As the pro­lific and insightful author anony­mous once said: “The two things you don’t want to see being made are leg­is­la­tion and sausage.” The latest evi­dence for this same obser­va­tion is how the fed­eral gov­ern­ment man­ages and cal­cu­lates the Con­sumer Price Index.

Looking at how the CPI is cal­cu­lated shows how infla­tion is under­es­ti­mated and denies Social Secu­rity recip­i­ents full cost of living adjust­ments, eroding the real value of their Social Secu­rity income.

For the unini­ti­ated, the stan­dard CPI is the bench­mark mea­sure of infla­tion cal­cu­lated monthly by the U.S. Depart­ment of Labor’s Bureau of Labor Sta­tis­tics. Widely used and closely watched, the fed­eral gov­ern­ment uses it for mul­tiple pur­poses. For example, the CPI is the stan­dard means for adjusting Social Secu­rity ben­e­fits paid monthly to about 56 mil­lion Amer­i­cans. The goal of this cost-​​of-​​living adjust­ment, first paid in 1975, is to pre­vent a decline in the pur­chasing power of retirees’ benefits.

 

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