White House Mulls CPI Change

The Clinton administration may consider a change in the Consumer Price Index formula as part of its budget proposal, White House Press Secretary Michael McCurry said today.

While cautioning that President Clinton still believes changes in the CPI should be made by Bureau of Labor Statistics economists -- not by politicians -- McCurry said the administration "will consider it very carefully."

That the administration would consider an adjustment to the CPI when constructing a budget agreement is a change of tone from last year, when Clinton and White House officials strongly ruled out any changes to the index except those computed by the BLS. "The president has long felt that changes in the CPI calculation should not be a political issue, but rather based on a consensus of [economists]," McCurry said.

Many economists believe the CPI is inflated, which automatically increases cost-of-living adjustments for entitlement programs and reduces tax revenues. If the CPI was lowered, as several House members and senators of both parties advocate, reaching a balanced budget would require smaller budget cuts. But with lowering the CPI comes the political risk of cutting Social Security and other entitlement program benefits.

The Senate Finance Committee Wednesday is slated to receive a report from the Advisory Commission to Study the Consumer Price Index, a bipartisan group of economists including former Council of Economic Advisers Chairman Michael Boskin appointed two years ago by the committee. The report is expected to recommend lowering the CPI; an interim report concluded the CPI was inflated by a full percentage point.

"We will consider very carefully any recommendations that come from the Boskin group," McCurry said. "We're in the middle of a budget process now and there is conceivably a budgetary impact here [from the Boskin CPI report]. But there's not necessarily a commitment to making changes as part of this budget cycle."

Senate Majority Whip Nickles Sunday on NBC's "Meet the Press" said Republicans are waiting for a "signal" from the White House before making a proposal to cut the CPI. "We're going to have to have some support ... and leadership from the White House [because] we don't want to ... make some very difficult decisions and have the White House come back and undercut us."