Who should do the paying as we go? All forms of revenue and expenditures should be on the table-entitlements, taxes, defense, and all the social programs. Everything. That includes something called “indexing,” whereby the spending in certain federal programs is increased to compensate for the inflation rate. More accurate indexing would save big money and help the economy.
Inflation is probably overestimated between 0.7% and 2%, probably closer to 2%. For example, the Consumer Price Index deals with a fixed market basket each month, but does not permit flexibility. If the price of beef goes up, many people switch to chicken, but that is not taken into account.
If the CPI were reduced by 0.5%, in the year 2005, the savings would be $73 billion. Some politicians view indexing as a sacred cow [because it effects Social Security payments], but they shouldn’t.
