(FORTUNE Magazine) – Forget politics. It's economics that makes for really strange bedfellows. Take the increasingly popular idea that the consumer price index overstates inflation. Bunkmates as odd as Bill Clinton, Bob Dole, Pat Moynihan, and Newt Gingrich have each hinted they'd like to "correct" the CPI downward.

If they follow through, they'll affect all Americans' lives--and not just by slowing increases in wage, rent, and other contracts governed by the CPI. They will also rewrite history. For if the CPI is too high, the widely quoted statement that Americans' real wages declined over the past 20 years would be disproved.

Revamping the CPI is a politician's dream: Seemingly painless tax increases and spending cuts result. The Congressional Budget Office says lowering the CPI by one percentage point would increase the IRS's annual take by $45 billion a decade from now (because tax brackets are adjusted for inflation each year). At the same time, it would reduce the growth of Social Security payments, military pensions, and interest payments by $90 billion. Much of this could even be done in the name of "fairness," since too-high cost-of-living adjustments cause inequitable transfers of wealth from the young (taxpayers) to the old (pensioners).

But peer behind the statistical curtain, and you'll wonder whether economists can--or should--try to measure the true cost of living. The basic problem with the CPI is rooted in the way the Bureau of Labor Statistics (BLS) collects and adds up the data. Every day, some 400 government price collectors fan out across the country to note the price of everything from green beans to rent on a house. The BLS weights each product category according to the basket of goods and services a typical American bought in, roughly, 1983.

But the BLS often collects the prices companies charge rather than the prices people actually pay. If you stock up on lower-priced Wal-Mart film instead of the name brand at your local store, the BLS doesn't necessarily count your saving as a reduction in price. Nor does it subtract most coupons. These and similar biases make the CPI overstate the inflation rate by about 0.2, says Michael Boskin, a Stanford professor who heads a panel of economists studying the CPI's upward bias. But even these obvious and comparatively small fixes are controversial. BLS officials say the effect of discount shopping and coupons is so small it's not worth fixing.

A bigger fight is likely to arise over the panel's contention that the whole idea of the CPI--tracking the price of a fixed basket of goods over many years--gives a poor picture of the cost of living. If the price of a favorite cookie, for example, shoots up, some consumers switch to lower-priced substitutes, changing their basket and saving money. And the BLS's fixed basket doesn't fully capture quality improvements and price drops in new products like computers. Substitution and quality improvements probably account for 0.7 of the CPI rate, the panel believes, and all its biases together most likely overstate the rate by between one and 1.5 points.

But even some of the CPI's biggest critics are leery of asking government economists to make these kinds of judgments--and the biases may not all be downward. If a new toaster-oven model replaces a metal body with plastic to reduce accidental burns, is that a safety improvement (and thus a drop in price) or a reduction in sturdiness (a real price increase)? And if fear of crime causes people to purchase goods such as security devices that they didn't used to have to buy, shouldn't that be reflected in a true cost-of-living index?

Neither the Boskin Commission nor the BLS nor Congress is grappling with the larger quality-of-life question. The commission will present its report in December, and congressional leaders say the CPI will be among the first issues they take up in January. But they may find themselves confronted with the "toaster oven" problem. A recent survey found that half of all Americans think not only that inflation is high and rising, but also that the government manipulates statistics to mislead them about the economy. They may not like what a "new and improved" CPI really means.

--Kim Clark