Boskin report controversy
The Boskin report was no doubt commissioned to provide a justification for adjusting the CPI downward in an effort to reduce the future cost-of-living-related liabilities of the federal government. Adjusting the CPI downward also has the effect of increasing federal income tax revenues as the rising nominal incomes of the middle class push them up into higher tax brackets which are only partially corrected for inflation, (although this is no longer the case, since nominal incomes have remained flat since 2000.)
Certain things in particular are suspect in today's CPI:
- The share of medical care is only 6.627% in the CPI-U , and the BLS is only admitting a 3.0% annual inflation for medical services . This does not reconcile with the fact that health care spending is 17% of the economy, or with the double-digit rate increases that consumers are seeing.
- Correcting the so-called "outlet substitution bias" per the findings of the Boskin report has led to a CPI which if I recall right, particularly in the case of clothing, compares today's prices at discount retailers to those of luxury retailers years ago, finding a small price decrease over a whole decade in some cases.
- We don't see the cost of higher education reflected in the CPI, either, nor is it really part of the cost of living per se, although it has been skyrocketing right along with the medical sector. There are several reasons for this: first, 529 plans and easy student loans simply put too much money on the table, making it easy for university administrators to raise tuition without discouraging enrollment. Second, declining public support for higher education is part of the austerity necessary to cope with the enormous federal debt that has accumulated under the administrations of Reagan, Bush Sr., Clinton, Bush Jr., and Obama.
Even if we had a CPI that measured inflation accurately, we lack tools to fight it under such a heavy debt load. The $14T figure is only the amount of treasury securities outstanding; future unfunded liabilities run to $50T, putting our debt closer to $65T. The federal government would probably be bankrupt without the Boskin report, and the public finds a stealthy devaluation of our currency more palatable than the heavy taxes and harsh austerity measures that would be necessary to balance our budget and pay off our debt the "right" way. 220.127.116.11 (talk) 05:34, 22 June 2011 (UTC)
Gas and Food Prices
Gas and Food Prices represent the greatest common prices that consumers have to pay on a day to day basis.
So whole thing is very strange. When I can go to a grocery store and see prices on many items jump up to such an extent that are equivalent to 10 or 15 years of CPI inflation...but instead of 10 or 15 years, it is overnight. To put it another way: If gas and food, the most common commodities that consumers buy, inflate at high rates, then the higher rate should be reflected in the CPI. For example, if the major consumer costs go up such and such percent, shouldn't the CPI reflect a change of such and such percent?
Well, I seem to remember that the basic inflation rate doesn't include gas and food....like it doesn't come out of peoples pocket or something?
- The CPI does include gas and food prices. There ARE other indexes that exclude those things, and some economists think those indexes are more reflective of the inflation rate, because gas and food prices are volatile and subject to relatively wild short-term fluctuations. But no, the CPI does not exclude them.Cromulant (talk) 23:29, 25 January 2013 (UTC)
So, what happened as a result of this commission? I'm aware that the BLS has changed its methodology to factor in substitution, but I don't know if that happened specifically because of this commission.Cromulant (talk) 23:50, 25 January 2013 (UTC)