Sarah Cohen, a professor at the DeWitt Wallace Center for Media and Democracy at Duke, and a one-time reporter for the St. Petersburg Times, sent along a story she had written in 1995, another era when there was serious talk of reforming Social Security. “Some stories never die,” she wrote. Sixteen years ago there was talk of privatizing Social Security and letting people invest their contributions in private accounts offered by investment firms. And then, as now, there was a move to change the way the cost-of-living adjustment was made. The headline of Cohen’s story, “Changes in CPI can be dear,” said it all:
Latching on to a decades-old statistical debate, lawmakers may soon tell working and retired Americans that they are overpaid and undertaxed. The political change of heart comes from an economic theory that holds that the nation’s main gauge of inflation, the Consumer Price Index, overstates the increase in price of everything from medical care and food to clothing and education.
She reported that the government wanted to reduce the “bias” in the CPI and “with the stroke of a pen, Congress could save $281-billion over seven years simply by shaving 1 percentage point a year from the inflation rate estimated by the CPI.” She wrote that supporters of changing the COLA formula back then “say making the change is simply fair: Americans have gotten away with a windfall because of the technical problems in producing an accurate cost-of-living index.” She interviewed New Jersey investment adviser A. Gary Shilling, who said oldsters have “been getting away with highway robbery.” The change would not bite as much at first, but Cohen pointed out that benefit cuts could snowball pretty fast.
Boy, that sounds familiar. These days, proponents of change argue that the current CPI “overstates inflation” and that the new, proposed Chained CPI could reduce annual benefits, on average, by about three-tenths of a percentage point and save about $112 billion over ten years. In some circles there’s a belief that the current CPI is also overpaying Social Security recipients. As Sean Snaith, who directs the University of Central Florida’s Institute for Economic Competitiveness, recently told The Palm Beach Post, “what we’re trying to do with these cost-of-living increases is not increase their standard of living, but keep them from losing their standard of living.” This year’s proposed cuts would also snowball pretty fast. Someone retiring at age sixty-five could expect 3.7 percent less in benefits at age seventy-five, and 6.5 percent less at age eighty-five.
Cohen produced an illuminating piece of journalism for her readers, showing clearly, with examples, how people would fare from changes in the COLA formula. That kind of detail has been missing from the reporting currently being produced by news outlets. How I wish today’s crop of stories about the chained CPI were as thorough and intelligible as Cohen’s was. Readers could quickly tell what was afoot among Washington’s economic gurus and maybe even weigh in on the debate as citizens are supposed to do. Cohen’s piece offers great context for reporters writing about the subject today. Yes, some stories never die. It’s just that those reporting them follow different rules. Context? What’s that?