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The Consequences of Budget Cuts

Fri Jul 15 2011
Robert Groves
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I have devoted much of this blog over the last two years to discussions about how the taxpayers who finance federal statistical findings can evaluate the quality of our work. Federal statistics play a critical role in our democracy, providing objective and documented measures of our economy and society. We often take these measures for granted, assuming that the federal statistical system will continue to provide timely, reliable, and relevant current measures of our economy and society as well as periodic benchmark measures.

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Each year the Congress and the Executive Branch work to formulate a budget for the Federal government, including the Census Bureau. Given our nonpartisan mission, we are careful both to avoid any appearance of partisan views, and to be straight about the statistical and scientific consequences of budgetary decisions. To do otherwise would erode public confidence in the statistics themselves.

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As the country continues to debate about its fiscal future, the budget spotlight this week came to focus on the Census Bureau. We began developing our Fiscal Year 2012 budget last spring. In formulating that budget, we reviewed our existing economic and demographic statistics programs and determined that we needed to terminate a number of existing programs such as the Current Industrial Reports program, the Statistical Abstract, and our foreign demographic analysis program to mention a few, in order to fund higher priority programs. In anticipation of tight spending limits, we have been making numerous cost efficiency moves throughout the Census Bureau. Last month we announced a decision to close six of our twelve regional offices. We have delayed filling hundreds of vacancies at our Suitland, Maryland headquarters, and have taken steps to achieve long term savings through consolidation of IT resources and innovative business processes. I have tortured readers of this blog by repeated notes about my beliefs that we must become more efficient to survive.

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The President presented a Census Bureau budget to Congress that was a real 11% cut from our funding the previous year. The Appropriations Committee in the House of Representatives has taken the first official action on that proposal, and cut that proposed budget further by 16.5 percent; our periodic programs request was cut 21 percent. The next steps for our funding bill are to be considered and then passed by the full House, then sent to the Senate.

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A cut of this magnitude in our periodic programs account means we cannot do all the work the Congress has asked us to do. Our ability to provide high quality and comprehensive statistical data will be severely diminished if we sustain such a large budget cut and we will be forced to cancel major programs that provide critical benchmark measures. This reduction also will force the layoffs of up to 700 employees from our headquarters workforce of almost 4,600. In addition to the personal hardships that would cause the hard working, dedicated employees of the Census Bureau, the loss of scientific, technical, and professional expertise that would result from losing such a high percentage of our workforce would have programmatic and data quality repercussions for years to come.

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If you are reading this blog, you probably already know how the data provided by the Census Bureau underlies much about what we know about our economy and our people. For example, the Bureau of Economic Analysis uses the statistics from the Economic Census to benchmark Gross Domestic Product (GDP) estimates and prepare input-output tables – the fundamental tool for national and regional economic planning. During benchmark years such as 2012, about 90% of the data used in calculating GDP comes from the Census Bureau. The Bureau of Labor Statistics uses Census Bureau statistics to benchmark producer price indexes and prepare productivity statistics. The Federal Reserve Board uses our statistics to prepare indexes of industrial production.

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Businesses use our statistics for site location, industry and market analysis, to make investment and production decisions, to gauge competitiveness, and to identify entrepreneurial opportunities. Detailed industry information for small geographic areas permits state and local agencies to forecast economic conditions, plan economic development, transportation, and social services. Using our statistics, national and local news media report back to investors and the general public their personal evaluations of how well the economy is doing and how our society is changing.

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We too are taxpayers, and we greatly appreciate these are difficult fiscal times. That is why we took steps to shrink our budget and find efficiencies that would not put our major, key surveys at risk. I will be writing more here as our funding legislation works its way through Congress.

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