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Via Workers World News Service
Reprinted from the Dec. 19, 1996
issue of Workers World newspaper
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Cooking the books to cut Social Security

What's behind the move to lower Consumer Price Index?

By Deirdre Griswold

Fables and folklore from the feudal period are full of parables warning the rich not to risk their downfall by being too greedy.

There's the story of the goose that laid the golden egg. The goose's owner, not content with finding an egg every few days, kills the bird to get them all. But he finds that only a living goose produces eggs. The subliminal moral: don't beat your peasants to death.

There's the story of King Midas, who gets his wish that anything he touches will turn to gold. And so he turns his own beloved daughter into a heap of metal.

The modern capitalist, however, being thoroughly pragmatic, long ago shed any moral scruples over accumulat ing great wealth. More is never enough.

Capital is such a shape-shifting, fluid substance that it can be put to any use-houses, yachts, fine art. And best of all it can be reinvested to produce even more capital.

Squeezing value out of labor

Karl Marx showed with iron logic 150 years ago that only human labor produces value. Capital must always try to squeeze more out of labor, reducing workers' wages down to bare subsistence in the drive to appropriate an ever bigger share of what the worker produces.

It is only when workers unite and fight vigorously-the class struggle-that they can moderate this tendency. And even then, the first serious capitalist crisis can wipe out their gains unless the workers are organized and prepared to fight to end exploitation and restructure society on a socialist basis.

This Marxist view was held up to ridicule for much of the post-war period as living standards rose in the United States and other industrialized capitalist countries. But a slew of statistics showing a steady decline in workers' real income in recent years makes it harder to dismiss the Marxist view of capitalist exploitation.

Capitalist restructuring has wiped out millions of full-time jobs in unionized industries. Newly created jobs tend to pay close to minimum wage.

Many people can find only part-time or contract work without benefits of any kind. Often they work two of these miserable jobs to maintain their old income.

This has not stopped the anti-worker offensive, however. It is only taking on a new form.

Blame the figures!

Now the apologists for capitalism have come up with a brilliant new idea. The problem is not that workers' wages have dropped. The problem is that government statistics have been wrong.

They want to change the way the Consumer Price Index is figured. If inflation is judged to have been lower, then today's wages and benefits are really worth as much in real dollars as incomes of 10 or 20 years ago.

This approach is as old as accounting. It's called "cooking the books."

The campaign to recalculate the CPI was initiated two years ago by Federal Reserve Bank Chair Alan Greenspan-an unelected official with more power over the economy than the most powerful Congress member.

But Greenspan only floated the first trial balloon. The capitalist politicians had too many other things on their plate at that time: cutting all the so-called discretionary programs like health, education and welfare while making sure the military continues to wallow at the trough.

Now Greenspan's proposal is back on the table. A panel appointed by Congress and headed by Stanford Economics Professor Michael J. Boskin recommends creating a new index that it says would reduce the perceived rate of inflation by over 1 percent a year.

That sounds modest. But in fact it involves a shift of tens of billions of dollars to the government.

Who loses?

Assault on Social Security

First of all, retirees on Social Security and disabled recipients of SSI. Their checks are indexed to inflation. Lower the official inflation rate and Social Security payments will be smaller.

Veterans' pensions would also be lowered. So would Cost-of-Living Allowances-COLA-in union contracts, which are pegged to the CPI.

Remember all those fervid promises about not raising taxes? That was supposedly why all the budget cuts had to be made.

But tax rates are also set according to inflation-what is called "bracket creep." Even if you earn more, you can stay in the same tax bracket next year as long as those extra dollars reflect inflation.

But lower the official inflation rate, and you may move up into a higher tax bracket. Just a sneaky way of raising taxes.

Seniors, veterans, unionized workers, taxpayers-all would be hurt by revising the inflation index. What politician wants to be held responsible for such an attack?

That's the problem now facing Clinton, Congress and the Federal Reserve. They want to find a way to steal this money-estimated at $50 billion over the next five years-out of the people's pockets. But who will take the flak?

The most secure way is to get both capitalist parties in Congress to pass a law establishing a new way of calculating inflation-maybe even setting up a new entity to replace the Consumer Price Index.

Both Democrats and Republicans are for it, according to a report in the Dec. 1 New York Times. But they have to find a "politically defensible" way to do it.

They'd love to come up with a way to do it quickly, before most people realize what's going on-and preferably without having to vote at all.

End of memory, not of history

These capitalist politicians have short memories.

What worries them most is the electoral fallout when these vicious measures take effect. They have lost sight of the larger social questions.

The last generation of politicos knew enough about the Great Depression to know that this capitalist system is subject to devastating crises, when production can grind almost to a halt and hundreds of millions of workers around the world suddenly find their very survival at stake.

They knew that while Social Security, unemployment insurance, welfare and other social programs instituted in the 1930s might not eliminate capitalist crisis, they could soften its social and political effects. In many countries around the world, the very survival of the capitalist system was in question.

This is not the end of history. But it may be the end of memory as far as the present generation of capitalist politicians goes.

For example, Sen. Tom Daschle, Democratic minority leader, recently suggested that people paying into Social Security should be "allowed" to divert some of those funds into the stock market. Presumably, they'd get bigger returns.

But what if the market crashes? What if a good percentage of their savings goes up in smoke? Does Daschle not know this is a distinct possibility?

Greenspan pretends to remember. He even warned the high rollers recently that the stock market was overvalued. Yet he pushes relentlessly forward to cut the incomes of retirees and workers with this inflation-indexing gimmick.

It is up to the progressive movement to remember, and not be seduced by the view that capitalism moves onward and upward forever. Each new speculative bubble, each new assault on the workers brings closer the day when millions will be urgently looking for answers.

Today, it seems that the masses are quiet and the movement has all the time in the world on its hands. But let the chaos at the heart of the capitalist system burst out and history will once again march forward at breathtaking speed.

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