WASHINGTON -- A move to scrap the nation's de facto cost-of-living measure -- a move that would have both immediate and long-term effects on the Social Security system and other entitlement programs -- may get a boost next week from an advisory panel report.

The Commission on the Consumer Price Index next Thursday is expected to conclude that the keystone gauge of U.S. inflation overestimates the rise in prices by more than one percentage point a year.

The CPI commission, headed by former White House chief economist Michael Boskin, was created by the Senate Finance Committee in 1995 to study measurement problems with the key inflation gauge.

But the panel is also expected to recommend the formulation of a new index that will replace the CPI as the cost-of-living gauge, something the closely watched measure was never intended to be, according to sources. The new measure would aim to correct measurement problems with the CPI that critics charge requires the government to overpay benefits recipients.

"The debate over replacing the current cost-of-living will move to center stage," said an official close to the panel.

The cost-of-living gauge is used to determine adjustments in Social Security benefits. Lowering the recognized rate of inflation by one percentage point could save the government roughly $195 billion over the next five years in inflation-related Social Security expenditures, helping to balance the budget.

A shift in the CPI that reduces the official inflation rate to 2% from 3% would also reduce the deficit the Social Security system faces in the long-term.

Retirees will find the downward shift will reduce benefits: A one-point drop in cost-of-living adjustments would cost a beneficiary who receives $619 a month about $74 in the first year -- with the gap steadily increasing, notes an article in Business Week.

If benefit formulas are changed accordingly, checks for those now in their 30s and 40s will be hit by 25 or 30 years of slower growth -- enough, some economists suggest, to extend the life of the Social Security trust fund by another 20 years. As it stands now, the fund is expected to run dry by 2029.

The CPI was adopted as a cost-of-living measure because the index was regarded as the most accurate barometer of costs to consumers. But critics of the price index say it tends to overstate costs because of its components. For example, they say it doesn't reflect the fact that people tend to substitute, say, chicken for steak when the price of beef rises, and that consumers are more frequently buying during sales and at discount stores rather than paying full price.

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