'Blue Dog' Democrats Want To Fix The CPI (2/26/97)

The Economic Assumptions Behind The Budget (2/6/97)

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Quick Budget Agreement Unlikely

Clinton reportedly won't support independent panel to fix CPI

WASHINGTON (AllPolitics, March 12) -- Hopes for a quick budget agreement are fading further, with news that President Bill Clinton won't support an independent panel to make the nation's Consumer Price Index (CPI) more accurate.

The Washington Post reported today that Clinton has abandoned the idea, after testing the waters and finding considerable opposition from Democrats and Republicans alike.

Last year, a panel of economists said that the CPI overstates the rate of inflation by 1.1 percent. But fixing it poses political pitfalls for lawmakers, since an adjustment would mean smaller increases in Social Security and other benefits tied to the index.

White House officials told the Post that lawmakers were worried that the public would view a CPI adjustment as merely a quick fix to balance the budget, rather than a sincere attempt to make the index more accurate.

Last month, the drive to change the way the government measures inflation got a boost from the "Blue Dogs," a group of conservative House Democrats. Their budget proposal included reducing the CPI by 0.8 percent.

They estimated that would save $103 billion over five years and provide a vital boost toward balancing the budget by 2002, a goal that both Clinton and congressional Republicans say they share.

In other budget developments, the House on Wednesday passed a nonbinding resolution requesting that Clinton submit a fiscal year 1998 budget that balances the federal budget by 2002. The vote was 231 to 197.

During floor debate, Democrats accused Republicans of stalling, pointing out that the Congress has failed to produce its own budget. Republicans argued that the president has not presented Congress with a workable blueprint on which to base further budget negotiations.

House members introduced the resolution in response to Congressional Budget Office projections that the Clinton balanced budget plan shows a $69 billion shortfall in FY 2002, unless so-called "triggers" are relied upon.

The resolution asks the president to submit a budget "that would balance the Federal budget by fiscal year 2002 without relying on budgetary contingencies."

The administration has said that built-in "trigger" mechanisms will fill any deficit gaps produced by the president's budget. CBO Director June O'Neill testified that the triggers will, in fact, work.

Critics argue that no future administration will allow such triggers to go into effect, likening them to unsuccessful tactics built into the Gramm-Rudman deficit reduction law.