Last week we wrote about how funding for economic data-gatheringagencies such as the U.S. Census Bureau was under threat from House Republicans looking for ways to cut spending.Apparently, they mean business. On May 9 the House voted to kill the American Community Survey , which collects data on some 3 million households each year andis the largest survey next to the decennial census. The ACS whichhas a long bipartisan history, including its funding in themid-1990s and full implementation in 2005 provides data that helpdetermine how more than $400 billion in federal and state funds arespent annually.
Businesses also rely heavily on it to do suchthings as decide where to build new stores, hire new employees, andget valuable insights on consumer spending habits. Check out this video of Target ( TGT ) executives talking about how much they use ACS data. Initially, it looked like the House might simply repeal the survey s mandatory requirement, something the Census Bureauhas said would just make it more expensive since they d have tosend more agents into the field to collect the data manually,rather than being able to legally require people who receive thesurvey to fill it out. Representative Daniel Webster (R-Fla.) wenta step further, leading the charge to dismantle the ACS entirely onthe grounds that it s unconstitutional. Webster gained his seat as part of the 2010 Tea Party revolutionthat won Republicans control of the House.
A press release on his website criticizes the ACS for invading people s privacyby requiring them to answer questions such as what time they leavefor work, how long their commute is, and whether they need helpgoing shopping. Those who receive a survey and fail to respond aresubject to fines of as much as $5,000. The fight over cutting funds for data-gathering agencies has openedup a rift in the deficit-hawk crowd. A handful of organizationsthat generally support big fiscal spending cuts have voiced theirsupport for fully funding the three main data-gathering agencies:Census, the Bureau of Labor Statistics, and the Bureau of EconomicAnalysis. The Chamber of Commerce, for example, strongly advocates fundingthem, since its members rely so much on the information theyprovide on basic things such as household spending, per capitaincome, and population estimates. Sintered NdFeB Magnets
The ACS is of particular value tothem, says Martin Regalia, Commerce s chief economist. Itis especially important to some of our bigger members for tryingto understand geographic distinctions and other granularity in theeconomy. Tom Beers, executive director of the National Association ofBusiness Economists, says that without good economic data,businesses would be flying blind. He adds: You end up in aguessing game about what s going on in the economy. Sintered SmCo Magnets Manufacturer
The types oflosses that result are far worse than what you end up spending tofund these surveys. Webster says ending the ACS could save $2.5 billion over the nextdecade. Asked to respond to concerns from the business communityover the impact of stopping the ACS, Webster s communicationsstaff referred me to his comments on the House floor, which don t address those concerns. Proponents of the ACS argue that the survey is particularlyimportant since it forms the basis of so much other data. Theloss of the American Community Survey will cause chaos andinefficiency in the operations of business and government in theU.S., says Andrew Reamer, a research professor at the GeorgeWashington University Institute of Public Policy. China Neodymium Rod Magnets
In 2010, Reamerpublished a report for the Brookings Institution measuring the overall impact of theACS. In a statement released on May 10, the Census Bureau saideliminating the ACS would mark the first time in the country shistory that we would not collect and share vital economic anddemographic measures of the country. These cuts would also keep usfrom conducting the 2012 economic census. Eliminating the AmericanCommunity Survey would make it extremely difficult if notimpossible to contain the costs of the 2020 census.
Contacted last week, economists at conservative think tanks CatoInstitute, American Enterprise Institute, and the HeritageFoundation all expressed support for the data-gathering agenciessince all three rely heavily on the statistics they produce tostudy the economy. Those agencies are essential, says PhillipSwagel, an economist and nonresident scholar at AEI. The datathey provide really tell us what s going on in the economy. Thisshouldn t be a political issue.