WASHINGTON -- The report of the Boskin commission on flaws in the Consumer Price Index offers President Clinton and the Republican leaders of Congress an extraordinary opportunity to finally come to grips with the federal deficit.
It is also a clear test of their ability to put aside politics as usual and solve a pressing national problem. But it is a test that, based on political history, there is little reason to believe they can pass.
There is no great mystery in the budget problem. Everyone on both sides recognizes that in the long run the only answer to continuing deficits is to restrict the growth of the federal entitlement programs. Everyone on both sides also knows about the extreme political dangers involved in messing around with Social Security or Medicare benefits or veterans' pensions or a hundred other things determined by the CPI.
The political sensitivity of these questions was apparent the last time any changes were proposed in Social Security, more than a decade ago, when the two parties had to join hands in a bipartisan commission so that neither would catch the political blame. And that same sensitivity was obvious earlier this year when the Democrats successfully persuaded many retired voters that Republicans were trying to "cut" the Medicare program.
The report on the CPI is a kind of politically neutered organism because it was produced by a congressionally appointed commission headed by Michael Boskin, an economist who served as chairman of the Council of Economic Advisers in the Bush administration. It found that the CPI now overstates inflation by about 1.1 percentage points largely because it no longer accurately reflects the buying habits of Americans or the options available to them in the marketplace.
The index is important because it determines the rate of increase in federal payments for Social Security as well as some indexed tax payments. Thus, the commission found that a 1-point reduction would save the federal government about $500 billion over the next decade, an amount that obviously would go a long way toward reaching a balanced budget.
The hitch, of course, is that someone would have to pay. But the amounts are modest. If the CPI were reduced a single point, the government fiscal experts say, the average Social Security payment starting next month would rise from $724 to $737 a month rather than the $745 now scheduled, a reduction in benefits of $8 a month or $96 a year. On the tax side, a family of four with an income of $50,000 a year would pay just under $100 a year more.
But the index is used in private industry as well as government financing. And that includes many labor contracts, so it was no surprise that John Sweeney, president of the AFL-CIO, quickly called the commission's proposal "cooking the books." Nor was it any surprise that the American Association of Retired Persons, the chief lobby for the aged, rejected the idea out of hand.
The reaction from both the White House and Republican leaders has been similarly predictable. The White House is taking what it called a "wait and see attitude," while Senate Majority Leader Trent Lott quickly said he "would like for the president to lead on this." The message is clear: Despite all the talk of bipartisan cooperation in the coming year, there is deep suspicion on both sides. Nobody wants to walk the plank alone.
This is just the kind of thing that voters seemed to be saying in the last two elections that they most abhor -- the inability of government officials in both parties to deal with significant concerns because they are too preoccupied with saving their own skins. But those same voters have also demonstrated repeatedly that, despite their demand for solutions, they will retaliate against anyone who gores their ox.
The fact that it may be difficult to use the Boskin commission report to find a quick fix to the budget problem doesn't mean, however, that it can't be a starting place. One of these days they are going to have to face reality.
Jack W. Germond and Jules Witcover report from The Sun's Washington bureau.
Pub Date: 12/09/96