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Via Workers World News Service
Reprinted from the June 20, 1996
issue of Workers World newspaper
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How Congress Quietly Cut Social Security

By John Catalinotto

You can tell it's an election year. Neither Republicans nor Democrats will take responsibility for significant cuts that they're both ready to make.

In the latest outrage, the two parties have conspired to cut Social Security benefits and raise taxes-without even debating or voting. This is a service to the very rich and a disservice to the vast majority of working-class people, especially retirees.

The case in point concerns new methods the Bureau of Labor Statistics is about to introduce for calculating the Consumer Price Index.

The CPI is an important statistic. It roughly measures how much the cost of living is rising.

It is used to determine things like the amount paid out in Social Security pensions. It also adjusts the level at which income-tax brackets change.

A reduction of one percentage point in the calculated CPI results in a $6-billion saving in the federal budget deficit. Slightly more than half this sum comes from reduced benefit payments. The rest is from increased income taxes.

Those who work with complicated statistics that depend on estimates know how subjective the interpretation can be. Different people, each using "reasonable assumptions," can come up with significantly different results.

It is even possible to decide what result you want and then come up with "reasonable assumptions" to get it.

Numbers Disguise Political Struggle

Central to the CPI in this case is not so much the mathematical accuracy of such an index-but the political struggle that determines if benefits are increased, taxes cut, and so on.

As 1994 ended, the entire capitalist establishment was pushing to reduce federal budget deficits. The real goal was to cut benefits the working class had won from the 1930s to the 1960s.

It should be no surprise that this was the very moment when some statisticians in the Bureau of Labor Statistics argued that the CPI was overstating inflation. They claimed they could arrive at a better CPI that would trim inflation--and Social Security payments.

This was an answer the ruling class wanted to hear, although some favored a more straightforward approach. In January 1995, House Speaker Newt Gingrich, then openly pushing the "Contract with America," didn't want to wait for a better CPI. He backed Federal Reserve Board Chair Alan Greenspan's suggestion to take the then-current CPI and simply cut it by one percentage point. (Washington Post, Jan. 16, 1995)

But such a blatant maneuver that cut Social Security might arouse a struggle. They decided to slide the cuts in quietly. The new calculation was accepted, and was to begin June 1996.

Then a Congressional committee of Republicans and Democrats realized that the Social Security cuts would take place just before the elections. In a remarkable show of bipartisan sleaze, they agreed to postpone the new CPI until Dec. 1--three weeks after the elections. (New York Times, June 1)

This deal amounts to a conspiracy by the two big capitalist parties to slip in a major cut in Social Security payments without drawing attention to their rotten role. It demonstrates the need for the working class, including its retired members, to have an independent organization to represent its interests.

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