Mr. President and Members of Congress: Begin with Simple Truths

January-February 1997

By James W. Skillen

WASHINGTON, D.C—All signs seem to indicate that Congress and the president maybe able to reach bipartisan agreement on some modest but important issues during the next two years. The big questions will probably remain out of touch. For example, Congress will not vote for a major health-care reform plan even though that is urgently needed. And the president will not be pushing Congress toward a comprehensive, reconfigured foreign policy, though the United States also needs that kind of leadership.

However, President Clinton and Vice President Gore have been working on "reinventing government," moving it from a preoccupation with heavy, bureaucratic programs to reliance on a more flexible approach that includes partnering with non-government organizations. And most Republicans remain intent on giving the states more freedom and individuals a lower tax burden.

Consequently, the president and Congress ought to concentrate much of their attention on issues where these two ideas reinforce each other.

Leading the Country to Face the Truth

Another arena in which Congress and the president should cooperate concerns the simple truth, recently reported, that the Consumer Price Index (CPI) is not accurate. Government demands "scientific evidence" (statistical measurements and projections, cost-benefit analyses, and so forth) as the basis for making executive and legislative decisions. The aim is to build laws on real facts and unbiased evidence.

A solid report, from a congressionally appointed commission, has now confirmed that the Consumer Price Index (CPI), which the federal government uses to estimate the inflation rate, has been overestimating inflation by about one percent. That may sound like small potatoes, but if a correction is not made, the consequence could be an increase in the national debt by $1 trillion over the next 12 years.

Now, one might imagine that this would be the perfect fuel for presidential-congressional cooperation. All they have to do is make a CPI adjustment and they will be able to speed up their joint effort to balance the budget by 2002. They can tell the American people that truth should win out over fiction; statistical evidence cannot be wrong. And we will all be happier and better off in the end.

Nevertheless, there are warning signs on the horizon. Not every interest group wants truth over fiction. Adjusting the CPI will mean lower Social Security payments and an increase in taxes for some. Moreover, plenty of hard data also points to upcoming crises in Medicare, Social Security (which, in simple truth, has no real trust fund), and other programs, which the politicians are trying to ignore for the time being. The fact is that lawmaking is quite often built on interest-group deal-making rather than on careful attention to the truth, scientific or otherwise.

If Congress and the president want to help restore public confidence in government, following an election when less than half the eligible voters voted and when many who did vote were unhappy with their options, let them begin with the simple act of revising the CPI.

From One Index to Another

If federal authorities can act to revise the CPI, then they ought to go on to another simple truth and revise the Gross National Product (GDP) measurement. Why? Because, at present, any expenditure of money is taken to be an indicator of growth. As the Washington Post editors point out, however, if the reconstruction costs following a hurricane add up to $1 billion, we can hardly say that the country is ahead since the hurricane produced a loss of $1 billion. Or "when a company depletes a natural resource—clearcutting timber or mining copper—that shows up as a plus in the GD1 too. A corporation's polluting activities add to the GD1 and so does the subsequent cleanup, but many public goods—improved education, say, or cleaner air—do not." How can this be a fair measure of economic progress?

What we need is an index that better measures real economic and social progress. Higher rates of divorce produce a higher GDP because of increased expenditures on lawyers fees and the breakup of households. But these expenses reflect, for the most part, a decline of social and even economic well-being for great society and many individuals.

The point of all this is simple but profound. Congress and the president can do a great deal of good in the year ahead without having to agree on monumental policy changes.

Write your senators, representative, and President Clinton today and tell them you want them to act on these simple truths early in 1997.