Commentary: On Congress' Hit List: Crucial Business Data

Is the U.S. economy slowing? How much business is really done over the Internet? What impact are computers having on productivity?

Intriguing questions. And folks from the Federal Reserve Board to Wall Street to Main Street would love to have the answers. But they won't anytime soon. That's because the federal agencies that gather and crunch those numbers are about to get caught up in an ugly federal budget squeeze. Not that anyone has anything against them. But when lawmakers start fighting over how to trim programs to keep the budget within spending caps, the statistical agencies could get whacked.

But it's the public that will feel the pain. "When you look at the consequences, the costs [of budget cuts] are tremendous," says Diane C. Swonk, Bank One Corp. chief economist and president of the National Assn. for Business Economics. The price: bad choices by business and policymakers, who will have to base decisions on second-rate data.

Beyond their devotion to their own poll numbers, most politicians don't seem to have much interest in how statistics are gathered. And the professional number-crunchers in government, stashed away in agencies across the bureaucracy, have no voice on Capitol Hill. Only one statistical program--the upcoming Census--is getting any attention in Washington. And that's only because it is the key to congressional redistricting after 2000. Next year, the gathering and analysis of data will cost taxpayers a mere $6 billion--and half will go to the census.

As much as business--and Wall Street--need solid data on the economy, they don't bother to lobby for funding. The agencies "are an orphan," says Everett M. Ehrlich, president of ESC Co., a capital consultancy, and former Under Secretary of Commerce for Economic Affairs. "The people who use the data think they come from the statistical tooth fairy."

The bleeding has already begun. The House wants to freeze spending for the Commerce Dept.'s Bureau of Economic Analysis, the folks who put together the vital gross domestic product data. BEA, which now has a $44.2 million budget, wants just $5.2 million more this year, in part to collect figures on E-commerce sales, as well as to modernize how it looks at computer software and financial services. But even that sum looks like it's in jeopardy.

What will happen to the Internet initiative? "We'll have to slow it down, do what we can with existing data," says BEA Director J. Steven Landefeld. In other words, keep guesstimating.

BLS BLUES. Matters could be even worse for the Bureau of Labor Statistics, which now spends $399 million to produce a vast array of data, including jobs and inflation numbers. BLS, a tiny piece of the Labor Dept., may suffer bigtime in the nasty budget battle between the Republican-controlled Congress and the White House over funding for the Labor and Health & Human Services departments, which share a single, huge spending bill.

BLS wants to spend an extra $3 million next year to fix up the consumer price index. And it hopes to do a thorough review of the closely watched employment cost index, a series that has not been updated since it began--in 1975. Most importantly, BLS wants an extra $5 million to overhaul its productivity data--perhaps the best predictor of standard of living. Today, government does a decent job figuring productivity for manufacturing, but on the service side, the data are very weak.

If Congress gets its way, that's how they will stay. In a $1.8 trillion budget, the extra funding these agencies need to track the New Economy is trivial. But the data they collect provide the best window on where the economy is today. And without that information, how can policymakers decide where they want to go tomorrow?

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