Greenspan Suggests Panel to Determine CPI 'Bias'

Federal Reserve Chairman Alan Greenspan urged Republican lawmakers to create a commission of experts to assess potential “bias” in the consumer price index (CPI), effectively bypassing the Bureau of Labor Statistics. Speaking to the House Banking subcommittee on monetary policy, Greenspan argued the CPI overstates inflation by 0.5 to 1.5 percentage points, while the Labor Department statistics bureau has been reluctant to make rapid changes to the index compiled since 1919. The bureau plans CPI adjustments in 1998 that would reduce the inflation measure by 0.2 to 0.3 points, but Greenspan said Congress could ask a professional group to meet annually and estimate the bias. The proposal would allow Social Security and other cost-of-living-linked payments to be adjusted accordingly. Rep. Michael N. Castle supported the idea, and other Republicans have framed it as a way to reduce the budget deficit by $150 billion over five years, with Newt Gingrich suggesting eliminating the BLS if desired changes are not made.