THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Monday, February 3, 1997 TAG: 9702020014
SECTION: FRONT PAGE: A10 EDITION: FINAL
TYPE: Editorial
LENGTH: 50 lines
When Senate Majority leader Trent Lott, R-Miss., and President Clinton agree, action may be in the offing. When Fed Chairman Alan Greenspan talks, people listen. Does that mean there's hope for entitlement reform?
Voters in the November elections endorsed the pursuit of a balanced budget. And that will necessarily entail entitlement reform. Republicans and Democrats have differed on what reforms are acceptable, but the onus is clearly on them to reach common ground. Two developments this week may point the way.
Lott expressed support for the idea of means-testing Medicare, though that would appear to have a disproportionate effect on Republican voters. President Clinton said he wouldn't rule out such a step.
One such plan would require single retirees earning more than $60,000 a year and couples earning more than $80,000 a year to pay more for Medicare. The change would reduce the deficit by only $9 billion over five years, but every little bit helps. As a country, we have entitled seniors to more health care than we will be able to afford as the baby boomers age. A modest dose of means testing could be a small but significant part of a cure.
Greenspan has unmatched clout on economic matters and a track record of responsible reform when it comes to Social Security. He was instrumental in an earlier fix in the '80s. Last Thursday, Greenspan weighed in on the question of an adjustment to the Consumer Price Index.
Cost-of-living increases in Social Security and a host of other programs are tied to the CPI. The Boskin Commission recently endorsed a view that economists have long held, that the CPI overstates the cost of living by as much as 1.1 percent a year. That means hundreds of billions in excess entitlement payments over time.
Making a fix won't be easy. For one thing, the CPI is an important economic statistic beyond its use as a proxy for the cost of living. Altering it would cause difficulties for other users. For another, so much is riding on the cost of living that any adjustment in the measure must be insulated from political pressure.
Greenspan has made a proposal that addresses both problems. He calls for the creation of a new gauge designed solely to measure cost of living, not consumer prices. And he calls for the measure to be determined annually by a nonpartisan panel of economists. ``We should let evidence, not politics, drive policy,'' Greenspan said.
That may beg the question. Finding an apolitical economist isn't easy. But Greenspan's support is welcome nevertheless. There is no one magic bullet that will balance the budget and reform entitlements so the programs remain viable for decades to come. But one step at a time, the journey can be made. Last week, two sensible steps got a boost.