ROANOKE TIMES 
                      Copyright (c) 1997, Roanoke Times

DATE: Friday, January 31, 1997               TAG: 9701310053
SECTION: BUSINESS                 PAGE: B-6  EDITION: METRO 
DATELINE: WASHINGTON

GREENSPAN: GET THE BIAS OUT

The government should quickly change its inflation measure in ways that will trim Social Security and raise taxes for millions of Americans, Federal Reserve Chairman Alan Greenspan told Congress on Thursday.

In his strongest comments to date on the matter, Greenspan took issue with critics who have called such changes a ``political fix'' to give lawmakers a back-door way to address the government's budget problems.

``On this issue, we should let evidence, not politics, drive policy,'' he said.

Greenspan told the Senate Finance Committee he fully agreed with the CPI report issued in December by five prominent economists, led by Michael Boskin of Stanford University.

The Boskin commission said the CPI was overestimating inflation by 1.1 percentage points annually, an error that will cost the government $1 trillion over the next 12 years in too generous cost-of-living increases and lost tax revenue.

Greenspan said Congress should create an independent commission of economists to provide Congress annually with an estimate of the upward bias remaining. The estimate would be used to trim the CPI.

``This type of approach would have the benefit of being objective, nonpartisan and sufficiently flexible to take full account of the latest information,'' he said.

-Associated Press

LENGTH: Short :   37 lines
ILLUSTRATION: PHOTO:  (headshot) Greenspan. color.