Bread & circuses.

MY mother reports that as a toddler I touched a hot stove only once, displaying an early ability to learn from experience. (Of course, I wasn't a blonde back then.) This ability is in surprisingly short supply among congressional Republicans. Still worshipping at the shrine of deficit reduction, some GOP congressmen are itching to make a technical adjustment in the government's inflation index. The idea is that this would dramatically reduce the deficit over the next few years. But it would do so by raising taxes and reducing Social Security benefits. The Republicans' only concession to their own political health is to insist that Bill Clinton lead the way over this particular cliff.

Economists agree that the Consumer Price Index, which measures consumer prices for a fixed market basket of goods and services, exaggerates the cost of living. As Ed Rubenstein explains in greater detail [see Right Data], because the CPI doesn't allow for consumers' tendency to substitute cheaper goods for higher-priced ones, the growing popularity of discount shopping, or the higher quality of new products, it overstates increases in the cost of living. It thus inflates the cost-of-living adjustments used to index Social Security and military retirees' benefits, and income-tax brackets, personal exemptions, and the standard deduction.

A commission of economists headed by Michael Boskin, Chairman of the Council of Economic Advisors under George Bush, recently concluded that the CPI probably overstates inflation by (a misleadingly precise) 1.1 percentage points a year. The percentage looks small, but the consequences of adjusting the CPI would be enormous.

First, the good news. Economic performance over the past two decades has been much better than indicated by the faulty CPI. Properly measured, real median family income has risen by 36 per cent since 1972, not by 4 per cent as current government statistics indicate. So we have been better off than we thought -- but many of us are not going to be as well off in the future if the CPI is adjusted downward. That's the red-hot stove that some politicians are sorely tempted to touch.

They are tempted because a 1-point downward adjustment in the CPI would reduce deficits by $600 billion over the next ten years, thereby making their pledge to balance the budget far easier to live up to. Most of the saving would come from lower benefit payments, but the Joint Economic Committee points out that roughly 40 per cent of it will come in the form of higher taxes on "primarily middle-class taxpayers." Uh-oh. Benefit cuts and tax increases? Whose responsibility will this combustible combination be?

The clearly erroneous index is calculated by the Bureau of Labor Statistics, which can be expected to make some needed adjustments over time. But the Boskin Commission recommended that the President and Congress make a larger adjustment and make it now. Senate Finance Committee Chairman William Roth stresses that any change must be "broadly and deeply bi-partisan." Like the congressional pay raise of seven years ago?

Some conservatives are warning Republican legislators of the dangers they face. Steve Forbes predicts that if Republicans are seen as advocating tax increases and benefit cuts they will squander the political capital needed to make the reforms that are really needed in the whole structure of Social Security. "If Republicans get caught up in looking as if we're trying to do something to current recipients, we'll be hammered the way we were on Medicare," says Forbes, who urges members of Congress to "look at the big picture --a major reform of Social Security for young people."

Forbes is not alone. Dave Mastio, writing in Slate, points out that adopting Boskin's recommendation for reducing Social Security COLAs would abort the growing interest in Social Security reform by providing a short-term fix to the trust fund's financial problems.

Leila Bates, director of tax and budget policy at Citizens for a Sound Economy, believes it is up to Bill Clinton to prod the BLS to reform the index. "Republicans shouldn't want to be accused of raising taxes and cutting benefits," she states.

Senator Pat Moynihan, Capitol Hill's biggest enthusiast for a downward adjustment to the CPI precisely because it would stall major Social Security reforms, declares "We're not trying to cut, we're not trying to raise. We're proposing an accurate count." But Republicans who spent the past year making unlistened-to arguments about reductions in the rate of growth of Medicare shouldn't relish spending the next two years playing defense on Social Security reductions.

AND they would be facing the same tormentors. The American Association of Retired Persons and the AFL - CIO oppose a major CPI adjustment. Bill Clinton might embrace it now, and later get away with distancing himself from this "Republican reduction in benefits." Which is how House Minority Leader Dick Gephardt could be counted on to describe it even if the Administration was supporting it.

Congressman Chris Cox (R., Calif.) believes that it is up to the Bureau of Labor Statistics to see that the CPI is as accurate as possible and rejects the Boskin plan as a way to cut spending. Unlike too many members who are yearning to reduce the deficit "painlessly," Cox scorns the "Darmanesque gimmick" of using COLA cuts to achieve "so-called savings," and he doesn't want government revenues to increase as much as they would under the Boskin plan.

Congressman David McIntosh (R., Ind.) agrees that it would be a "terrible idea" for Congress to adjust the CPI in a way that would impose "a hidden tax increase on the middle class."

Republicans in Congress should let the Bureau of Labor Statistics make appropriate adjustments in the market basket used to calculate the CPI. The only downward adjustments they should be contemplating are in our record tax and spending levels.