It is a great pleasure to welcome Commissioner Abraham before the JEC once again. The Bureau of Labor Statistics (BLS) is one of the most objective, professional, and respected statistical agencies in the world. I would like to thank BLS for maintaining its high standards of objectivity, and for its assistance in the work of this committee over many years. We have forged a good relationship that will continue to be strengthened in the years ahead.

      I am pleased to announce that yesterday the Speaker designated me chairman of the JEC for the 105th Congress, the first Republican House member to hold this position in over 40 years. It is a responsibility I take very seriously, and I look forward to working with JEC members from both sides over the next two years. I am confident that together with ranking minority member Senator Bingaman, we will be able to move the committee forward. I would also like to welcome the other committee members here this morning.      

      The employment data released this morning show that the unemployment rate was unchanged, while payroll employment posted a solid increase of 262,000. The December payroll employment increase should be viewed in the context of a very modest rise in the previous month. Despite an increase in employment for the month of December, manufacturing employment over the 12 months of 1996 declined by 94,000.

      Turning to another issue, among the important economic statistics provided by the BLS is the consumer price index (CPI). The CPI is a fairly old statistic, and a committee headed by George Stigler reported to the JEC in 1961 its findings on issues related to this index involving substitution, quality changes, updating market baskets, treatment of new products and other issues. More recently, the Boskin commission report reviewed many of these same issues, and this report sparked considerable controversy.

      I think it is fair to say that although there is a consensus that the CPI may overstate inflation, the extent of this overstatement is debatable. It is also worthwhile to note that Congress, rightly or wrongly, chose to index a variety of federal benefits and tax provisions after the Stigler committee issued its report in 1961. There would seem to be ample reason for Congress to examine this issue carefully before making hasty policy decisions.

      After all, the policy decisions made regarding the CPI would affect many millions of Americans over time. According to a recent JEC analysis, about 40 percent of the direct effects of legislative reductions in the CPI would comprise tax increases on primarily middle class taxpayers, while the remainder would fall on entitlement beneficiaries. Congress should consider whether this mix of policy for deficit reduction achieves the desired results in the best way.

      In closing, I would like to say that I look forward to working with my JEC colleagues on both sides of the aisle, and with the BLS and other agencies, over the next two years.

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