[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.
____________________