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Show THE VOICE OF BUSINESS 5 The case tfor freezing COLAs I By Richard L. Lesher, Pres.. Cha mber of Commerce of the United States Sooner of later, it will dawn on members of Congress that the only workable strategy for reducing projected pro-jected budget deficits is to seriously attack at-tack the spending side of the equation. In anxious and hopeful anticipation of this awakening. I would like to propose an action which would in a single stroke reduce the projected deficit for fiscal 1983 by $20-$25 billion: Congress should free for one year the automatic cost-of-living adjustments (COLAs) contained in more than 70 federal programs, including Social Security, veterans pensions and federal civilian and military retirement pensions. pen-sions. I recognize that any proposal to change these programs is by nature the hottest of political potatoes, and subject to extremist demagoguery about throwing throw-ing the nation's retirees out into the streets. So before the politicians beat up on the idea, let's take a dispassionate look at the facts: -The rapid growth of COLAs has been a major cause of runaway federal spending. From 1978 to 1981, these increases in-creases in benefits cost the American taxpayer $69 billion. Over the next two years, they will cost $47 billion. -Most federal COLAs compensate fully for increases in the Consumer Price Index ( CPI ) , a measurement that has long been recognized as an overstatement of inflation. By contrast, less than five percent of private pensions pen-sions have automatic COLAs at all. And, the average yield of cost of living wage hikes granted in collective bargaining agreements is about 60 per-. per-. cent of the CPI. This amounts to a great inequity for those who are still working in the private sector. -In every year since 1970, Social Security benefit increases have gone up faster than wage increases. Since 1978, benefit-! for Wial Security and other programs have increased nearly twice as fast as after-tax wages. In some; cases, federal civilian and militarv; COLAs have led to pensions for recea retirees that are actually higher thai , the incomes of the workers now holding thnspjobs. '' -The average after-tax per capita in -come of persons 65 and older was Rain Ra-in 1978, while that for the entire pepaia-1 lion was just $3,412. This doesn't i& elude non-cash income such as-Medicare as-Medicare and Medicaid benefits, nutri ; tional and energy assistance programs.-;; and housing services of which large 1-portions 1-portions go to the elderly. Nor does rri take into account the fact that 80 pern cent of the aged own their own homes -with 70 percent of those having paid-uf s mortgages. -A one-year COLA freeze would 4-more 4-more than help workers catch up itl r the increases of retirees. Robert A.-?: Myers, former Chief Actuary of Social Security Administration-:: believes it would also solve the short.; run financial problems of the Sociar Security system for ud to in years, The evidence is overwhelming that f I one-shot freeze of the cost of living : justments in Social Security and otbes: programs is a reasonable measure tha :-; would not cause undue suffering amonf retirees. No one is suggesting that an);f? benefits be cut -only that we skip an in crease just once. This would enable it , not only to significantly cut the budges ;, and score further victories in our batuV-against batuV-against inflation and high interes-j rates. It would restore financial viability viabili-ty to Social Security and restore sonK-fairness sonK-fairness to a situation in which the,, who still work have been getting fai smaller increases than those who ; longer work. : At a time when thousands of worker are forgoing additional benefits a: : pay increases in order to keep thenar, jobs, and when millions of Americans: don't have jobs, is it really too much It : j ask the beneficiaries of federal JW:-; grams for this one small sacrifice- |