I know that my short-term memory isn't very good (a result of my Y chromosome, by my wife's explanation) but I could have sworn that the big issue in the last election from the left (beyond the war of course) was the indictment that real wages were not increasing -- i.e. that the average worker's wages were growing more slowly than inflation.
Now, this hypothesis was mostly bullshit, particularly when you factored in benefits with wages, but economic facts have never stood in the way of a little populist class demagoguing. However, now it appears that when push comes to shove, no one on the left really believed any of it.
The other day, Kevin Drum posted this:
At the Democratic debate yesterday, Tom Vilsack
proposed a slow reduction in future Social Security benefits by
switching from wage indexing to price indexing
A number of folks, most on the left, called it a really bad idea. Drum himself didn't have a definitive opinion, but seemed to think the idea at least screwy. Why? Well, these folks all thought that a shift from wage to price indexing would reduce benefits, and in fact that is what Vilsack thought -- he proposed it as a way to help close the future cash flow gap in Social Security. Am I understanding this right? Because the only way that this switch could reduce benefits would be if wages were growing faster than prices! Surely I must be missing something? Do we really have a bunch of Democrats all criticizing a plan because everyone universally assumes wages increase faster than prices? Doesn't this contradict their whole meme in the election?
So I followed a link in one of these posts to the Center for Budget and Policy Priorities (I don't know how they would describe themselves politically, but looking at their body of work on the home page, you won't confuse them with Cato). Apparently, this re-indexing scheme was also proposed by GWB (I missed that) and this site was criticizing his plan because it would reduce benefits. And yes, there was the key line (emphasis added):
Under current law, initial Social Security
benefits for each generation of retirees grow in tandem with average wages in the economy. This ensures that each generation receives Social Security benefits that reflect the living standards of its times. Full "price indexing" would make a change in the Social Security benefit formula so that initial Social Security benefits would keep pace only with prices, rather than wages, from one generation to the next. Because prices increase more slowly than wages, this would result in progressively larger benefit reductions over time
There you have it. Democrats and the left criticizing a plan because they assume wages go up faster than prices, so re-indexing from wages to prices would reduce benefits. In fact, the folks I read accept this fact as so fundamental, everyone just assumes it to be true. Is this wildly hypocritical or what?