Wednesday, May 22, 2013

Dispelling Chained CPI Myths


Dead on arrival… When President Obama released his budget recently, Congressional Republicans immediately shot it down. This was no surprise because the budget called for tax increases, which Republicans vehemently oppose. However, I was puzzled by the negative reactions of a few Democrats; after all, President Obama’s budget included many progressive ideas, such as more stimulus spending. What could have caused such dissent from his party? Well, the budget called for the adoption of Chained CPI to measure future inflation; a move that Democrats and Republicans condemned as an assault on seniors and a severe benefit cut
Shifting to Chained CPI entails updating and improving the way the federal government measures inflation for various government programs. The government indexes benefits (such as Social Security), in order to keep up with inflation, so that both rise at the same rate. The government has not changed the way it calculates inflation in quite some time. Since the 1990s, Chained CPI has been viewed as a more accurate measure of inflation than our existing policy because current estimates overstate inflation and, hence, benefits paid.
This brings me to the first myth about Chained CPI. Chained CPI is NOT a benefit cut. Chained CPI slows down the rate of growth of social security payments. Seniors will not wake up next month and receive any fewer dollars in Social Security benefits than they are used to. Chained CPI would shave only 0.3% off inflation estimates or about $9 annually for the average couple that retired in 2010. Under Chained CPI, Social Security benefits would keep up with cost of living, rather than increase faster than inflation as they do now. 
In fact, moving to Chained CPI actually helps strengthen Social Security. By 2033, the Social Security trust fund will be depleted and will require a massive increase in the payroll tax or a 25% across-the-board decrease in benefits. As the Baby Boomers retire over the next two decades, more and more pressure will be put on the Social Security trust fund. The worker-to-retiree ratio has fallen from 5:1 in 1960 to 3:1 in 2010 and will only continue to decline, which means less revenue to support beneficiaries. In two decades, Social Security will no longer be solvent. Imagine the horrors if the checks actually stopped coming! The shift to Chained CPI will help maintain social security for current and future retirees.
Another prevalent myth claims Chained CPI is a hidden tax increase that will hurt the poor, the disabled, and the elderly. Chained CPI will slow the growth rate for income tax brackets. Individuals right on the cusp of a higher tax bracket may suddenly be “bumped up” into a higher one. However, it is important to remember two points. First, due to our marginal income tax system, only the small portion of above the threshold will be taxed at a higher rate, and second, Chained CPI should be viewed as only one part of comprehensive tax reform.
Chained CPI alone will not solve our budget deficit problem nor will it close the Social Security funding gap, but Chained CPI or a similar policy will play an integral role in any budget deal between Democrats and Republicans. The switch has already been a part of most major bipartisan deficit-reduction plans (Simpson-Bowles, Domenici-Rivlin, Obama-Boehner). Fix the Debt, a non-partisan movement to fix America’s finances, states that the switch to Chained CPI will reduce the social security funding gap by 1/5 and reduce deficits by more than $300 billion over the next decade.
Chained CPI is not just smart policy; it is also smart politics. Congress and the President can easily find a way to make this happen and doing so will prove that both Democrats and Republicans are serious about solving America’s deficit crisis. Furthermore, Chained CPI does not just kick the can down the road to future generations. It asks all Americans, old and young, Democratic and Republican, to be willing to exchange a small amount of personal sacrifice for a whole lot of societal benefit.                 
Chad Kolinsky is a graduate of the University of Miami and a blogger for The Can Kicks Back (www.TheCanKicksBack.org), a non-partisan and Millennial-driven movement to fix the national debt. 

Sunday, May 19, 2013

4 Companies That Are Making Mad Money While Also Changing the World


A new business entity is starting to emerge throughout the world.  A benefit corporation is a for-profit business that focuses on some sort of benefit to society; compared to a regular corporation that works to maximize profits.  The increase in benefit corporations can partly be attributed to the coming of age of the millennial generation.  As I discussed in my last post, millennials are seeking jobs that have a real impact on the world; jobs, which may help those in need or save the environment.  This led to an intriguing question.  What millennial run companies that are making money, while improving the world?  Below is a short list of companies that came to mind.  Some may be benefit corporations and some may not, but it is clear they are all changing the world in one way or another.

1) TOMS Shoes:  After reading Blake Mycoskie’s (CEO of TOMS) book, “Start Something That Matters”, I could not be more impressed with this remarkable company.  Blake started TOMS in 2006 after a trip to Argentina where he was introduced to the alpargatas shoe.  This traditional Argentinian shoe is worn throughout the country and Blake wanted to bring them to the US.  At the same time he noticed many Argentinian children lacked shoes, which prevented them from going to school and increased the chances of infections.  These two ideas combined to form the One for One business model.  A true entrepreneurial pioneer, Blake decided that for every pair of TOMS sold one pair would be donated to children in need.  Today TOMS has donated over 2 million pairs of shoes and are sold in over 500 retailers worldwide.  TOMS has expanded their business model to eyewear and apparel as well.

2) FEED Projects:  Lauren Bush worked as an honorary spokesperson for the United Nations World Food Program.  During her travels, she encountered the horrible consequences of malnutrition and hunger in the world.  At the same time, Lauren noticed the reusable shopping bag movement.  Together these two ideas formed FEED Projects where every bag sold guarantees free school lunch for a year to a child in a developing country.  Because the children receive the meal at school, FEED Projects also helps these kids receive an education.  FEED Projects has been a huge success; partnering with companies like Amazon.com, American Eagle, and Whole Foods.  To date, FEED Projects has donated over $6 million and 60 million meals.

3) Change.org:  Ben Rattay founded Change.org and its mission is to “empower anyone, anywhere to start, join, and win campaigns for social change”.  A certified benefit corporation, Change.org is the world’s largest petition platform and makes money to “sponsored” petitions from organizations like Amnesty International.  Today Change.org has over 35 million users in 196 different countries.  In 2011, a Change.org petition with 300,000 signatures forced Bank of America to drop its $5 a month banking fee.  A 2012 petition with over 2.2 million signatures helped spur public overage over the death of 17-year-old Trayvon Martin.  Websites like Change.org have empowered people worldwide and will continue to grow their influence.  (Honorable mention to Causes.com.  A similar website created by Sean Parker, founder of Napster and the first President of Facebook).

4) Facebook.com:  With revenues of $5.1 billion in 2012, Facebook joined the Fortune 500 list for the first time.  When Facebook went public in 2012 the company was valued at $104 billion dollars.  It’s easy to see how Facebook makes money, but Mark Zuckerberg has also revolutionized the world.  Today Facebook is available in over 70 languages and has over 1.1 billion users.  This social network has transformed the way people communicate and share information.  Protest movements throughout the world have been emboldened by Facebook and other social networks.  As David Wolman wrote in Wired Magazine, “The Arab Spring has shown the world what is possible when you combine social unrest with brave citizenry and powerful digital tools.” 

What other should be on this list?  And why?  Share your comments / thoughts below.

Chad is a blogger for TheCanKicksBack, a non-partisan, Millennial driven campaign to fix the national debt and reclaim the American Dream and the founder of Purple State Politics.