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Michael Boskin
Boskin became frustrated with flaws in official statistics when he was
chairman of President Bush’s Council of Economic Advisers. Now, four
years out of that job, the 51-year-old Tully Friedman Professor of
Economics and senior fellow at the Hoover Institution has created a
firestorm in Washington over the unlikely subject of statistics. Last
year, he headed a five-member blue-ribbon panel that told Congress the
nation’s official inflation rate has been wrongly measured. The
commission’s December report seems to have convinced many influential
national and foreign leaders, including Alan Greenspan, the highly
respected chairman of the Federal Reserve Board. It caught elected
politicians’ attention because it pointed out a way for them to tackle
the nation’s budget crunch. The commission recommended:
* The Bureau of Labor Statistics should adopt
new CPI formulas and, with added financial resources, move faster to
keep up with changes in the economy.
* Congress and the president should stop
automatically adjusting the tax code and federal spending programs by
the CPI, and choose a more realistic inflation adjustment number. In the
meantime, if Democrats and Republicans can agree to a downward
adjustment of 1.1 percent, the move would go a long way toward balancing
the federal budget.
The commission’s recommendations opened a Pandora’s Box, and Boskin,
as the man with the key, has become the center of nationwide attention.
His name made page one for weeks while economists and other experts had
a field day with the ramifications of the commission’s report. “The
Boskin report demolishes the theory that living standards have
stagnated,” wrote Newsweek, referring to conventional wisdom that
holds that the nation has been falling downhill economically since about
1973. The New York Times said the commission suggests that “much
of the economic debate of the last few decades has been based on the
wrong premises, and therefore is simply irrelevant.” The Washington
Post asked, “Are we better off than we think we are?”
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