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Economists Criticize Gingrich Threat to Government Statisticians

January 19, 1995

WASHINGTON (AP) _ A leading group of economists rebuked House Speaker Newt Gingrich on Wednesday for threatening to ``zero out″ Labor Department number-crunchers unless they change the Consumer Price Index to make it easier to balance the budget.

Such attempts to pressure the Bureau of Labor Statistics into rapidly revising the CPI ``are unwise and smack of political interference in the collection and dissemination of economic data,″ said Maurine Haver, president of the National Association of Business Economists, the largest group representing the profession.

Haver, who has a consulting firm in New York, said the CPI needs to be revised but that government statisticians, suffering under budget cuts, can’t be expected to turn on a dime.

Federal Reserve Chairman Alan Greenspan told Congress last week that he believes the index, which has shown price increases of 2.7 percent for the past two years, overstates inflation by between 0.5 and 1.5 percentage points.

The index, he said, has failed to factor in improvements in quality in many manufactured products that partially account for price increases.

Greenspan said CPI revisions could save $150 billion over five years. Republicans in Congress, including Gingrich and Majority Leader Dick Armey of Texas, have seized on that prospect as a relatively painless way of helping to balance the budget.

Annual cost-of-living increases to Social Security recipients, for instance, are tied to the index. And tax brackets, exemptions and standard deductions are adjusted to keep taxpayers from paying more because of inflation.

Gingrich, speaking Sunday in Georgia, said if the Labor Department statisticians ``can’t get it right in the next 30 days or so, we zero them out, we transfer the responsibility to either the Federal Reserve or the Treasury and tell them to get it right.″

However, Haver said transferring the Bureau of Labor Statistics’s duties would only delay completion of the CPI revision and ``push the goal of improvement in the quality of economic statistics into the more distant future.″

Previously announced changes in the CPI, taking effect next month, are expected to shave about 0.1 percentage point off the inflation rate.

Gingrich’s spokesman, Tony Blankley, said the speaker wants to ``make sure the bureau faithfully carries out the law.″

``Nobody wants anything other than accurate numbers. ... I think he was sending a signal and I think the signal was received,″ he said.

Rep. Pete Stark of California, the ranking Democrat on the Joint Economic Committee, and three Democratic senators criticized Gingrich, saying revising the CPI could push 114 million American households into higher tax brackets and reduce benefits for 42 million Social Security recipients.

``Congress should not put a gun to the head of an independent statistical agency _ or even threaten to do so,″ Stark said.

Sens. Christopher Dodd of Connecticut, Byron Dorgan of North Dakota and Tom Harkin of Iowa said they would introduce a Senate resolution saying any change in the CPI should be made after ``thoughtful study and analysis″ rather than ``pressure exerted by politicians.″

``The speaker of the House has just basically threatened a federal agency into agreeing with him. We find a major political figure in town trying to doctor the numbers, cook the books,″ Dodd complained. ``You’d be indicted in the private sector if you tried to do this.″

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