CNN - Budget cutters take hard look at Social Security - Sept. 27, 1995

Budget cutters take hard look at Social Security

September 27, 1995
Web Posted at: 11:01 p.m. EDT

From Correspondent Charles Bierbauer

WASHINGTON (CNN) -- Most politicians usually wouldn't touch Social Security with a 10-foot pole. But with other budget cuts, such as Medicare and welfare, becoming so painful, the pole may get shorter.

Members of Congress are talking about reducing the cost of living adjustment for Social Security, and it no longer seems to be such a political taboo.

[fletcher] Bernyce Fletcher gets a monthly Social Security check of about $600. She doesn't count much on the annual cost of living adjustment. "It's nothing, only about $5 or $6. (It's) no good, OK? " she's says. Not OK for her, and not likely to get any bigger.

The consumer price index, which determines that cost of living adjustment, is too generous, according to a study commissioned by the Senate Finance Committee. Sen. Daniel Moynihan, D-New York, says the consumer price index overstates the cost of living between .7 and .2 percent. So, the senator proposes reducing the cost of living adjustment by 1 percent.

A couple with the average 1995 Social Security benefit of $14,136 would receive $14,532 next year if the CPI remains at this year's level, 2.8 percent. The couple would get about $140 less under Moynihan's proposal.

The big difference shows up over time. Seven years from now, at the same CPI rate, that couple would get more than $17,000. With a lower living adjustment, they would get just over $16,000. Apply the savings to all programs linked to the consumer price index -- Social Security, government retirement, income tax brackets -- and it's big money.

[fmoynihan] "In 10 years time, it picks you up $634 billion," Moynihan says. "In 15 years time, well past the trillion mark. Compound interest is so powerful." Savings of that magnitude could reduce, but not eliminate, the need for savings in Medicare.

Can a lower cost of living adjustment be sold to the public? One Texas Republican thinks so. "We say as we bring down the consumer price index, inflation is going to come down and so that is going to benefit the retirees," says Sen. Lamar Smith, R-Texas.

Can it be sold to the politicians? Senate Majority Leader Bob Dole says it has merit if both parties and the White House are on board. White House officials weren't ready to commit to any change. "I can't say that because it's not at all clear that Congress will take up this idea they seem seized of at the moment," says White House Spokesman Mike McCurry. "But we'll have to see if they do anything with it."

There is a hint of momentum on Capitol Hill, even though for years touching Social Security has been considered a political death wish. Members of Congress say their Medicare choices are so tough, that slowing Social Security too may not be such a bad idea, so long as everyone has a hand in it.

Budget cutters take hard look at Social Security

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