[Congressional Record Volume 141, Number 13 (Monday, January 23, 1995)]
[Senate]
[Pages S1345-S1351]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      UNFUNDED MANDATE REFORM ACT

  The Senate continued with the consideration of the bill.
  Mr. BINGAMAN. Mr. President, under the unanimous consent agreement 
that we are operating under, I had reserved three amendments to be 
offered to this bill, and I now ask unanimous consent that we set aside 
the pending business so that I can offer the third of those three 
amendments.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 194

  Mr. BINGAMAN. Mr. President, I send an amendment to the desk and ask 
that it be reported.
  The PRESIDING OFFICER. The clerk will report.
  The bill clerk read as follows:

       The Senator from New Mexico [Mr. Bingaman] proposes an 
     amendment numbered 194.

  Mr. BINGAMAN. Mr. President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 25, add after line 25, the following new section:
       ``(4) Application to provisions relating to or 
     administrated by independent regulatory agencies.--
       Notwithstanding any provision of paragraph (c)(1)(B), it 
     shall always be in order to consider a bill, joint 
     resolution, amendment, or conference report if such provision 
     relates to or will be administered by any independent 
     regulatory agency.

  Mr. BINGAMAN. Mr. President, I will reserve my discussion of this 
amendment until an appropriate time later in the debate, and I look 
forward to presenting it at that time.
  Thank you, Mr. President. I yield the floor.
  Mr. DORGAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Mr. President, if I might be able to address the Senator 
from Idaho and the Senator from Ohio, it was my desire at this point on 
the amendment that had previously offered by myself, by Senator Harkin, 
and others, on the Federal Reserve Board issue, my understanding is 
Senator Harkin has submitted a statement for the Record. We are 
concluded on this side. I would like to get the yeas and nays ordered 
on that amendment, if that is acceptable.
  The PRESIDING OFFICER. The Chair advises that it would take unanimous 
consent to request the yeas and nays at this time.
  Mr. DORGAN. Mr. President, I make such request. I ask unanimous 
consent to order the yeas and nays.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  Mr. KEMPTHORNE addressed the Chair.
  The PRESIDING OFFICER. Who seeks recognition? The Senator from Idaho.
  Mr. KEMPTHORNE. Mr. President, I move to table the amendment, with 
the unanimous consent then that no further amendments be in order to 
that particular amendment and that the vote will occur tomorrow. The 
first vote will be at 4 p.m.
  I ask for the yeas and nays.
  The PRESIDING OFFICER. Without objection, it is in order to request 
them at this time.
  Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The motion to table will occur under the 
previous order.
  Mr. DORGAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Mr. President, I ask the Senator from Idaho and the 
Senator from Ohio, I have one additional amendment which the Senator 
from Iowa has joined me in offering. It is amendment No. 179, which is 
at the desk. Inasmuch as the Senator from Iowa is here and ready to 
speak on the amendment, it may be that we could very quickly dispose of 
that amendment.
  I intend also to ask for a recorded vote on that amendment. That 
amendment deals with the Consumer Price Index and the calculation of 
the Consumer Price Index and a mandate required, or at least seeming 
public mandate required, of the Bureau of Labor Statistics of at least 
one prominent Member of Congress.
  We are willing to discuss that, offer it, and seek a recorded vote, 
and follow the first recorded vote that has already been ordered, if 
that would satisfy the desire and interests of the two Senators who are 
managing the bill.
  The PRESIDING OFFICER. The Senator from Idaho.
  Mr. KEMPTHORNE. Mr. President, I think that would be very 
advantageous for us to keep moving forward on the progress of this 
bill. So I welcome that sort of discussion.
  Mr. DORGAN. Mr. President, is that satisfactory with the Senator from 
Ohio?
  Mr. GLENN. That is satisfactory.


                           Amendment No. 179

 (Purpose: To express the sense of the Senate regarding calculation of 
                       the Consumer Price Index)

  Mr. DORGAN. Mr. President, I ask that amendment No. 179 that I sent 
to the desk be reported, and I ask unanimous consent to set aside any 
current amendment that is pending in order to do that.
  The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 
will report.
  The bill clerk read as follows:

       The Senator from North Dakota [Mr. Dorgan] proposes an 
     amendment numbered 179.

  [[Page S1346]] Mr. DORGAN. Mr. President, I ask unanimous consent 
that the reading of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       At the appropriate place, insert the following:

     SEC.   . CALCULATION OF THE CONSUMER PRICE INDEX.

       (a) Findings.--The Senate makes the following findings:
       (1) The Chairman of the Board of Governors of the Federal 
     Reserve System has maintained that the current Consumer Price 
     Index overstates inflation by as much as 50 percent.
       (2) Other expert opinions on the Consumer Price Index range 
     from estimates of a modest overstatement to the possibility 
     of an understatement of the rate of inflation.
       (3) Some leaders in the Congress have called for an 
     immediate change in the way in which the Consumer Price Index 
     is calculated.
       (4) Changing the Consumer Price Index in the manner 
     recommended by the Board of Governors of the Federal Reserve 
     System would result in both reductions in Social Security 
     benefits and increases in income taxes.
       (5) The Bureau of Labor Statistics, which has 
     responsibility for the Consumer Price Index, has been working 
     to identify and correct problems with the way in which the 
     Consumer Price Index is now calculated.
       (6) Calculation of the Consumer Price Index should be based 
     on sound economic principles and not on political pressure.
       (b) Sense of the Senate.--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 a result of a consensus reached by the experts, not 
     pressure exerted by politicians.

  Mr. DORGAN. Mr. President, my colleague, Senator Harkin, from Iowa, 
who will speak on this, had to leave the floor for a moment to take a 
telephone call. Let me make a few comments on this amendment, which I 
offer on my behalf, on behalf of Senator Dodd, and on behalf of Senator 
Harkin.
  This amendment deals with an issue that is technical but very 
important. The amendment deals with the Consumer Price Index. We saw 
about a week ago a story in Washington, DC, in the press, that the 
chairman of the Federal Reserve Board came to the Congress and he 
testified on one thing or another. In his testimony, he opined that the 
Consumer Price Index probably, in his judgment and in the judgment of 
the Federal Reserve Board, actually overstates the rate of inflation by 
anywhere from one-half of 1 percent to 1.5 percent.
  Shortly after the Chairman of the Federal Reserve Board made that 
statement, some others in Congress began to climb in and say, well, if 
that is the case, if the Consumer Price Index overstates inflation, 
then let us force the Bureau of Labor Statistics to get active and do 
something about it. In fact, one prominent Member of Congress indicated 
that we will give them 30 days down at the Bureau of Labor Statistics 
to either change it or we will zero them out, get rid of them.
  Well, Mr. President, here is the consequence of what seems like an 
innocent sounding recommendation. If someone--the Fed--says we think 
the Consumer Price Index actually overstates inflation, it does not 
sound like it means very much, does it. Leave aside for just a moment 
the question of if that in fact is what the Fed thinks, if in fact that 
is what they believe, what on Earth has the Federal Reserve Board been 
doing down there. They have increased interest rates six times because 
inflation rates were too high. We have low rates of inflation for 4 
straight years, and if inflation is overstated by 1.5 percent of the 
Consumer Price Index, that means the real rate of inflation is only 1.2 
percent.
  By what justification could these folks down at the Federal Reserve 
Board be imposing on America a mandate of increased costs by higher 
interest rates across the board? What justification could they have for 
that?
  Well, I will debate that another time. They have no justification. It 
is a wrongheaded policy that injures this country, puts the brakes on 
the economy, and will send this country into a recession. The Fed, 
unfortunately, does not know what it is doing. What it is doing is the 
wrong thing for our country. But that is a debate for another day, and 
a debate I have already had and one I will have again, I am sure.
  The proposition is this. If you say that the Consumer Price Index 
really overstates inflation, what are the consequences of that? Well, 
the consequences are you are able to reduce the spending on Social 
Security because you have a smaller COLA adjustment on Social Security 
recipients' cost-of-living adjustment. So you save money by not giving 
as much in a cost-of-living adjustment to those folks who live on 
Social Security.
  In fact, the estimates are we are talking around $27 billion, I 
believe, on the Social Security issue. If one assumes the Federal 
Reserve Board's calculations, the decrease to Social Security 
recipients would be very substantial. And if one assumes the Federal 
Reserve Board's calculations, it also means that you have other 
consequences in the Federal budget. And the Federal budget deficit, 
which the Federal Reserve Board should care about, is increased by 
this.
  So what the Senator from Connecticut, and the Senator from Iowa and I 
are concerned about is this discussion about this subject in the 
context of politics rather than science. The question of what is the 
Consumer Price Index and how should it be changed, if it should be 
changed, is a technical question, to be sure.
  Most of the discussions about whether the Consumer Price Index is 
accurate or not come from the Bureau of Labor Statistics. In fact, most 
of the information for any studies that exist come from the Bureau of 
Labor Statistics. So someone who sees this on a comment by the Chairman 
of the Fed to say, ``Let's change the Consumer Price Index immediately 
and if they don't do it, we will in 30 days zero them out,'' they are 
saying we are going to impose a mandate, a political mandate on the 
Bureau of Labor Statistics.
  I say that is the wrong way to do things. We have developed a 
resolution, a sense of the Senate, that says a precipitous change in 
the calculation of the Consumer Price Index that would result in both 
an increase in income taxes--and the reason for that is that the 
personal exemption has to do with the Consumer Price Index. As the 
Consumer Price Index goes up, the personal exemption is indexed to it 
so that goes up. If it is shown not to go up so much, the personal 
exemption does not go up as much, and therefore one's taxes are 
increased. So you have two consequences here. One is increased income 
taxes and second is a lower Social Security payment by changing the 
calculation of the Consumer Price Index.
  But our sense-of-the-Senate resolution says 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. Any change in the 
calculation of the Consumer Price Index should result from thoughtful, 
studied analysis and should be a result of consensus reached by 
experts, not pressure exerted by politicians.
  Our point is we have had two major political figures seize on a 
comment by the Chairman of the Fed to suggest we are going to impose a 
mandate on the bureaucracy to change the calculation of the Consumer 
Price Index, and our point is this. This has consequences. Words have 
consequences and so do actions, and actions to change the Consumer 
Price Index for political purposes might well reduce the Federal 
deficit but how is it done? By increasing taxes and by cutting Social 
Security benefits.
  We would never have raised the subject in this context except that 
some leading figures say this must be done and must be done now and 
soon and, if not, we will zero out funding for the Bureau of Labor 
Statistics.
  There is no evidence that what the Chairman of the Fed has said is 
correct. Some say the Consumer Price Index overstates inflation. Some 
say it is about right. And there are some who will allege that it 
understates inflation through a series of five or six very complicated 
questions that are debated aggressively among economists.
  I am not here today to try to debate that or resolve that. I am only 
here to say that the final lesson in what the Consumer Price Index 
ought to be ought to be a lesson that we study from scientists and from 
those who know 
[[Page S1347]] and from economists and others who do a thoughtful 
analysis, not from pressure brought by politicians.
  That is the issue, and that is why I hope we will have a vote on this 
and the vote will say that the Senate concurs: we do not believe a 
precipitous change in the Consumer Price Index should result from 
political pressure. It ought to result from thoughtful analysis by 
those who know and who study and who give us their expert 
recommendations.
  Mr. President, I see my colleague from Iowa is in the Chamber, and I 
would be happy to yield the floor.
  Mr. President, might I make one other unanimous consent request while 
I am on my feet. The Senator from North Dakota [Mr. Conrad] asked to be 
included as a cosponsor of the amendment that I offered on the Federal 
Reserve Board, and I would ask unanimous consent to achieve that.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HARKIN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. HARKIN. Mr. President, I congratulate and thank my colleague from 
North Dakota for offering this amendment, for his thoughtful insight 
into what some people in the Republican party over on the other side 
are calling a technical correction in the Consumer Price Index or CPI, 
our basic measure of the rate of inflation. I think that is what the 
leaders of the other body called it, a technical correction. Well, you 
know, some people said ketchup was a vegetable once, too. These 
technical corrections at some time have very serious consequences.
  So while you can call it a technical correction, it is nothing less 
than two things. It is a stealth tax on the middle class, and it is a 
cut in Social Security benefits for the elderly, both of which I might 
add are just the opposite of what my friends in the Republican Party 
have said they want to do.
  So I think this amendment would help my friends on the other side 
clear up the issue. It would make it clear that we do not in any way 
want to put pressure on the independent Bureau of Labor Statistics to 
somehow come up and rush through and make a finding on the basis of 
political pressure but that, indeed, it ought to be thought through 
very carefully.
  The Senator from North Dakota is absolutely right that this change in 
the CPI has consequences, big consequences--about $21 billion in higher 
taxes annually by the year 2000 and $27.5 billion cut in Social 
Security in that same year. And that has to do with the fact that when 
you pay your income taxes, the personal deduction, the standard 
deductions that we all get, that middle-income families get are all 
adjusted by the CPI, and so if you ratchet down that CPI, you may say, 
well, it is technical, but it is a 1 percent reduction. And what that 
would mean is that every year the amount that you could claim for 
deductions in the standard deduction would be less, so you would pay 
more in income taxes. And, as I said, after 5 years, the Federal 
Reserve estimates about $21 billion in higher taxes. And that would 
mostly come from moderate and middle-income taxpayers.
  Now, I wish to be as fair as I can, Mr. President. On the merits, 
there may be--and I use the words ``may be''--an overestimation of 
inflation in the CPI statistics. This has been known for many years.
  Now, the technical reasons are very complex, and the Bureau of Labor 
Statistics has and is accurately working on making adjustments. A 
couple of small adjustments are planned for next month and a key change 
is scheduled to take effect in 1998.
  And funds for part of a 6-year effort to improve the CPI were 
approved in the fiscal year 1995 Labor-HHS appropriations bill which I 
chaired and which was supported on both sides of the aisle.
  I also want to point out, Mr. President, that in 1987 Congress 
required the BLS, the Bureau of Labor Statistics, to set up an 
alternative CPI weighted for the elderly. We asked them to do that in 
1987 because the elderly pay much more for health care. And that CPI 
for the elderly now shows a higher level of inflation for the elderly 
every year.
  I ask unanimous consent to have printed at this point in the Record 
an article that outlines the results of the experimental CPI authored 
by Nathan Amble and Ken Stewart in the May 1995 monthly Labor Review.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

                   [From the Labor Review, May 1995]

             Experimental Price Index for Elderly Consumers

                   (By Nathan Amble and Ken Stewart)

       An experimental consumer price index for older Americans 
     rose somewhat faster than each of two published BLS Consumer 
     Price Indexes; as might be expected, expenditures for medical 
     care accounted almost entirely for this difference.
       The Consumer Price Index (CPI) of the Bureau of Labor 
     Statistics measures the average change in prices over time 
     for a fixed market basket of goods and services for two 
     population groups. The CPI for All Urban Consumer (CPI-U) 
     represents the spending habits of about 80 percent of the 
     population of the United States. The CPI for Urban Wage 
     Earners and Clerical Workers (CPI-W) is a subset of the CPI-U 
     and represents about 32 percent of the total U.S. population.
       The 1987 amendments to the Older Americans Act of 1965 
     directed BLS to develop an experimental index for a third 
     population of consumers: those 62 years of age and older. In 
     its 1988 report to Congress, BLS observed that from December 
     1982 to December 1987, the experimental consumer price index 
     for older Americans rose slightly faster than the CPI-U and 
     CPI-W.\1\ (See table 1.)
     \1\Footnotes to appear at end of article.
---------------------------------------------------------------------------
       This article updates the analysis of the behavior of the 
     experimental index for older Americans for the period from 
     December 1987 through December 1993. Over this 6-year period, 
     the experimental price index rose 28.7 percent, slightly more 
     than the increases of 26.3 percent for the CPI-U and 25.5 
     percent for the CPI-W.


                   methodology, data, and limitations

       Although the study discussed in this article indicates a 
     higher overall inflation rate for older Americans compared 
     with the rates for the official CPI population groups, any 
     conclusions drawn should be used with caution because of the 
     various limitations inherent in the methodology.
       Expenditure weights. For each CPI population group, item 
     strata are weighted according to their importance in the 
     spending patterns of the population. The population of older 
     Americans used for the experimental price index was defined 
     to be all urban noninstitutionalized consumer units that were 
     either
       1. unattached individuals who were at least 62 years of 
     age; or
       2. members of families whose reference person (as defined 
     in the Consumer Expenditure Survey) or spouse was at least 62 
     years of age; or
       3. members of groups of unrelated individuals living 
     together who pool their resources to meet their living 
     expenses and whose reference person was at least 62 years of 
     age.
       In the 1982-84 Consumer Expenditure Survey, which is used 
     as the source of expenditure weights in the current CPI, 19 
     percent of the total sample of eligible urban consumer units 
     (3,135 out of 16,500) met this definition. Because the number 
     of consumer units used for
      determining weights in the experimental index was relatively 
     small, expenditure weights used in the construction of the 
     experimental price index have a higher sampling error than 
     those used for the larger populations.
       For each population group, the base expenditure weight of 
     any component represents the actual expenditure on that 
     component in the base period. The relative importance of any 
     component is its expenditure weight (updated for changes in 
     relative prices) and represents the proportion of that weight 
     to total expenditures for the population. The relative 
     importances of selected components for each of the three 
     population groups are shown in table 2 for December 1987, the 
     first month of the study.
       Areas and outlets priced. The experimental consumer price 
     index for older consumers is a weighted average of price 
     changes for the same set of item strata collected from the 
     same sample of urban areas as are used in calculating the 
     CPI-U and CPI-W.
       Retail outlets are selected for pricing in the CPI based on 
     data reported in a separate survey representing all urban 
     households. The experimental index also uses the same retail 
     outlet sample. Thus, the outlets selected may not be 
     representative of the places where older persons purchase 
     their goods and services.\2\
       Items priced. As with retail outlets, a major limitation of 
     the experimental index is that the categories of items to be 
     priced are selected using expenditure weights calculated from 
     the expenditure surveys for the urban population. As a 
     result, the specific item classes selected for each stratum 
     may not be representative of those classes used by the older 
     population.
       Prices collected. A final source of uncertainty about the 
     appropriateness of using the CPI-U prices for the index of 
     the older population concerns the availability of discount 
     prices for older Americans. For example, senior-citizen 
     discount rates are used in the CPI-U in proportion to their 
     use by the urban population as a whole. To the extent that 
     senior-citizen discounts take the form of a percentage 
     discount from the regular 
     [[Page S1348]] price, this may not be a problem. If, however, 
     the discount is not a fixed percentage of the price, the 
     scarcity of senior-citizen discount prices in the current CPI 
     could lead to error in the experimental index.
       Because of the preceding limitations, any conclusions drawn 
     from the analyses presented in this article should be treated 
     as tentative.


                   relative behavior of price indexes

       Table 3 gives the annual price changes in the all-items 
     CPI-U, CPI-W, and experimental price index during the period 
     1988-93. Table 4 shows the behavior of these three indexes at 
     the major component levels during the same period.
       Over the 6-year period from December 1987 through December 
     1993, the reweighted experimental price index for older 
     Americans rose 28.7 percent. This compares with increases of 
     26.3 percent for the CPI-U and 25.5 percent for the CPI-W.
       Examining the indexes in more detail, we see that medical 
     care prices during the period rose slightly more than twice 
     as fast as the average for all items in each population 
     group. Because the elderly typically spend more on medical 
     care than does the
      population as a whole (see table 2), the medical care 
     component accounted for most of the difference between the 
     experimental index and either of CPI-U and CPI-W. In the 
     experimental index, this component increased 59.4 percent 
     during the period 1988-93. By contrast, inflation for the 
     medical care component of the CPI-U was 53.3 percent and 
     that for the CPI-W was 53.3 percent.
       The price change for each major expenditure component 
     varied by population because the expenditure weights of the 
     items that comprised the major components varied among the 
     three population groups the indexes served. The expenditure 
     weight that an item had in a particular population reflected 
     the importance of that item as a proportion of the total 
     expenditures of that population. For example, the relatively 
     high expenditure weights of the medical care component of the 
     experimental index may largely be attributed to the 
     differences in the nature of the demand for medical care 
     services by the elderly, compared with the demand for such 
     services by all urban consumers or by urban wage earners and 
     clerical workers. Within the medical care component, the 
     elderly had larger out-of-pocket costs relative to both of 
     the other groups chiefly because those groups had employer-
     provided health care benefits more readily available to them. 
     An analysis of the relative importance of the various 
     subcomponents making up the medical care component for the 
     elderly and for all urban consumers indicates that older 
     Americans devote a substantially larger share of their 
     medical care budget to physicians' services, followed by 
     hospital room stays and commercial health insurance coverage.
       Of the seven major expenditure components, the apparel 
     category registered the smallest price change for all three 
     population groups over the 1988-93 period.
       Within the transportation component, public transportation 
     items such as airline fare, intercity bus fare, intercity 
     train fare, and taxi fare had higher relative importance for 
     the elderly than for all urban consumers. These items 
     contributed to the observed overall higher inflation rates in 
     the transportation component of the experimental index.
       Like medical care, another expenditure component that rose 
     significantly in all three indexes during the study period 
     was the ``other goods and services'' category. However, 
     unlike medical care, this component recorded the smallest 
     increase in the experimental price index (41.8 percent), 
     compared with the CPI-U (47.0 percent) and the CPI-W (46.2 
     percent). The reason for the lesser rise could be found in 
     differences in the composition of the three populations. For 
     instance, the CPI-U and CPI-W, with their relatively larger 
     concentration of younger people, had a significantly higher 
     relative importance for college tuition, which increased 
     faster than the average of all items in each year of the 
     study. In addition, the populations of all urban consumers 
     and urban wage earners and clerical workers spend 
     proportionately more for tobacco and other smoking products, 
     which have also typically increased faster in price than the 
     ``other goods and services'' component, of which they are a 
     subcomponent. These items have thus contributed to the faster 
     rise in the ``other goods and services'' component of the 
     CPI-U and CPI-W relative to the experimental price index for 
     older Americans.
                       cost-of-living adjustments

       Adjustments to Social Security Benefits are currently based 
     on the percentage change in the CPI-W, measured from the 
     average of the third quarter of one year to the third quarter 
     of the succeeding year.
       While the Senate Special Committee on Aging stipulated that 
     the current study cover persons 62 years of age and older, 
     this population is not likely to be the most appropriate one 
     for defining and developing an index for use in indexing 
     Social Security benefits.
       The reason is two-fold. First, many Social Security 
     Beneficiaries are younger than 62 years and receive benefits 
     because they are surviving spouses or minor children of 
     covered workers or because they are disabled. The spending 
     patterns of this younger group are excluded in the weights 
     for the experimental index for older Americans. Second, a 
     substantial number of persons 62 years of age and older--
     especially those 62 to 64 years--do not receive Social 
     Security benefits at all. Although these older consumers are 
     included in the population covered by the reweighted 
     experimental index, they presumably should be excluded from 
     an index designed to reflect the experience of Social 
     Security pensioners. In short, an index designed specifically 
     to measure price changes for Social Security beneficiaries--
     that is, one that excludes older persons who do not receive 
     benefits, but includes younger persons who receive survival 
     and disability benefits--might well show price movements that 
     differ significantly from those of the experimental index set 
     out in this article.

   TABLE 2.--COMPARATIVE ANALYSIS OF RELATIVE IMPORTANCES OF SELECTED   
           COMPONENTS OF CONSUMER PRICE INDEXES, DECEMBER 1987          
------------------------------------------------------------------------
                                                            Experimental
                                                              index for 
              Component                 CPI-U      CPI-W        older   
                                                              Americans 
------------------------------------------------------------------------
All items...........................     100.00     100.00       100.00 
Food and beverages..................       7.61      19.45        15.49 
    Food at home....................       9.86      11.14         9.79 
    Food away from home.............       6.19       6.65         4.57 
    Alcoholic beverages.............       1.55       1.66         1.13 
Housing.............................      42.48      39.95        48.30 
    Owners' equivalent rent.........      19.26      16.84        25.47 
    Apparel and upkeep..............       6.34       6.36         4.68 
Medical care........................       5.98       4.95         9.47 
Transportation......................      17.45      19.41        14.43 
    Motor fuels.....................       3.29       4.03         2.67 
Entertainment.......................       4.37       4.04         3.34 
Other goods and services............       5.93       5.84         4.31 
College tuition.....................       1.13        .84          .46 
Tobacco and other smoking products..       1.29       1.70         1.02 
------------------------------------------------------------------------


   TABLE 3--PERCENT CHANGE IN ALTERNATIVE CONSUMER PRICE INDEXES, ALL   
                ITEMS, 12 MONTHS ENDED DECEMBER, 1988-93                
------------------------------------------------------------------------
                                                           Experimental 
               Year                  CPI-U      CPI-W    index for older
                                                            Americans   
------------------------------------------------------------------------
1988.............................        4.4        4.4              4.5
1989.............................        4.6        4.5              5.2
1990.............................        6.1        6.1              6.6
1991.............................        3.1        2.8              3.4
1992.............................        2.9        2.9              3.0
1993.............................        2.7        2.5              3.1
Cumulative change, December 1987-                                       
 December 1993...................       26.3       25.5             28.7
------------------------------------------------------------------------


 TABLE 4--PERCENT CHANGE IN ALTERNATIVE CONSUMER PRICE INDEXES, BY MAJOR
                      COMPONENTS, DECEMBER 1987-93                      
------------------------------------------------------------------------
                                                           Experimental 
            Component                CPI-U      CPI-W    index for older
                                                            Americans   
------------------------------------------------------------------------
All items........................       26.3       25.5             28.7
Food and beverages...............       24.8       24.8             25.0
Housing..........................       23.1       22.4             25.1
Apparel and upkeep...............       17.7       16.6             16.6
Transportation...................       22.8       21.9             25.0
Medical care.....................       54.2       53.3             59.4
Entertainment....................       25.9       25.0             28.2
Other goods and services.........       47.0       46.2             41.8
------------------------------------------------------------------------

                              Conclusions

       This article examined changes in three distinct Consumer 
     Price Indexes--the Index for All Urban Consumers (CPI-U), 
     Index for Urban Wage Earners and Clerical Workers (CPI-W), 
     and experimental index for Americans 62 years of age and 
     older--for the period December 1987 through December 1993. 
     Analysis of the relative behavior of the three indexes at the 
     all-items level reveals that the experimental index rose 
     slightly faster than the two published indexes.
       The experimental price index, reweighted to incorporate the 
     spending patterns of older consumers, behaves more like the 
     CPI-U than the CPI-W. This is to be expected, because the 
     CPI-U comprises the expenditures of all urban consumers, 
     including those 62 years of age and over. The CPI-W, on the 
     other hand, is limited to the spending patterns of families 
     of wage earners and of clerical workers and, therefore, 
     specifically excludes the experience of families whose 
     primary source of income is from retirement pensions.
       As an estimate of the inflation rate experienced by older 
     Americans, the experimental index has several limitations. 
     One of these is that the samples from which expenditure 
     weights for the index were calculated are substantially 
     smaller than those used in either the CPI-U or the CPI-W. 
     This means that the experimental price index is subject to 
     larger sampling errors than either of the two official 
     indexes.
       To produce a more precise CPI for older Americans, sample 
     sizes would need to be strengthened for the Consumer 
     Expenditure Survey to reflect the spending habits of the 
     elderly more accurately. In addition, the point-of-purchase 
     survey and the pricing surveys would need to be improved to 
     reflect which retail outlets and items should be sampled for 
     older Americans. These improvements in the sample design 
     could yield altogether different results from those obtained 
     in the study described in this article. Finally, it should be 
     noted that the medical care component of the CPI has a 
     substantially larger relative weight in the experimental 
     index than in the CPI-U or CPI-W. As a result, this component 
     of the experimental index tends to have a larger impact on 
     the elderly than it does on either all urban consumers or 
     urban wage earners and clerical workers.
                        [[Page S1349]] Footnotes

     \1\Charles C. Mason, ``An Analysis of the Rates of Inflation 
     Affecting Older Americans Based on an Experimental Reweighted 
     Consumer Price Index,'' report presented to Congress, June 
     1988. During the period from December 1982 through December 
     1987, the CPI-U rose 18.2 percent, the CPI-W increased 16.5 
     percent, and the experimental index for older Americans grew 
     19.5 percent. Over the 11-year period from December 1982 
     through December 1993, the CPI-U rose 49.4 percent, the CPI-W 
     increased 46.2 percent, and the experimental CPI for older 
     Americans grew 53.8 percent.
     \2\The sample size of the current point-of-purchase survey is 
     not adequate to determine whether older Americans typically 
     shop in different types of outlets from those frequented by 
     the general population.
  Mr. HARKIN. So, while some say the CPI is overestimating inflation, 
we now know that for the elderly the CPI underestimates inflation. So 
if you are now going to arbitrarily cut back the CPI with this sort of 
technical correction, by 1 or 1.5 percent, without some further study 
and analysis and finely tuning it, not only will you have the increase 
in taxes that we talked about, you will have the Social Security cuts. 
It will hit the elderly the hardest, because they rely most heavily on 
Social Security for their basic needs. And on top of that their costs 
for prescription drugs and Medicare and their supplemental insurance 
and things like that continue to rise much faster than the basic rate 
of inflation.
  I have not addressed myself directly to the issue that Senator Dorgan 
spoke about, but he is absolutely right. This idea of somehow 
threatening the Bureau of Labor Statistics to come up with the desired 
results within 30 days or their funding would be cut off was a threat 
made by the Speaker of the House. He was quoted widely in newspapers as 
saying he would cut off their funding if they did not come up with the 
results in 30 days.
  I hope the Speaker will reflect upon his words and come up with a 
more moderate statement, because efforts to threaten professional staff 
with budget cuts if they do not come up with the results desired by 
elected officials I think is very dangerous. We need nonpolitical, 
objective career professionals producing statistics that Government and 
the private sector use to develop their policies. I think we have that 
now. If each party that wins an election puts in people who only give 
the answers they want regarding economic statistics rather than the 
best professionally developed figures possible, then I think we are 
going to be in real big trouble. Fortunately, I hope we are going to 
back off this so-called dynamic scoring, the justifications that were 
used to quadruple the public debt in the 1980's. I think they are 
backing off of that. I am hopeful now my friends on the other side of 
the aisle will back off from any attempt to improperly pressure the 
Bureau of Labor Statistics.
  Again, I congratulate Senator Dorgan for his amendment. I am proud to 
be a cosponsor. We must maintain the highest professional standards for 
statistical services in the Bureau of Labor Statistics, which produces 
the CPI and other statistics on which the Federal Government and our 
entire economy depend. They must continue to operate without any 
political interference.
  I urge all Senators to support the amendment of Senator Dorgan. 
Again, first, to send a clear signal we are not going to politically 
interfere; and, second, that we need to proceed very cautiously on this 
to get the best information possible for any future adjustments in the 
CPI; and, third, to state clearly that any adjustments in the CPI, of 
course, ought not to lead to arbitrary cuts in Social Security or taxes 
on the middle class.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Washington.
  Mr. GORTON. Mr. President, if I may, in the midst of this interesting 
debate, I would like to return the focus of the debate to S. 1 itself; 
to unfunded mandates, to the impact that those mandates have had on 
State and on local governments, and to the urgent necessity of seeing 
to it that this bill is passed and it becomes law.
  I have gotten a great deal of correspondence from local governments 
and the State of Washington on the subject of unfunded mandates. But I 
would like to start with one the focus of which is a little bit 
different than many of the particular complaints about unfunded 
mandates.
  The mayor of the city of Kennewick wrote to me and said:

       Congress needs to understand the long range impacts of its 
     actions when it passes amendments [to legislation].

  I agree. But I am inclined to think that the mayor of Kennewick could 
have gone considerably further. And I also reflect on why it is that a 
mayor of a city some 2,500 miles from here should have to say this to 
us. Of course, the Congress of the United States should have to 
understand the long-range impacts of the laws that it passes. That is a 
responsibility we ought to take on ourselves, not one we should have to 
be reminded of by mayors or Governors or county commissioners. Yet it 
has been my experience that very frequently we attempt to avoid 
understanding long-range impacts in passing feel-good legislation, 
sometimes legislation for valid social purposes but social purposes 
which we are unwilling to fund.
  In my case, I think I would make the statement somewhat stronger than 
the mayor of Kennewick does. I would revise it to say: ``Congress needs 
to be responsible for the long-range impacts of legislation that it 
passes.''
  No group of individuals is likely to be responsible when they can do 
something that pleases other groups or other individuals without any 
consequences for the cost of pleasing those individuals or groups. When 
one separates the authority to make requirements, to pass mandates, to 
set policy, from the responsibility to pay for the consequences of 
those actions, one inevitably is led to irresponsibility. And it is 
responsibility and accountability that this legislation is all about.
  In dealing with this legislation I, in common with many of my 
colleagues, have asked my local governments to report to me the impact 
of mandates which we have already imposed on them without understanding 
the consequences and without taking responsibility for the 
consequences. I should like to share a few of them with my colleagues 
and with the record here this afternoon.
  The mayor of Colfax, WA, wrote to me that the money spent to comply 
with Federal mandates--and I am now quoting him--

       * * * no matter how well intentioned, will inhibit the 
     city's ability to provide a pump station to supply the 
     community hospital, provide wellhead protection for our 
     primary water source, and to repair a critical reservoir. 
     These are only a few of the most important projects that may 
     be delayed or not completed.

  It does seem to me to be self-evident that the citizens of Colfax 
ought to be allowed to determine whether those are higher priorities 
than priorities imposed upon them by Members of Congress in a general 
fashion all across the country. And to a very significant degree that 
is what this debate is all about.
  The board of county commissioners of San Juan County wrote to me to 
say:

       The excessive testing and monitoring required by 
     [environmental mandates] puts such a burden on the limited 
     financial capabilities of small water systems that they don't 
     have the money left to maintain their systems! The effect is 
     greater and greater cost with no improvement in service or 
     public safety.

  This particular letter, of course, applies to the Safe Drinking Water 
Act, a subject on which this Senate debated in the last Congress and 
did, in fact, remove at least a number of unjustified, unfunded 
mandates.
  Unfortunately, the Congress as a whole was not successful in passing 
amendments to the Safe Drinking Water Act, and those mandates remain to 
this day in full force and effect.
  The mayor of Tenino says that the city has been:

     forced to shift revenue desperately needed for social 
     services and programs to pay for the costs associated with 
     [mandates]. Although we have not raised taxes to pay for 
     these services, this action will soon become our only 
     recourse.

  This is a small rural town, the jobs of many of whose citizens have 
been affected by grave restrictions on harvests in our national and in 
our private forests, where unemployment is high or where extra money is 
hard to come by.
  In the city of Langley, the mayor says that compliance with the Safe 
Drinking Water Act alone will cost each water user an additional $54.
  The mayor of South Bend, a very poor community in monetary terms, at 
least, of less than 2,500 people, wrote in to say that:

       [[Page S1350]] Last year our water department was in 
     compliance with every phase of its operation while serving 
     approximately 900 customers. Today, we are considered out of 
     compliance and the costs to bring us back in with the Clean 
     Water Act by 1996 will cost us over a million dollars. How we 
     are going to finance this, God only knows.

  The clerk of the town of Fairfield wrote to say:

       The effect [of mandates] is, in one word, Disaster! * * * 
     These mandates will do the same thing to small communities as 
     they'll do to small businesses--they will bankrupt them. 
     There is just no way to come up with the dollars these 
     mandates will require. Congress has to come to the 
     realization that the taxpayer's purse is not a bottomless 
     pit.

  The chairman of the county commissioners of Asotin County described 
Federal mandates by saying:

       Frustration is the real issue I guess. We do not know with 
     any degree of certainty which way to go. A small county with 
     a limited revenue base, a population of only 18,000 people 
     and a per capita income of nearly $17,000 has very few 
     alternatives.

  Finally, the mayor of a very small town, Washtucna, wrote in to say:

       * * * any federal mandate legislation that requires a local 
     government to comply with, but allows no funds to implement 
     these mandates, places small communities in a financial 
     crisis. In fact, many cases could be prohibitive to the point 
     to force some small towns into bankruptcy and 
     unincorporation. Many of the federally mandated regulations 
     have little or no positive consequence to small rural farm 
     communities and therefore are not beneficial to a community 
     that can ill afford the added tax. If it were possible for 
     our small community to afford an additional tax, we would 
     prefer a new water supply tank, new water lines, sidewalks 
     and street improvements.

  I am absolutely certain that mayors of small towns and large towns, 
county commissioners and State governments, have written to each and 
every Member of this body with similar stories. They come down to one 
major point: We in our communities want to set our own priorities. We 
are not necessarily objecting to national priorities or national 
mandates. But if you Members of Congress and members of the executive 
wish to impose these mandates on us, please pay for them.
  By an overwhelming majority, these men and women who constitute our 
State and local governments have written to us and called to us to ask 
us to pass this bill. My only fear with respect to this bill, with all 
of the admiration I have for the two Senators who are managing it, is 
that it is likely to be a disappointment to these local officials 
because, of course, it is not retroactive. We are having enough 
difficulty with the bill as it is. It would be impossible to pass it if 
it were retroactive. So it will not solve a single one of the specific 
problems created by mandates already in existence. Nor will this bill 
guarantee that there are no further unfunded mandates. It will still be 
possible, even if this bill becomes law, to impose an unfunded mandate 
of a considerable nature on our local communities if we simply waive 
the point of order which is appropriate to present in the case of a 
bill carrying with an unfunded mandate, and we will be able to grant 
that waiver by a mere 51-vote majority here in the U.S. Senate, a 
simple majority here and in the House of Representatives.
  Does this mean that the bill is of little or no meaning? No, Mr. 
President, I do not think that is the case. I think this is an 
important piece of legislation because at the very least, that waiver 
vote will mean that Members who vote for the waiver must be conscious 
of the fact that they are imposing an unfunded mandate. In most cases, 
they will have a fiscal note attached to it that will indicate just how 
much that unfunded mandate is likely to cost. And they therefore will 
be accountable to the people of our States, our counties, and our local 
communities for having imposed that unfunded mandate. They will lack 
the excuse that they did not know what they did. Those mandates will be 
imposed consciously and deliberately.
  As a consequence, Mr. President, I think while unfunded mandates will 
not end in the Congress, people being what they are, they will probably 
be somewhat less frequent in the future. If this Congress succeeds in 
passing some of the priorities which led to this Congress having such a 
different face as its predecessors and removing at least some of the 
present unfunded mandate burdens, we will have more of our States and 
communities able to set their own priorities in the way which has been 
so important in the development of the United States of America 
throughout its entire history.
  So I know that the sponsors would like an even stronger bill. I 
believe that they are to be congratulated on doing as much as they have 
done in connection with this bill. While I find the other debates which 
are going on in connection with this bill, those on consumer price 
indexes, on the metric system, and on the Federal Reserve Board to be 
most interesting, it seems to me at least in the third week of debate 
upon this bill, on this charter of independence, on this liberation for 
our States and local governments, that the time is nigh on us that we 
should deal squarely and directly with the subject matter of this bill, 
that we should pass it and settle any possible minor differences with 
the House of Representatives, send it to the President, and liberate 
our States and local governments from the immense burden of unfunded 
mandates, at least as far as the future is concerned.
  Mr. REID. Mr. President, I ask unanimous consent that we turn to 
amendment No. 190, the amendment that is in the form of a sense-of-the-
Senate resolution, offered by Senator Harkin, at this time and lay the 
amendment now pending aside.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. REID. Mr. President, I will speak briefly on the sense-of-the-
Senate resolution offered to this body. I do it because last year I 
offered an amendment to the balanced budget amendment that would have 
exempted Social Security. I did not prevail at that time.
  There has been, since that time, a significant amount of debate on 
the balanced budget amendment. And without exception, everyone who has 
been asked what should happen to Social Security in relation to the 
balanced budget amendment has said ``leave it alone''--Democrats and 
Republicans, the Democratic leaders, Republican leaders, and even those 
new leaders, like Speaker Gingrich, have stated Social Security should 
not be part of the balanced budget amendment.
  I felt it was appropriate that I speak on this legislation offered by 
the Senator from Iowa, because I have held a press conference earlier 
on saying that I am a supporter of the balanced budget amendment. But I 
am going to have everyone stick to what they have said: The balanced 
budget amendment should exempt Social Security. Why? We have gone to a 
lot of trouble to make Social Security an independent agency.
  They are in the process of now appointing the board of directors, in 
effect, of that agency, this new Social Security agency. Its funds will 
no longer be part of the general funds of this country. The program 
should stand or fall on its own merits. This year, there will be about 
a $70 billion surplus in the Social Security fund. By the year 2002, 
the surplus will reach about $800 billion.
  I had the pleasure of serving with Senators Danforth and Kerry on the 
entitlement commission. I know--we all know--that Social Security is 
something we must watch very closely to make sure it is actuarially 
correct and sound. I repeat that Social Security should rise and fall 
on its own merits. If we had to pick a contract with America, the 
original, the most important contract with America, has been the Social 
Security system.
  Mr. President, I will speak more at length about this when the 
amendment comes up. But as a young boy, one of the first things I 
remember about Government is that my grandmother could not walk from 
here to that wall, as she was always infirm, but her only independence 
was she got what she referred to as her old age pension check. I was a 
little boy and did not realize that Social Security was a new program 
at that time. It gave my grandmother, who was born in England, 
independence and some security.
  I want to make sure that my children and my children's children have 
the ability to enjoy the benefits of Social Security. I do not know 
whether this sense-of-the-Senate resolution will pass or not. We all 
know that sense-of-the-Senate resolutions, in the overall scheme of 
legislative activities, are not the most important things. But they do 
send a message. I think we should send a message to the American 
people 
[[Page S1351]] that we are going to try to save Social Security, and 
this is a prelude to the amendment that will be offered by this 
Senator, Senators Conrad, Dorgan, Harkin, and Feinstein, at the time 
the balanced budget amendment is brought up.
  The Social Security program we have in America is a simple, binding 
contract. Individuals collect Social Security payments after paying 
into a trust fund with their employer over a period of years. I want to 
make sure, Mr. President, that the Social Security trust fund is a 
trust fund and not a slush fund. We should not be able to use the 
moneys out of Social Security to pay for highways in New Hampshire or 
highways in Nevada. We should not be able to use the Social Security 
trust fund to pay for subsidies for farmers in Iowa or in Missouri. 
Those moneys that we collect into this trust fund should be used only 
for Social Security recipients, and that is all.
  When I practiced law, I had a trust fund that I set up. I had to do 
that; we were required by the rules of the bar association. If I had a 
check that came for settling a case, as an example, the money went into 
the trust fund and I had to be very careful what I did with those 
moneys. It was different than moneys that were in my general account 
that I could use to pay rent and salaries of my employees. I could not 
use that trust fund money to pay anything other than what was allowed 
by law. If I did anything else, I violated that trust that was 
established, and then I could be disbarred or even criminally 
prosecuted. So the Social Security trust fund, I believe, Mr. 
President, should be treated the same way.
  Congress has an obligation to uphold its end of the contract. So this 
unique, binding contract upon which millions depend should be 
protected, and it should not be a giveaway or an entitlement, even 
though it is not and even though people lump it into the entitlement 
category.
  I congratulate my friend, the junior Senator from Iowa, for offering 
this sense-of-the-Senate resolution. I hope that all Senators will give 
this very serious consideration, as I know they will. We understand 
that this is a prelude to the real debate that will take place, which 
will be substantive law, and that is to exempt Social Security from the 
balanced budget amendment.
  Mr. SPECTER. Mr. President, I ask unanimous consent that I may speak 
for 5 minutes as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________