A headline, "Michel Backs Scaling Down Cost-of-Living Raises for the Aged," which ran in the Post Dec. 16, was inaccurate. The story concerned a suggestion by incoming House Minority Leader Robert H. Michel that Congress consider whether Social Security benefit increases should continue to be tied to the consumer price index as currently calculated. Michel did not himself endorse a change in computation methods, but said Congress should consider a two-track consumer price index which would reflect a different inflation rate for the elderly who do not, in general, pay high interest rates for housing.
The newly elected leader of House Republicans, Bob Michel, said yesterday that Congress should consider scaling down the automatic annual cost-of-living increases in Social Security benefits which since 1972 have been tied to the consumer price index.
Some 36 million people -- one out of seven Americans -- now receive monthly payments from the old-age and disability insurance funds, which together account for about a fifth of the federal budget. Various proposals have been made over the years to restrain the cost of these programs, but politicians have shied away from offending so large a segment of the population.
In a breakfast with reporters, Michel, whose influence as Republican leader is vastly enhanced by the fact that the GOP will control the Senate and White House next year and is gaining 33 House seats, said Republicans had cautiously avoided the emotion-changed issue before the election. Now, however, he said, "We can look at it, discuss it openly and above board."
Michel said, "We have to have hearings on how accurately the CPI reflects what is taking place in senior citizens' lives . . . With the kind of explosive inflation we have been having, the housing factor is an inordinate component for people over 65."
Because older people are not in the market for new housing, they do not have to bear the high interest rates that young people do -- and that the CPI reflects. Michel said Congress should "look at a two-track CPI directly bearing on those at the retirement level."
The Republicans are under considerable pressure to make good on their election-year economic promises lest the Democrats recover in 1982 and 1984. "We've got to have enough movement [on the economy] within 18 months or we will suffer irreparably at the polls to where we can't complete the job," said Michel, a longtime conservative from Peoria, Ill.
Given President-elect Ronald Reagan's program to cut taxes and increase military spending, Michel predicted that "the budget deficit may increase initially, but we have to more than make up for that in the second year.If not, we will suffer the wrath of the American people."
Michel said a key strategy will be to "arrest the growth of expenditures in entitlement areas," programs where no annual legislated appropriation is required. "Just thwarting the implementation of one having to do with nursing homes, for example, could save $600 million," he said. Other cuts could be made in trade adjustment assistance, a program which compensates workers who lose their jobs because of import competition, he added.
Michel also said he favors postponing the controversial "Moral Majority" agenda -- issues such as school prayer and antiabortion constitutional amendments -- and any conservative labor legislation until an economic program is passed. "It would be disastrous for us to invite concern in those areas which would arouse the ire [of labor]," he said. "We need their support in helping implement changes in the economy. Once you address these, then other goodies can be added later."