Lott Urges Expert Study of Inflation Adjustment

Senate Majority Leader Trent Lott on Monday suggested the appointment of four outside experts to propose any adjustments in the government’s inflation measure as part of this year’s upcoming budget negotiations.

Such a panel could provide some political cover for the Democratic White House and the Republican Congress as they look at inflation-adjusted benefit programs such as Social Security while trying to restrain spending.

“If the number is accurate, leave it alone,” Lott said Monday at an appearance before the National Assn. of Broadcasters. “If it’s not, then fix it.”

Lott said the group of outside experts should be appointed by President Clinton and Congress.

“Give them a limited amount of time to give us a number and that’s the one we’ll use,” he said.

The issue is politically sensitive because the Consumer Price Index is used to calculate annual increases in Social Security benefits, and any reduction in the gauge would curtail benefit hikes. It is also used in figuring the yearly adjustment of income tax brackets, and any reduction in the gauge would mean additional tax revenue for the government.

Several officials, Fed Chairman Alan Greenspan among them, have said the current measure of inflation overstates the actual increase in the cost of living. A bipartisan commission appointed by Congress concluded earlier this year that the current system of measuring inflation overstates the cost of living by about 1.1 percentage points. An adjustment of that magnitude would save the government $1 trillion over the next 12 years and ease the task of balancing the budget.

At the White House, spokesman Mike McCurry said that “we’ve said, in effect, the same thing--that this ought to be submitted to a discussion by those who are expert in labor statistics, economic statistics, those who know how to measure the impact inflation has on both public expenditures and on the living expenses of Americans.”

A spokeswoman for Lott, Susan Irby, said the lawmaker was thinking in terms of four experts from outside Congress who would consult with key lawmakers before making their determination.

Clinton and congressional leaders appear to be heading toward a major effort to craft a balanced budget this year, and neither side wants to be the one to propose a change on the cost of living on its own.