CPI Adjustment Off Table

dbaumann@njdc.com

Changes in the Consumer Price Index will not be available to bridge the $50 billion deficits that remain in competing budget plans, a move that will make a budget deal even more difficult, a key Republican and Democrat both said Monday.

"I think that's by the boards now," Senate Majority Leader Trent Lott, R-Miss., told reporters. "It's too late. People have hardened."

Lott's new opposition to using the CPI was echoed by House Budget ranking member John Spratt, D-S.C. Asked if a CPI adjustment was going to be used, Spratt said, "I don't think that's a necessary assumption."

In recent days, Republicans gave the White House a budget offer and Democrats gave the GOP an informal response. "Neither the offer nor the counter-offer is in balance," Spratt told CongressDaily, adding that each carries a $50 billion deficit.

Earlier this year, Lott said he wanted President Clinton to propose a CPI commission that might recommend a cut in the index, a move that would save billions of dollars by adjusting cost-of- living increases for popular programs like Social Security. However, key Democrats said they would oppose a CPI adjustment and Clinton declined to make the move.

In recent days, a group of conservative Republican senators said they believe the CPI should not be politicized. Lott said he is now not willing to ask Republican senators to "walk the plank" and support a CPI cut, which almost certainly would trigger a negative advertising blitz by the AFL-CIO and the American Association of Retired Persons. Asked what impact taking the CPI off the table will have, Lott said, "It just makes the job harder."

Lott said he met with Senate Budget Chairman Pete Domenici, R-N.M., for three hours this weekend and spoke with White House Chief of Staff Erskine Bowles. In addition, Lott said he hopes to discuss the budget with Clinton during a telephone call today. Noting he believes the White House must compromise on its plan for large increases in domestic spending, Lott said, "The president is still going to have to sober up and come off the [spending] binge."

Meanwhile, Spratt said budget negotiators have other options for closing the $50 billion gap, including using some OMB economic assumptions and finding additional offsets for a tax cut.

Spratt warned that even if budget negotiators can reach agreement on spending figures, details of how to reach savings targets in such programs as Medicare and Medicaid still must be worked out.

"The devil is in the details, and there's a devil at every level of this deal," Spratt said. Spratt also expressed hope that negotiators will not insist a deal must be cut by the time the president leaves for Mexico early next week.

"I hope that's not the attitude others bring into these meetings," Spratt said. "There are lots and lots of problems that have to be worked out."

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