Clinton Open to Revamp of CPI, Aide Says

WASHINGTON —  President Clinton rejected a GOP proposal to recalibrate the consumer price index through an independent commission because he feared naming such a panel would actually set back the process of revising the politically sensitive measure, Treasury Secretary Robert E. Rubin said Sunday.

Appearing on NBC-TV’s “Meet the Press,” Rubin insisted that the Clinton administration was still open to revising the price index, which is used to calculate annual cost-of-living adjustments for such federal programs as Social Security.

But he argued that pursuing the changes through a high-profile commission, as Senate Majority Leader Trent Lott (R-Miss.) recently proposed, “could easily have created all sorts of politicization, which in turn could well have forced this issue off the table.”

Many congressional Republicans, and some centrist Democrats, contend that revising the index is essential to reaching a bipartisan agreement to balance the federal budget. Revising the index would save the government tens of billions of dollars by reducing the annual increase in payments to Social Security recipients and other federal beneficiaries. It would also increase tax revenues by having the effect of moving taxpayers into higher brackets more quickly.

A congressional commission chaired by Michael J. Boskin, former chief economic advisor to President Bush, concluded in December that the index overstated inflation by about one percentage point annually. But other economists disagree about the extent of the error--if any--and critics consider the drive to recalibrate the measure as a back-door attempt to cut benefits for the elderly and to raise taxes.

Administration officials have expressed general interest in revising the price index, but earlier this month, the president rejected Lott’s proposal to have a commission undertake the job. That decision bitterly disappointed Republicans, who claimed that the president had caved in to pressure from congressional liberals in his party and advocates for the elderly, who oppose reductions in the cost-of-living adjustments.

On Sunday, Clinton’s position also drew criticism from former Sen. Sam Nunn (D-Ga.), the newly installed chairman of an anti-deficit group known as the Concord Coalition.

“History will judge harshly President Clinton if he does not engage in an honest and candid way with the American people and the Congress on the whole question of long-term entitlements, including but not limited to the CPI,” Nunn said on “Meet the Press.”

Rubin praised Lott’s plan for a commission as “constructive,” but he said the administration had concluded the idea would draw so much political fire that it could result in “poisoning the well” for any changes in the inflation index.

Rubin said the administration was still committed to “the most accurate possible measure of inflation,” but he offered no specifics on how, or when, the president might propose to revise the price index.