Sequestration Cuts To Census Bureau Make Federal Government Dumber On Economy

WASHINGTON -- Not only do leaders on both sides of the aisle think sequestration is stupid, the automatic spending cuts that went into effect March 1 also will make the federal government dumber -- especially at understanding the economy.

Some of the counterproductive impacts of the $85 billion worth of cuts being implemented this year are pretty well understood. First, these cuts slow the economy and make it harder to reduce the deficit, according to Federal Reserve Chairman Ben Bernanke. They also cost the government money, because their across-the-board nature means agencies like the Internal Revenue Service must slash the same amount as other departments, even if it hurts the ability to pursue tax cheats. In addition, the Government Accountability Office, which brings back to the federal Treasury more than $100 for every dollar it spends, is set to lose about $27 million, making cutting waste harder as well.

But there is yet another budget reduction that could compound the ills of sequestration's fact-blind approach: an estimated $46 million cut to the Census Bureau, on top of a recent refusal by the House Appropriations Committee to boost the bureau's budget by about $50 million.

The White House's Office of Management and Budget sought the extra funding to deal with the country's economic census, which is done every five years and provides the baseline data used to calculate everything from the Gross Domestic Product to the employment rate. Businesses use the data to decide things like where to build new plants or to find emerging markets. Economists use it in just about all of their predictive analyses.

But the last time the economic census was done was in 2007 -- before the recession.

"We have one of the fastest-moving economies in the world," said Phil Sparks, a co-founder of the Census Project, which represents local governments, businesses and others who deem an accurate measurement of America and its economy to be essential. "To have data that is this dated and dog-eared, we're just tying one hand behind our back economically."

Ironically, the new trove of economic data has already been gathered. But the Census Bureau needs cash to crunch those numbers and render them into a useful form. It's a massive undertaking, and the bureau will likely have to put it off until it has the funding, according to a source familiar with the agency's thinking. The Office of Management and Budget declined to comment.

Sparks said the delay was "penny wise and pound foolish."

"To have taxpayers and policymakers not have this information in order to know where we are going to go in this recovery is just plain stupid," he said, noting that the information gathered will eventually paint a picture of what actually happened during the Great Recession, and provide a much more accurate portrait of where the country is now. "Hopefully it will inform the policymakers what to do next," he said.

The information could be especially crucial if Congress and the president try to tackle an ambitious reform of the tax code as they strive for a "grand bargain" on debt and deficit reduction over the rest of the year.

"If you have data that is five or six years old, especially given the turmoil of the last few years, you're not going to have the accurate picture you'd have from data that's just a few months old," Sparks said. "Policy is going to be suffering because of this."

That's not the end of the downside of cutting census funding. Counting every American, as the Constitution requires, is enormously expensive, with the 2010 count coming in under budget but still costing about $13 billion.

Part of the expense is due to the growing reluctance of some Americans to send back the survey's forms; it costs much more to send workers to their homes on foot. In hopes of improving responses for the 2020 count, the bureau is in the process of designing and testing new methods -- all of which will now have to be put on hold.

"There are tests that have to be conducted for large-scale innovation that could save lots of money for the census in 2020," said Sparks, whose Census Project is appealing to the Senate to try to add the requested extra $50 million to the bureau's budget.

"This is a large-scale test that has to be done ahead of time," Sparks noted. "It's the difference between spending hundreds of millions of dollars [on census-taking] or billions of dollars."

Indeed, census officials have warned Congress that if they can't make sure newer, cheaper collection methods work, they will have to use older, more expensive strategies in 2020.

"It's really a very tightly wound 10-year clock they're on, and it's already started to tick," said Sparks.

Jennifer Hing, a spokeswoman for the House Appropriations Committee, said that the $50 million "budget anomaly" requested in the upcoming continuing resolution to fund the federal government for the rest of the year did not rise to the level of importance that the committee felt was necessary.

"Per the Chairman’s [Rep. Hal Rogers (R-Ky.)] statement, the anomalies included will 'prevent catastrophic, irreversible, or detrimental changes to government programs, or to ensure good government and program oversight,'" Hing wrote in an email. "In the committee’s estimation, this item does not fall under this definition."

Michael McAuliff covers Congress and politics for The Huffington Post. Talk to him on Facebook.



What Sequestration Would Cut