So serious: so silly - inaccurate government statistics - Above the Beltway

Chief Executive, The,  Jan-Feb, 1992  by Edwin J. Feulner

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When you consider the deadpan seriousness with which most Washington politicos approach their jobs--Yes, they really do think they are important!--you'd expect that they'd get it right once in a while. And that's just about how often that the caring folks in Washington do succeed--once in a while.

That's why each of the tax code changes during the past decade--1981, 1982, 1986,1990, and we'll probably see another this year, was followed by so-called "technical adjustments." That's why the Treasury issues not one, but three reports each quarter on the gross national product (GNP)--a report, an adjusted report, and a final report. And sometimes all of them are wrong. That's why the $180 billion a year that taxpayers spend fighting poverty seems to have no effect on poverty. That's why we're saddled with multi-billion-dollar government boondoggles like the toxic waste "Superfund." That's why once congressional staff study--for the Joint Tax Committee, of all groups--actually predicted a few years ago that government revenues would increase if America's "wealthy" were taxed at a rate of 100 percent.

SKEWED STATS

Despite a payroll of 37,000 to serve the Congress--including the staffs of the Congressional Budget Office, General Accounting Office, Congressional Research Service and Office of Technology Assessment--and more than two million people grinding away in the federal bureaucracy, official Washington seems to have no idea where it has been or where it is going. In short, things are much worse in our mixed-up capitol than even the most hardened cynic probably has imagined.

Consider just a few examples.

* The GNP: The Commerce Department in late April 1991 estimated that the GNP dipped 2.8 percent during the first quarter of last year. A month later, on May 29, Commerce revised its April estimate, saying the economy shrank just 2.6 percent. And a month later, in June, it revised the number a third time. This is the way it is routinely done--we get the same set of numbers three times. While such differences may appear minor to the general public, a fraction of a percent, as any CEO knows, can be quite significant. In the case of the national GNP, it can mean tens of billions of dollars. More important, the government's data--the GNP figures, unemployment figures, balance of trade figures, and inflation figures--trip other fiscal wires, from stock and bond prices to cost-of-living increases for retirees. The effect and severity of such faulty data is overwhelming.

* The trade deficit: Official U.S. balance of trade figures historically have missed the mark by a wide margin. Why? Because when government number-crunchers collect trade data they ignore the sale of U.S. services to overseas markets. Thus, the U.S. and Canadian governments, for example, publish widely differing statistics on U.S.-Canadian trade--our data omitting the service industries, theirs including this information.

* The Census Bureau's annual report on poverty: On September 26, 1991, the Census Bereau reported that the number of people living below the official poverty threshold ($12,675 for a family of four in 1989) increased to more than 13 percent. Liberal editorialists went ballistic, blaming the increase on everything from "uncaring" politicians, to Pentagon spending, to Ronald Reagan. Make no mistake: Hard-core poverty is a tragedy of great human proportion, and it is very real to millions of Americans. But for more than a generation, since Lyndon Johnson's "War on Poverty" began in 1964, the U.S. has been investing huge sums of money and manpower to combat this problem. Last year alone, U.S. taxpayers invested an estimated $184 billion in anti-poverty programs, and yet the Census Bureau report indicated that the tragic problem of poverty got worse, not better. What's going on here? Why aren't these programs helping?

We may never know, because the Census Bureau's poverty statistics are skewed. In making its "income" calculations, for example, the Census Bureau does not count non-cash income such as food stamps, housing vouchers, and various other subsidies. It's as if these programs didn't exist. But if you've ever stood in line at a supermarket, you know darn well that food stamps exist. Indeed, as social scientist Robert Rector has observed, another set of government reports indicates that low-income households spend $1.94 for every $1.00 in income they claim. Because the Census Bureau poverty report ignores this and other data, we don't even know how much of the $184 billion a year is reaching the poor, and how much is being siphoned off by the formidable welfare bureaucracy. But without this information, how can we ever hope to solve this tragic problem? Continuing blindly down the same old path certainly won't get us anywhere.

* Budget deficits: Office of Management and Budget Director Richard Darman and other architects of the fall 1990 budget deal promised that the deficits would be reduced in 1991 and subsequent years: a total of $500 billion over five years. In February of 1991, Darman estimated a fiscal year 1992 deficit of $281 billion. In July, less than six months later, Darman upped his deficit prediction by $67.4 billion, nearly a 30 percent increase, attributing the change to "technical re-estimate."