The consumer price index, which determines that cost of living adjustment, is too generous, according to a study commissioned by the Senate Finance Committee. Sen. Daniel Moynihan, D-New York, says the consumer price index overstates the cost of living between .7 and .2 percent. So, the senator proposes reducing the cost of living adjustment by 1 percent. The big difference shows up over time. In 15 years time, well past the trillion mark.
Compound interest is so powerful.
Savings of that magnitude could reduce, but not eliminate, the need for savings in Medicare. One Texas Republican thinks so. Senate Majority Leader Bob Dole says it has merit if both parties and the White House are on board. White House officials weren't ready to commit to any change. But we'll have to see if they do anything with it.