Portland, OR
The recent report of the Boskin Commission has raised the question of whether or not COLAs based on the CPI should be modified. Almost every American family has an important stake in this decision. We believe that the downward adjustment proposed by the Commission is an unwise course and should be firmly rejected.
First, the question of the degree and direction of CPI bias is far from a settled question. The Boskin Commission has a view. Many distinguished economists and labor market experts disagree. In fact, many believe that there are serious problems of understatement -- a question the Commission did not even address.
Second, the BLS, responsible for the construction and compilation of the CPI, is and has been engaged in a continuous process of refinement and adjustment of the Index. For Congress or the Administration to substitute an arbitrary decision for the work of experts would undermine the BLS and all of our nation's statistical agencies and do untold harm to the integrity of this vital data.
Third, and most important, while there is dispute about the validity of the Boskin findings, there is no dispute about the consequences of following their lead. Every Social Security recipient would see his or her income reduced. So too would every person receiving a federal pension or disability benefit. And because of the change in tax bracket indexation, every working family would see their tax bills increase. Millions of workers with contracts that reference the CPI would face the prospect of smaller paychecks. Balancing the budget by cooking the books is a bad idea. Balancing the budget on the backs of working families is an even worse one.
The AFL-CIO vigorously opposes any legislative action that would arbitrarily adjust COLAs, that would undermine the integrity of the nation's economic statistics, and that would reduce incomes and increase taxes for tens of millions of American families.