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Economists to the Rescue

HOW do you close a $400 billion gap? That's the central question as the semi-irresistible force of Republican budget negotiators met the semi-immovable wall of the Clinton budget team.

Each side hints it has begun to see signs that compromise is possible. As we have said all along, compromise is not only possible, it's inevitable.

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Politicians rarely lavish kind words on economists. But, in this case the practitioners of the supposedly dismal science deserve hosannas. They are rescuing the negotiators' holiday season by preparing some wonderful economic models as stocking stuffers. Furthermore, economists are coming to the rescue not just once but twice.

The first rescue comes courtesy of the Congressional Budget Office. Its new projection of higher growth rates and tax revenues over the next seven years helps to close that $400 billion gap between what GOP balancers want and Clinton will concede. But the gap still gapes. Both Mr. Clinton and his GOP opponents must give ground.

There is an ironic aspect to the CBO rescue. When GOP presidents faced Democratic Congresses, the Republicans preferred the more optimistic outlook of the White House's Office of Management and Budget while Democrats swore by CBO figures. Now the shoe is on the other foot, and Clintonites praise the old GOP approach of dynamic, rather than static, growth models.

The second rescue was urged earlier this year by Alan Greenspan and is due to be announced soon. It's a revision in the way the Bureau of Labor Statistics calculates the Consumer Price Index (CPI). That's the inflation measure by which crucial federal entitlements and tax allowances are permitted to expand.

The budget negotiators anticipate a downward adjustment of about 0.3 percent in the CPI as a result of such a revision. That would save $30-plus billion over the next seven years - and increasing amounts after that.

Mr. Greenspan urges a full percentage point change as realistic. GOP leaders and Clinton should nudge the system closer to that figure. The nation would benefit from more accuracy on inflation.

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