Tags: Politicians | Underestimate | Living | Costs | Narrow | Deficits

Politicians Underestimate Living Costs to Narrow Deficits

Monday, 11 Jul 2011 08:52 AM

For decades, officials have been using poor methodology to gauge living costs, which makes it convenient for politicians to manage budget deficits.

The result, according to Barron's, is that the costs of living are understated, which means social security and other checks are smaller and therefore cover a lot less than what many feel they should be.

Lower inflation rates look good, and lower paychecks to the nation's seniors looks good, too.

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(Getty Images photo)
Things aren't going to get better soon.

"Social Security and vets' disability payments are tied to the cost of living, and, in their infinite wisdom, the politicos have concluded that the current gauge overstates inflation," Barron's reports.

Officially, inflation rates remain within Federal Reserve comfort zones.

While many are feeling the squeeze of higher prices at the gasoline pump and grocery store, core inflation rates, which are stripped of volatile food and energy prices and key for setting interest rates, remain low enough not to merit changes from currently loose monetary policies.

Fed Chairman Ben Bernanke has said the U.S. Central Bank will continue to pay close attention to inflation, but has said up to now that loose monetary policy stays.

The only thing that appears to be changing is Bernanke's popularity.
According to a Bloomberg National Poll, Bernanke is viewed favorably by 30 percent of those polled, compared with 26 percent who view him unfavorably; the remainder are unsure.

In September of 2009, Bernanke saw 41 percent approval and 22 percent disapproval, Bloomberg reports.

"It's a reflection of the fact that most Americans still don’t feel the economy is in recovery," says Greg Valliere, chief political strategist at Potomac Research Group in Washington, Bloomberg reports.

"If a team is doing poorly the quarterback gets a disproportionate share of the blame."

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For decades, officials have been using poor methodology to gauge living costs, which makes it convenient for politicians to manage budget deficits. The result, according to Barron's, is that the costs of livingare understated, which means social security and other checks...
Politicians,Underestimate,Living,Costs,Narrow,Deficits
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