Senate salary reduced 65 percent by Fed inflation
Washington, DC – September 18, 2012 – Inflation has reached the halls of congress. U.S. senators are paid about 65 percent less than what they were paid in 1998. Senators earn 40,000 more dollars, but those dollars are worth less.
To keep pace with inflation, senators would need to take home about $500,000, or about four times more. This is not surprising since the price of gas rose four times as well since 1998.
Instead of using the Consumer Price Index to measure inflation, an organization called Monetary Choice uses the price of a basket of raw materials that includes 38 items, such as oil, coffee, and sugar. These items are used in most products people buy.
In 1998, a senator’s salary was worth 137 of these commodity baskets. Despite now being paid $40,000 more in 2012, a senator’s current salary can only buy 48 commodity baskets. A 65 percent decrease.
Monetary Choice blames the Federal Reserve for issuing 230 percent more dollars during the past 14 years.
“There were 2.7 trillion dollars in 1998. Now there are 8.7 trillion. These new dollars have reduced the value of all existing dollars, for senators, their staff, and their constituents,” said Dave Doctor, president of Monetary Choice.
Doctor says the solution is to rein in Federal Reserve. The House recently passed a bill to audit the Federal Reserve, and the senate could vote on a similar bill any day. An audit would promptly expose the banks and companies that request loans, which provide a reason to issue more dollars. Mr. Doctor expects the audit’s publicity would convince these firms to seek new investors instead.
“Had the Senate starting auditing Federal Reserve back in 1998, their paychecks, and the salaries of their constituents, might still have the same value,” said Mr. Doctor.
With million-dollar net worths, many senators may disregard the lower value of their salary. However, their constituents definitely care, especially when they buy groceries – something they will do many times before the November election.
Monetary Choice offers an inflation calculator that allows anyone to see if their income is worth as much as they were paid as far back as 1998. Mr. Doctor suggests that people request raises to make up for the falling value of the dollar.
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