By Richard A. Gephardt
Thursday, May 1 1997; Page A23

Faced with the need to make good on their promises to balance the federal budget by 2002, too many Washington policymakers have hit upon the ultimate fiscal gimmick. They want to balance the federal budget by pretending that working Americans aren't having an even harder time balancing their family budgets.

That's why so many public officials have suddenly decided to "reform" the consumer price index (CPI). They're echoing the findings of a commission chaired by former Bush administration economist Michael Boskin, which claimed to find that the CPI has been "overstated" by 1.1 percent.

The Boskin Commission conclusion is irresistible to Washington's would-be deal-makers not on the merits – which are hardly discussed – but because re-jiggering the CPI by legislative fiat solves their dilemma of how to provide tax cuts while balancing the budget. Using the CPI to make numbers add up is just another scheme to balance the budget without making the hard decisions.

Changing the CPI is seen as the easy way out of the polarizing politics and painful choices of real deficit reduction. Back in 1993, congressional Democrats narrowly passed President Clinton's budget plan, without a single Republican vote in the House or the Senate. The next year, Republicans captured both houses of Congress by demonizing Democrats for supporting a plan that jump-started the economy, lowered interest rates and has cut the deficit in half. Now, in 1997, the budget debate is still gridlocked. The Republicans, who have yet to come up with their own balanced budget, continue to insist on big tax cuts, including a capital gains cut that primarily favors the wealthiest Americans. The president, rightfully, has laid out a balanced budget with more moderate tax cuts aimed at the middle class, funding for education initiatives and for essential reforms in a deeply flawed welfare reform.

We have an impasse, and that's why so many policymakers – some of them well-meaning – have seized upon these recommendations as an easy way to cut cost-of-living increases in Social Security, veterans'pensions and tax credits for the working poor.

But look at the facts: If the Boskin Commission's recommendations were followed and the CPI were cut by 1.1 percent, the average couple with one worker receiving Social Security would lose $2,359 in benefits over the next five years; a couple receiving a veteran's pension would lose $1,901 over five years; a family of four making $20,000 would pay $1,056 more in taxes over five years; and, according to the Congressional Budget Office, a one percent reduction in the CPI would increase federal income taxes by $9.6 billion in the year 2000 and $44.5 billion in 2006.

This shouldn't happen to the American people by political sleight of hand. We ought to have an accurate CPI that reflects the cost of living calculated by the experts, not by politicians. The Bureau of Labor Statistics (BLS) has altered its calculations and methodology many times to reflect changes in the economy. The bureau soon will test and compare new methodology on a parallel track with its existing approach. Congress shouldn't prejudge or preempt its conclusions. Both the accuracy and integrity of the data are fundamental to policy and public trust. Each day, financial markets, companies, employees and consumers make decisions based on these data. BLS Commissioner Katherine Abraham told a House subcommittee hearing yesterday that no budget savings would be realized from BLS technical changes in the CPI untill 2000, at the earliest. Let's not rush to cut the CPI simply to take early credit for future budget savings before the BLS tells us it's the right policy.

Many economists believe that the CPI is overstated. But many others believe that it's understated – that it fails to reflect the real goods that people, especially the elderly, actually purchase week to week.

For example, the BLS has looked at how inflation affects people who are 62 and older compared with the general population. They found that an accurate CPI for the elderly would be substantially higher. Millions of elderly Americans who rely on the Social Security cost-of-living adjustments aren't getting a CPI bonus; instead, they are steadily losing purchasing power.

If the CPI is inaccurate, it should be fixed. But even the Boskin Commission admitted that "in some categories there is little if any published evidence that allows us to reach a determination." The report simply doesn't provide us with the facts necessary to decide this important issue. That must be left to the BLS. And the BLS should be given the resources to do the research that's necessary.

For most Americans, who have seen their real incomes stagnate or decline over the past 20 years, inflation is a real issue, not a statistic or abstraction. Telling them that inflation has been overstated doesn't reflect their economic reality. They have to tighten their belts more every year just to be able to pay their own bills.

Linking the debate about the CPI to the debate about a balanced budget will undermine the integrity of the index – achieving exactly the opposite of what advocates of "reform" profess to be seeking. Cost-of-living increases should not be turned into a pot of money for instant budget-cutting. A commission on the CPI, as part of a budget deal, should be rejected.

Political friend and foe alike have characterized my opposition to cutting the CPI as a major obstacle to progress on a balanced budget. It's flattering that they consider my views so formidable. The truth is, senior citizens and their families, veterans, working people and a majority of my House Democratic colleagues share that view.

Let's remember, President Clinton offered a plan to balance the budget last year without "reforming" the CPI. The bottom line is that interest in the CPI has increased in direct correlation to the Republicans' appetite for big tax breaks.

The American people deserve honesty, not cuts in vital programs that Congress would never dare to make in the light of day. Let's balance the budget the old-fashioned way. It will be harder on politicians but not for seniors, hard-pressed working families and the most vulnerable people in our society.

The writer, a Democratic representative from Missouri, is House minority leader.