Census Faces Funding Cuts That Would Affect GDP Data

If the House-passed appropriations bill were to prevail for fiscal 2008, the Census Bureau would see significant funding reductions, including the elimination of five economic surveys that provide data for the gross domestic product and other key statistics.  In addition, other funding cuts that are part of House-passed bills would curtail plans to improve service sector data and survey samples that are part of consumer price index.

Congress began its August recess without finishing work on these appropriations measures, as well as others proposed by the Bush administration. Both the House and Senate will return on Sept. 4, but the outcome for these funding bills is far from certain as the start of fiscal 2008, on Oct. l, nears.  Some observers expect Congress to roll several appropriations bills into a continuing resolution, which could jeopardize some data programs if it were a long-term CR.

The administration’s FY 2008 budgets, proposed to Congress in February, included a series of improvements to key data programs produced by the Census Bureau, the Bureau of Economic Analysis, and the Bureau of Labor Statistics.  Funding for BLS is part of the appropriations bill that covers the Labor Department, while funding for BEA and Census is part of the Commerce Department bill.

Both the Commerce bill and the Labor bill have passed the House but not the Senate.
The Commerce bill (H.R. 3093/S. 1745) also includes the departments of Justice and State, while the Labor bill (H.R. 3043/S.1710) also includes Health and Human Services and Education.

Census Surveys Cut in House Measure

As passed by the House on July 26, the Census Bureau’s budget request is significantly lower than the $1.23 billion proposed by the administration.  The House fully funded the 2010 Decennial census and restored funds for the Survey of Income and Participation.

However, Census officials expressed concern about funding reductions that are part of the House-passed measure.  If those cuts were part of a final appropriations bill, which must be negotiated with the Senate, Census would see funding for its current economic programs reduced by $23.5 million and its Economic Census programs by another $10 million.  These cuts would also result in Census dropping its plans for improving current service sector measures.

“The loss of data resulting from these cuts amounts to the largest single loss of source data for the GDP accounts since their creation in the depths of the Great Depression,” said Thomas Mesenbourg, Census associate director for economic programs.  He added that the loss of this source data would “result in a sharp reduction in the accuracy of the GDP, PCE-inflation, profits, productivity, and other estimates critical to monetary policy, federal and state and local budget projections, to business and household decisions, and to financial markets.”

BEA Programs Would Be Affected If Census Programs Were Cut

If the funding cuts contained in the House-passed bill for Census were enacted, the affects on source data would be detrimental to the GDP accounts and other data programs produced by the Bureau of Economic Analysis, BEA officials said.

“We will be closely monitoring this situation, since the budget cuts and subsequent loss of data would amount to the largest single loss of source data for the GDP accounts since their creation,” said Katie Kane, BEA Congressional affairs specialist.

The House-passed appropriations bill would provide BEA with a total of $86.5 million for fiscal 2008, somewhat higher than the $85 million requested.  In its report on the bill, the House Appropriations Committee recommended that higher amount, in part, to “expand and improve timeliness of regional data to benefit state and local officials and economic development organizations.”

BEA’s budget, as approved by the House, also includes the $2.1 million requested to support the plan to measure the impact of research and development activity in the national income and product accounts (NIPAs).

BLS Funding Higher in House, But Cuts Proposed By Senate Panel

BLS officials are most concerned about possible spending cuts if a final FY 2008 bill is more like the measure approved by the Senate Appropriations Committee than like the House-passed bill.

As approved by the House on July 19, the BLS budget provides $576.1 million or  $1.7 million above the requested level.  “In addition to supporting the critical initiative to implement a more representative and current sample of geographic areas, as well as a continuously updated housing sample in the CPI, the funding allows the BLS to conduct focused research studies on work-related injuries and illnesses and supports the first year of a study to develop a methodology for determining the cost of living by state,” said Emily Barrington, BLS deputy associate commissioner for administration.

Funding cuts included in the bill passed by the Senate Appropriations Committee would trim the agency’s budget by $14.4 million, including a $13.2 million reduction that could force BLS to fund the CPI modernization by eliminating the international price program (IPP), officials said.

The BLS import and export price indexes are among the data series designated by the Office of Management and Budget as “principal economic indicators” and the statistics are uses to measure the real value of imports and exports in the GDP estimates.

“The loss of these data also would reduce the quality of aggregate productivity statistics produced by BLS that rely on accurate measures of real GDP.  In addition, the U.S. Census Bureau uses IPP data to adjust monthly international trade figures in order to track and publish trade flows in real terms,” BLS said. 

Another $1.2 million funding reduction included in the bill passed by the Senate committee is spread among several BLS programs and could curtail plans to improve the current employment statistics program and occupational employment projections, for example.

Officials from all three agencies emphasized that they are not sure when the Senate might act on the appropriations bills or whether both the Commerce and Labor bills might become part of a continuing resolution, at least at the start of the new fiscal year.  BLS officials cautioned that “while a short-term CR could be absorbed with minimal programmatic disruption, a long-term CR would jeopardize core BLS programs.”  Also, the BLS officials said, “the standard prohibition against beginning new activities under a CR could endanger the critical initiative to modernize the CPI.”