WASHINGTON - Clinton administration officials and congressional Republicans yesterday endorsed a Senate advisory panel's conclusions that government statistics overstate inflation, opening the door to a discussion that could lead to lower cost-of-living adjustments for federal benefit programs and boost prospects for a balanced budget deal.
Appearing yesterday on NBC-TV's "Meet the Press," Treasury Secretary Robert Rubin praised the work of the commission of five economists led by former Bush adviser Michael Boskin.
Rubin said the commission's report had helped highlight widely recognized inadequacies in the consumer price index, the measure used to adjust federal benefit payments and income tax rates to offset inflation.
Rubin promised that White House economists would work closely with outside experts in figuring out how to fix the index.
"I think Boskin had it exactly right," Rubin said. "He's put out the report and now we have to let the experts digest that report and get a sense of whether there is a broad-based agreement around the country on changes that should be made."
On CNN's "Late Edition," White House budget director Franklin Raines said the administration would work with Congress to study the Boskin commission's recommendations in an "expeditious way."
Republican leaders called those sentiments constructive, but reiterated warnings that they would make no move to revise the CPI unless the administration takes the lead.
"The ball's in the president's hands," said House Budget Committee Chair John Kasich (R-Ohio), who followed Rubin on NBC. "If he wants to make the CPI more accurate, Republicans will be there to support him. But if he doesn't want to do it, we're going to probably be out there criticizing him for not wanting to get this right. But we're just not going to walk out there by ourselves."
In its report to the Senate Finance Committee last week, the Boskin commission estimated that the CPI exaggerates yearly inflation by 1.1 percentage points. Correcting an error of that size could reduce by hundreds of billions of dollars the total spending cuts necessary to balance the budget by 2002, the zero-deficit target year.
Still, having expressed a tentative, mutual willingness to explore fixing the CPI, politicians from both camps yesterday said they had few ideas about how that effort should proceed. "OK, so now we both say they aren't going to attack each other on this," a senior White House aide said yesterday. "The big question now is, 'What's the next step?' "
One thing congressional leaders and the White House seemed to agree on was the need to counter perceptions that they see tinkering with the CPI as a fiscal "quick fix" that spares them from making tough tax and spending choices to balance the budget.
"This should not be approached as a budget issue," Senate Budget Committee Chair Pete Domenici (R-N.M.), said on "Late Edition."
"What we all need is a CPI that reflects inflation as accurately as possible," Rubin said.
In their other comments, however, Clinton officials and GOP leaders yesterday hinted at how difficult it may prove to reach a budget agreement without the help of a CPI correction.
For example, Senate Majority Leader Trent Lott (R-Miss.), and Kasich said any budget plan should include a reduction in the tax rate on capital gains-profit from the sale of assets. Rubin said a capital gains cut "would not be a priority that I or, much more importantly, the president would have," although he said the subject was likely to be "one of the items that we will have to have in our ultimate negotiations."
Separately, Lott, speaking on "Fox News Sunday," chided Federal Reserve Board Chair Alan Greenspan for questioning in a speech last week whether bullish sentiment on Wall Street has gotten out of hand - a remark that triggered a decline in stock prices.
"You know, I've always been a little nervous about the Fed, quite frankly," Lott said. "I try not to be a Fed-basher, but I sometimes think they focus too much on one side of the equation, rather than a broader basket of things. And I'm a little nervous about the degree of independence they have."
Lott also said, "I think interest rates should be lower, even than what they are, certainly."
He noted that Fed chairs "make mistakes like we do," and suggested that Greenspan probably wished that he had chosen other words last week.