Running scared

     After some vigorous arm-twisting by the AFL-CIO and the American Association of Retired Persons, President Clinton has backed away from a plan to adjust the inflation index so that it reflects economic reality.
      What's at issue is the Consumer Price Index -- the federal inflation gauge compiled by the Labor Department. Every year, the federal government uses that index to calculate how much of an increase in monthly benefits each of the nation's 60 million Social Security recipients will receive.
      Problem is, there is a general agreement among economists, including Federal Reserve Board Chairman Alan Greenspan, that the CPI overstates the inflation rate by a bit more than 1 percentage point. This means that, for decades, the government has been paying Social Security beneficiaries cash to which they were and are not entitled -- a huge "bank error in their favor" amounting to tens of billions of dollars per year.
      Instead of asking Social Security recipients to repay the money, President Clinton backed a plan -- offered up by conservative Democrats and Republicans in Congress -- to set up a special commission to adjust the CPI to reflect economic reality.
      An adjusted CPI would extend the life of the Social Security trust fund by slowing annual cost-of-living increases and help balance the federal budget.
      But senior citizens and organized labor screamed bloody murder and Mr. Clinton last week withdrew his support for the commission idea. Some key Republicans are also wary of tinkering with the CPI, fearing -- with full justification -- that liberal Democrats will bludgeon them with the issue, just as they did with Medicare last time around.
      Lacking Mr. Clinton's support, the CPI adjustment plan is going nowhere fast: Senior citizens -- at least those who adhere to the AARP's line -- want that extra money whether they are entitled to it or not, and who cares if the Social Security trust fund goes belly up sooner rather than later?
      Mr. Clinton (and those Republicans who are running scared) did the thing that was politically safe, and shortchanged the nation as a whole.