[Congressional Record Volume 141, Number 10 (Wednesday, January 18, 1995)]
[Senate]
[Page S1125]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


       SENATE RESOLUTION 63--RELATIVE TO THE CONSUMER PRICE INDEX

  Mr. DORGAN (for himself, Mr. Dodd, and Mr. Harkin) submitted the 
following resolution, which was referred to the Committee on Banking, 
Housing, and Urban Affairs:

                               S. Res. 63

       Whereas the Board of Governors of the Federal Reserve 
     System has maintained that the current Consumer Price Index 
     overstates the rate of inflation by as much as 50 percent;
       Whereas other expert opinions on the accuracy of the 
     Consumer Price Index range from those indicating a modest 
     overstatement of the rate of inflation to those indicating 
     the possibility of an understatement of the rate of 
     inflation;
       Whereas several leaders in the Congress have called for an 
     immediate change in the way in which the Consumer Price Index 
     is calculated;
       Whereas changing the Consumer Price Index in the manner 
     recommended by the Board of Governors of the Federal Reserve 
     System would result in both a reduction in Social Security 
     benefits and an increase in income taxes;
       Whereas the Board of Governors of the Federal Reserve 
     System estimates that a 1-percentage point reduction in the 
     Consumer Price Index, effected today, would generate 
     $150,000,000,000 in revenue over the next 5 years, including 
     $55,000,000,000 generated during the year 2000 alone;
       Whereas the Board of Governors of the Federal Reserve 
     System estimates that, of the $55,000,000,000 in revenue 
     estimated to be generated during the year 2000, 
     $27,500,000,000 would result from a reduction in Social 
     Security benefits and $21,400,000,000 would result from an 
     increase in personal income taxes, which would primarily 
     impact families with children;
       Whereas the Bureau of Labor Statistics, which has 
     responsibility for the Consumer Price Index, is working to 
     identify and correct problems with the way in which the 
     Consumer Price Index is currently calculated; and
       Whereas calculation of the Consumer Price Index should be 
     based on sound economic principles and not on political 
     pressure: Now, therefore, be it
       Resolved, That it is the sense of the Senate that--
       (1) a precipitous change in the calculation of the Consumer 
     Price Index that would result in an increase in income taxes 
     and a decrease in Social Security benefits is not the 
     appropriate way to resolve this issue; and
       (2) any change in the calculation of the Consumer Price 
     Index should result from thoughtful study and analysis and 
     should be the result of a consensus reached by the experts, 
     not pressure exerted by politicians.

  Mr. DORGAN. Mr. President, today I join my colleagues Senator Dodd 
and Senator Harkin to submit a sense-of-the-Senate resolution opposing 
any precipitous change in the way the Consumer Price Index [CPI] is 
calculated that is based on politics rather than sound economic 
analysis.
  The discussion in recent days by the Speaker of the House and some 
others about the calculation of the Consumer Price Index reaffirms the 
understanding that just because a person is thoughtless doesn't mean 
they can't also be reckless.
  The precipitous call for a change in the Consumer Price Index by the 
Speaker and others shows again how attracted they are to gimmicks and 
illusions to prop up the house of cards they call an economic strategy.
  This latest suggestion that they dub as technical is one that would 
cut Social Security COLA's for America's elderly and increase taxes for 
most of America's taxpayers--all of this under something that they 
would describe as a technical change.
  Let's review what's been said about this. Recently, Chairman Alan 
Greenspan of the Federal Reserve Board testified before Congress and 
said that in his judgment the CPI calculation overstates the CPI by 0.5 
to 1.5 percent.
  I will leave aside, for the moment, the question that begs to be 
answered. What on earth are Alan Greenspan and his buddies at the Fed 
doing raising interest rates six times if they think the real rate of 
inflation is only 1.2 to 1.7 percent.
  As to the question about the calculation of the CPI, the studies that 
have been done--and there have been several--stem mostly from research 
done by the Bureau of Labor Statistics that calculates the CPI. The Fed 
study shows it overstates inflation by one-half to 1\1/2\ percent. The 
Congressional Budget Office thinks it overstates inflation by two-
tenths of 1 percent to eight-tenths of 1 percent. And there are others 
in the academic community that think it may actually understate 
inflation.
  This weekend, when asked about Greenspan's comments, the Speaker of 
the House said that he would give the Bureau of Labor Statistics people 
``30 days to get it right'' or he would fire them and give the job to 
the Fed. And Dick Armey, the House majority leader, said he wants to 
change the CPI immediately. Of course the motive for both is that if 
they can use a gimmick like changing the CPI they will reduce the 
deficit by cutting Social Security COLA's and by increasing taxes and 
claim it's all just technical.
  The appetite to play these games to justify their economic proposals 
seems boundless. First they propose to change the way proposals in 
Congress are scored so that their proposals will look less radical. Now 
they do half-gainers at Alan Greenspan's suggestion that they change 
the CPI because they think that will be an easy fix to show a reduced 
deficit even though someone else--the elderly and the wage earners--
will pay the price.
  Because the Speaker indicated he would mandate the Bureau of Labor 
Statistics to make this change in 30 days or he would ``zero them out 
of the budget'' the three of us will propose today a sense-of-the-
Senate amendment to the mandates bill now on the floor expressing the 
sense of the Senate that changes in the CPI should be a result of 
consensus reached by experts; not pressure exerted by politicians.


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