[Congressional Record Volume 142, Number 72 (Tuesday, May 21, 1996)]
[Senate]
[Page S5456]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   ADJUSTING THE CONSUMER PRICE INDEX

 Mr. MOYNIHAN. Mr. President, a number of careful statements 
have been made on the floor yesterday and today concerning the use of 
the Consumer Price Index [CPI] as a proxy for measuring changes in the 
cost of living. As we all surely know, the Bureau of Labor Statistics 
[BLS] is insistent that the CPI is not a cost of living index: never 
has been; cannot be. It would be more than a third of a century ago 
that I became Assistant Secretary of Labor in the Kennedy 
administration. In that role, I had nominal supervision of the Bureau, 
and I attest that this was fully understood at that time, well before 
the CPI began to be used as it is today as an index for various 
entitlement programs and tax schedules.
  The question has been properly raised as to whether economists are in 
general agreement that the CPI overstates inflation. My distinguished 
friend from North Dakota, Senator Conrad, described the near unanimous 
testimony of a panel of economists that testified before the Senate 
Committee on Finance to this effect. I would draw the attention of the 
Senate to the fact that well before the Finance Committee established 
the Boskin commission to enquire into this matter, the subject was 
under consideration in the Office of Management and Budget. 
Specifically, a memorandum of October 3, 1994, sets forth the matter in 
specific terms.
  I ask that portions of that memorandum be printed in the Record.
  The material follows:
                                                  October 3, 1994.
     From: Alice M. Rivlin.
     Subject: Big Choices.
       When we met in August, we noted that it was time for a 
     serious discussion of the budget and economic agenda for 1995 
     and 1996. Decisions must be made soon about the policies to 
     be articulated in the FY 1996 budget, the State of the Union, 
     and our response to the Kerrey-Danforth Commission report. 
     These policies and the message they contain are crucial to 
     the record we will run on in 1996.

                    Illustrative entitlement options


        Options                                      5-yr savings (S B)
COLA reduction:
    CPI minus 0.5 ``technical'' reform (CPI may be overstated by 0.4% 
      to 1.5%).......................................................33
    Eliminate COLAs for one year.....................................55
109 2 for five years.........................................

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