Price index deal would cut wages, benefits

by Tim Wheeler

This article was reprinted from the May 3, 1997 issue of the People's Weekly World. For subscription information see below. All rights reserved - may be used with PWW credits.

President Clinton told a CBS interviewer April 27, that he is willing to "take the heat" in pushing for a downward revision in the consumer price index (CPI) as part of a deal to break the deadlock on the 1998 federal budget.

Republicans have been demanding the CPI revision as a disguised tax on low income senior citizens' meager social security benefits. A one percent downward revision in the CPI would slash Social Security benefits by at least $140 billion over the next 10 years - balancing the budget on the backs of the elderly and the poor.

Clinton claimed there is an "overwhelming consensus" that the CPI overstates the inflation rate, thereby granting seniors and other Social Security recipients higher cost-of-living (COLA) benefit increases than they are entitled to. He said he will support the revision providing that the reformulation is based on the "merits" of the case rather than "politics."

But the AFL-CIO, the National Council of Senior Citizens, the American Association of Retired Persons, and scores of religious organizations are outside this "consensus" and remain staunchly opposed to the CPI revision. Organized labor is opposed to a CPI downward revision because it would undermine COLAs in union contracts, costing workers ultimately tens of billions in lost wages.

Jennifer Vasiloff, executive director of the Coalition on Human Needs in Washington which unites 100 churches, unions, and other anti-poverty groups, said, "This idea keeps popping up. It shows that it is a continuing threat and we are very concerned about it. It would mean cuts not only in Social Security benefits but also in many low-income benefit programs. It offers our elected officials an easy way out, a technical fix to reduce budget deficits rather than making all the hard choices on spending priorities."

The intense maneuvering on the issue, she added, was brought home when the Washington Post reported Tuesday that Senate Majority Leader Trent Lott "won't support a revision of the CPI." Eric Smith, a spokesperson for House Minority Leader, Richard Gephardt (D-Mo.), told the World, "Mr. Gephardt is absolutely opposed to any revision in the CPI."

Both Lott and House Speaker Newt Gingrich have backed away from the CPI revision on grounds that a majority of Republican lawmakers will not support it. They are gun shy after a 1995 memo by Clinton adviser Harold M. Ickes surfaced detailing how Democrats would pillory GOP candidates for ramming through the CPI revision. It included a draft fundraising letter accusing the Republicans of "a cowardly, back-door political gimmick to take tens of billions of dollars out of the pockets of senior citizens."

Now Clinton is trying to find a bipartisan cover for the measure so that voters will be unable to exact vengeance for the foul deed in the next election. That is what happened in 1986 when a "bipartisan" commission whipped up hysteria that Social Security was "going broke" A bipartisan majority of both houses of Congress approved higher Social Security taxes, cuts in benefits and a higher retirement age. President Reagan signed it.

Michael Jay Boskin, a director of the Exxon Corporation and a right-wing economist at Stanford University, is one of the key propagandists for the CPI revision. Boskin wrote such books as Too Many Promises: The Uncertain Future of Social Security.

Lott last week told reporters he expected President Clinton to yield on the CPI revision in exchange for his support of the treaty banning chemical weapons. The GOP is also obstructing a Senate confirmation vote on Alexis Herman as the next Labor Secretary demanding that Clinton cancel his plan to issue an executive order that only union construction firms be hired on federal construction projects.

Last Tuesday rumors swept Wall Street that Clinton had reached agreement with the Republican leaders to go along with a quarter of a percent downward revision in the CPI. It touched off wild trading on the Stock Exchange with blue chip stocks surging 173 points, the biggest point gain ever.

Martha McSteen, president of the National Committee to Preserve Social Security and Medicare, has blasted the proposed CPI revision.

"Low-income seniors now have a tough enough time making ends meet. Without an adequate inflation adjustment, many more will be forced to choose between food and medicine," McSteen said.

Many economists and senior advocates, including McSteen's group, argue that the CPI seriously understates inflation's inroads on senior citizens' purchasing power. Health care costs, especially the cost of medicines, for example, have skyrocketed at double digit rates for the past decade or more.