Editorial: Congress trips over smallest of deficit steps

Potential adoption of an alternative index for calculating Social Security makes so much sense it was bound to precipitate the partisan back flips that are just so much more wasted motion in Washington, D.C.

President Barack Obama last summer suggested future benefits be determined using a chained Consumer Price Index that would moderate annual increases. The CPI used now has, over time, reflected slightly higher inflation than was true for the broader economy.

Use of the chained CPI was among the recommendations of the Simpson-Bowles committee that last year produced an admirable blueprint for solving the nation’s deficit problem, only to see it become another quickly discarded what-might-have-been.

The attraction of the chained CPI is simple: It saves money, about $300 billion over 10 years. Much of that comes out of the pockets of seniors whose benefits will increase at a slower rate. With a 3.6 percent bump in monthly checks pending – the first in three years – most would ask why Congress would diminish future increases.

The rest comes out of increased taxes. Personal incomes will rise faster than adjustments made to income tax brackets. The effect is a gradually increasing tax burden on lower- and middle-class wage earners.

The plan’s tax aspects ought to be catnip for Republicans, but they just cannot seem to get enough. In their latest stab at reaching a compromise in the supercommittee reviewing deficit reduction alternatives, they would chain the chained CPI to making permanent the tax cuts adopted under President George W. Bush and hastily extended by President Obama last year.

In effect, they would trade $300 billion in savings associated with adoption of the chained CPI for $4 trillion in new deficits over the same 10-year period.

Meanwhile, AARP and other defenders of Social Security are producing ads denouncing the new index and threatening any who would support it.

All of this is framed by a new analysis of U.S. Census data that indicates the gap in wealth between households headed by people 65 or older and those headed by those 35 or younger has doubled in five years and quintupled in the past quarter-century. The extraordinary economic reverses of the past four years account for much of the change, which is hardly comforting for the generations that will be handed the fiscal mess their elders have failed so completely to seriously confront.

Most news accounts describe a supercommittee that, with just two weeks to complete its work, is headed down the well-worn track to failure and partisan fault-finding. Switching to an alternative index for figuring retirement benefits undeniably will be painful for many. To spread the pain, it should be coupled with raising the ceiling on income subject to withholding.

But, compared with the overwhelming challenges posed by entitlements, adoption of the chained CPI will yield only incremental savings. If the supercommittee and Congress cannot make this change – supposedly supported by both parties – where is the will to solve the nation’s much bigger problems?