[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.
____________________