Benefits and Wages
I had no hard opinion on Tom Vilsack's proposal to index Social Security benefits to prices rather than wages, although off the top of my head I see no real problems with reducing the higher end of Social Security benefits to ensure that the program doesn't chew up the entire federal budget over time. I did note that hilzoy of Obsidian Wings did not like the idea, and she seemed to be joined in that dislike by many other prominent lefty bloggers. But now Coyote Blog points out a rather interesting conundrum regarding that dislike: a number of lefties have complained for some time that real wages are stagnant. Kevin Drum stands out in my memory as having been particularly outraged by that issue.
To summarize Coyote Blog's argument, if wages aren't growing, then indexing Social Security benefits to prices ought to increase benefits rather than decrease them. The only way indexing SS to prices would decrease benefits were if wages are growing faster than prices, which would mean that real wages are also growing since purchasing power is increasing.
I have little interest in claims of hypocracy, as Coyote Blog makes; hypocrisy, as they say, is the homage vice pays to virtue. But I am curious if the same people who say real wages are stagnant also think Vilsack's proposal is a bad idea because it would reduce SS benefits, because that does appear to be contradictory. Any economists out there want to enlighten me?
Update: typo fixed.