What’s Wrong Today:
On
May 9, the U.S. House of Representatives passed an appropriations bill for
Commerce, Justice, Science, and Related Agencies (H.R. 5326) that
drastically reduces funding for the Census Bureau and makes participation in
the American Community Survey voluntary.
According to the National
Association of Business Economics,(NABE) the legislation:
•
Terminates the American Community Survey
(ACS);
•
Cancels the 2012 Economic Census; and
•
Halts development of cost-saving measures for
the decennial census.
The vote was largely along party
lines.
So, What’s Wrong?
Well, how
much data do you need if the answer to all of our problems is lower taxes and
reduced regulation?
It’s
not that the House Republicans reach different conclusions based on the data.
It’s not even that they contest the accuracy of the data. They are fighting to prevent the data from even being “collected”.
Most
U.S. economic data comes from three federal agencies: the Census Bureau, the
BEA, and the Bureau of Labor Statistics. They have a combined budget of $1.6 billion,
less than 0.05 percent
of President Barack Obama’s
$3.7 trillion
proposed budget. Census
data are funneled to the Bureau of Economic Analysis (BEA), which shares its
conclusions with the president’s
Council of Economic Advisers, the Federal Reserve Board, and Congress.
How
are Economic Census data used?
• By the federal government as an
input to calculate elements of key economic indicators, such as economic growth
(GDP), prices, and productivity;
• By businesses in evaluating
whether to expand into new market geographies;
• By economic development
commissions in attracting new businesses to their areas; and
• By companies to benchmark
performance against industry averages (see Ford example below)
How
are ACS data used?
• By corporations to examine
workforce characteristics of neighborhoods to determine optimal locations for new
factories or sales centers;
• By homebuilders looking to
tailor new subdivisions to surrounding neighborhoods based on income, family
size and existing home values; and
• By governments in planning
resource allocation to meet the educational, safety and housing needs of their
citizens.
As
reported in The Economist,
the ACS conducts an annual poll of 3 million households each year. One outcome
of the last survey was research by the Department of Veterans Affairs and four
universities to determine geographic concentrations of veterans in the US. The
survey found that 300,000 vets live in Maricopa County Arizona and that
two-thirds are over 55. They also learned that poor, older vets are twice as
likely as non-veterans to be homeless.
This sort of
data helps target resources to those who need it most.
Daniel Webster (R-FL) led the effort to
kill the survey. He said: “what really promotes business…is liberty, not
demand for information”.
He complains that the ACS survey
is “random”, not “scientific”. This is from a guy with a degree in electrical
engineering from Georgia Tech.
Poor
Congress critter
Webster: real scientists agree
that randomized survey data are well, quite scientific.
This guy is clearly not
related to the great
Senator Daniel Webster who served in the Senate with such distinction in
the early 19th century.
The Economic Census happens every
five years. According to its funding request, the Economic Census needs funds
to cover the cost of mailing 4.6 million
forms to 3.1 million
businesses, as well as conducting about 500,000 reminder phone calls and
sending 4.2 million
follow-up packages. That idea was lost on the committee, which reduced funding in part because it says the bureau won’t start analyzing the
data until the end of fiscal year 2013.
Business
Week reported that a surprise to the GOP is that economists and business
leaders, including the US Chamber of Commerce, were against the House’s efforts
to cut funding to the agencies that gather economic data.
Some
of the biggest users of the data are the in-house economists at big companies. “We
are total data hogs,”
says Ellen Hughes-Cromwick, chief economist at Ford Motor (F). The most recent GDP estimate
released by the BEA showed that motor vehicle output made up half of the 2.2 percent
in GDP growth in the first quarter, giving Hughes-Cromwick a window into
consumer spending habits that directly affect Ford’s
revenue. Says Hughes-Cromwick: “It’s
crucial to keep up with changes … and you do that with good data.”
Conservatives
believe the Census Bureau does too much already. “They waste a share of their budget
on studies that no one actually uses,”
says Chris Edwards, an economist with the Cato Institute, who cited periodic
surveys on such items as the total hog count in the U.S. to prove his point. “A
lot of that could be done by the private sector.”
He might tell us why the private
sector has failed so miserably in producing survey data of remotely the
quality, consistency and usefulness (including for their own businesses) that
the federal agencies do,
after all, they are simply lazy bureaucrats who are not subject to market
discipline and all that good Galt stuff.
In
the movie, “Wag the Dog”, they fabricate a fake culture to go with
their fake war and they want to popularize an Albanian dish.
They ask, “who
knows anything about Albanian food?”
Answer: “Nobody”…
so,
Denis Leary says: “Good, then we can make up whatever we want.”
Taking
a cue from House Republicans, I disconnected the gas gauge and oil light on my
car since they waste valuable energy.
