Dead Calm In The Eye Of The Cpi StormMike Mcnamee
Katharine Abraham has $190 billion on the line. Economists recently found that the consumer price index overstates inflation by 1.1 percentage points a year--costing billions in extra cost-of-living outlays. As Bureau of Labor Statistics commissioner, Abraham must make the CPI more accurate.
Abraham, 42, is unperturbed. The BLS was first to recognize the CPI's weaknesses, she says, and BLS will fix them without worring about political or budgetary effects. "Our job is to produce the best possible CPI," she says. Indeed, Abraham has "weathered this storm by treating it as a professional issue, not personal criticism," says Labor Secretary Robert Reich, who tapped the Harvard-trained economist to head the BLS in 1993.
Abraham's ace in the hole: Since Richard Nixon got burned for trying to hush up unemployment numbers, politicians don't dare tamper with the BLS. So Congress and the Administration won't risk telling the BLS how to figure a new CPI. With such protection, Abraham's calm will remain unshaken.