WASHINGTON'S HOT POTATO.

The article reflects upon a U.S. Senate advisory panel report made in December 4, 1996 indicating that the consumer price index (CPI), the nation's main gauge of inflation, overstates price hikes by 1.1 percent points a year. Correcting that error would reduce the federal deficit by about $200 billion over the next five years. It would also slow the growth of wages and benefits for millions of workers and retirees. Nearly half the budget savings from a CPI correction though would be in the form of smaller annual cost-of-living adjustments in Social Security and other federal retirement benefits. A Senate Finance Committee report on the issue states that the CPI is too simple an index to measure prices accurately in a rapidly changing economy.