Fix the CPI Yardstick Now
The first boomer president has finally set in motion the potential Big Solution to the Big Baby Boomer Problem of the next century. But he has done so almost invisibly. And some GOP leaders seem inclined to take their time responding unless Mr. Clinton leads more accountably.
The problem is the well-known march of boomers toward retirement and the consequent march of Medicare (sooner) and Social Security (somewhat later) toward insolvency.
A major part of the solution ought to be, if we're honest, adjusting the consumer price index (CPI) to reflect the reality of inflation in America.
The vehicle for achieving that solution will be the appointment of yet another bipartisan commission to tackle the supposedly third-rail issue of redesigning the CPI, on which cost-of-living adjustments (COLAs) are based.
Change the yardstick and you change practically everything economic on the American landscape. The upward adjustment of Social Security benefits and private and government pensions slows. Income tax collections rise. Pay scales tied to the CPI expand less. Mortgage and consumer interest rates tend to be lower as private-sector lenders and the Fed see lower inflation figures.
In other words, such a large percentage of Americans is affected that politicians are, yes, cowardly - despite general agreement that the CPI has been vastly misleading us for years.
That explains why Clinton, the econo-wonk, will discuss CPI distortion with a White House guest but not take the lead to change the outdated measuring stick. He leaves it to his able budget aide, Frank Raines, to utter a quiet announcement that the administration is willing to join GOP Senate majority leader Trent Lott's call for a new CPI reform commission.
Even after such edging forward, Fed chairman Alan Greenspan has to jawbone for action because House leaders Newt Gingrich and Richard Gephardt are holding back.
Some $90 billion a year is wrongly taken out of today's workers' paychecks because of the CPI distortion. Michael Boskin, chair of last year's bipartisan CPI panel, estimates the federal deficit could shrink by $140 billion per year if the CPI reflected the more fast-moving reality of America's economy. Even a compromise reclaiming just part of the loss would be welcome.
We need prompt action on a new commission called for by Messrs. Lott, Raines, and Greenspan. We need to hear loud and clear persuasion from the man in the bully pulpit. The meter is running. Scores of billions continue to flow away from solving impending national mega-problems. It's time to save that money. It's time for honest national accounting.