infection and the medical team treated him immediately. It has been controlled." Reuters

Taliban terrorists kill six female polio vaccination workers in Pakistan

Five female polio vaccination workers in Karachi, Pakistan, and one more in Peshawar, have been shot to death in coordinated attacks. The perpetrators are assumed to be Taliban terrorists. Taliban leaders have been for years describing the polio vaccination programs as Western espionage, or as attempts to sterilize Pakistani children to prevent the births of more Muslims. These claims turned into demands after the American administration, in the process of bragging about having killed Osama bin Laden, revealed that a phony vaccination program was used to help establish the identity of bin Laden. The polio vaccination program has now been put on hold, but it's considered critically important for Pakistan, which appears to be on the verge of a large polio epidemic. BBC (Check out the BBC link for an interesting pictorial history of polio.)

(Comments: For reader comments, questions and discussion, see the 19-Dec-12 World View -- 'Chained CPI' proposal enters the farcical Fiscal Cliff negotiations thread of the Generational Dynamics forum. Comments may be posted anonymously.) (19-Dec-2012) Permanent Link
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Generational Dynamics Web Log for 19-Dec-2012 19-Dec-12 World View -- 'Chained CPI' proposal enters the farcical Fiscal Cliff negotiations

Domestic violence revealed in ancient Egypt

'Chained CPI' proposal enters the farcical Fiscal Cliff negotiations

Russia sends warships to Mediterranean for evacuations from Syria

Hugo Chavez battles respiratory infection, following cancer surgery

Taliban terrorists kill six female polio vaccination workers in Pakistan

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Generational Dynamics Web Log for 19-Dec-2012
19-Dec-12 World View -- 'Chained CPI' proposal enters the farcical Fiscal Cliff negotiations