Social Security’s ‘Chained COLA’ not ready for prime time

Social Security’s cost of living adjustments (COLA) are designed to protect against the erosion of retiree purchasing power when prices go up, as measured by the Consumer Price Index (CPI). “Now Social Security self-styled ‘reformers’ seek to lower COLA every year based on their claim that COLA overstates inflation,” says Merton C. Bernstein, LLB, a nationally recognized expert on Social Security. The proposed substitute for the current CPI formula, ‘Chained COLA,’ is based on the assumption that benefit recipients substitute lower-priced goods as prices go up. “This the assumption is unrealistic for those millions who only have access to convenience stores that typically offer fewer choice and higher prices,” says Bernstein, the Walter D. Coles Professor Emeritus at Washington University in St. Louis School of Law. “And, further, it is not reasonable to assume that most consumers can outwit the wiles of merchandising experts.”

Weidenbaum memoir offers inside look at rise of Reaganomics

For nearly a quarter century, Murray Weidenbaum has said little about what it was like to serve as the first chairman of President Ronald Reagan’s Council of Economic Advisers, a role in which he was a primary architect of policies later known as “Reaganomics.” Now, one year after Reagan’s passing, Weidenbaum has issued a brief memoir detailing his years as the president’s chief economic adviser.

St. Louis Fed’s Poole speaks on bond market at Olin School of Business

PooleIn a wide-ranging analysis of bond market fundamentals, St. Louis Fed President William Poole said the focus should be on long-term interest rate basics. “Longer-run fundamentals tend to get lost in a welter of short-run considerations that fade into oblivion quickly as a new set of short-run concerns dominate the news,” he said. Poole spoke to a group of financial analysts at Washington University’s Olin School of Business on”Prospects and Risks in the Bond Market,” Sept. 4.