59

duction of productivity data, for example, requires a lot of inter-
action among the agencies. Another example that I would point to
is the work that the Bureau of the Census does to enable the Bu-
reau of Labor Statistics to Produce the Consumer Price Index. In
addition to collecting price data from businesses, we need informa-
tion from households about their spending patterns. Given the Cen-
sus Bureau’s comparative advantage in conducting household sur-
veys, we rely on them rather than duplicating that capacity.

Even relationships that work well obviously can be improved. I
talk in my written statement about some of the things that have
been done in recent years to try to improve working relationships,
for example, the coordination group that the director of the Bureau
of Economic Analysis and I established last summer to ensure that
there were regular conversations between top managers at the two
agencies about issues of mutual concern.

I mention as well some of the things that we are doing in the
technology area. Dr. Riche and I signed earlier this month the
memorandum of understanding between our two agencies that will
provide the basis for staff from the two agencies approaching large
companies jointly to try to set up arrangements for their reporting
data i? us electronically using common formats, a common ap-
proach.

My statement talks as well about some of the joint efforts of the
statistical agencies to begin to establish a common approach to put-
ting data up on the Internet so that folks can easily access it.

In connection with that, I guess I would want to just note I per-
sonally would find it ironic if at this point in time there historically
have been concerns, and I think legitimate concerns, about how it
is that people who are not familiar with our, admittedly somewhat
idiosyncratic, structure who want data find what they need.

I think with the growth of the Internet as a way to get informa-
tion and the ease of coming in at one point and moving over to
some other agency, if that is where the data can be found, it would
be ironic if at this point concerns about user access to the data
were to be an important factor in motivating a move to consolidate
the agencies. I think at this point this is less of a concern than it
has ever been in the past.

Having argued that there is little overlap, little redundancy in
the various statistical agencies activities, I would be remiss were
I not to acknowledge the one glaring exception to that generaliza-
tion. That glaring exception is the fact that both the Bureau of
Labor Statistics and the Census Bureau maintained separate inde-
pendent business lists that are used as a sampling frame for their

usiness surveys.

The existence of these duplicate business lists is sometimes cited
as an example, as though it were one among many, of redundancy
in the activities of the statistical agencies. It is my view, though,
that it is really the example, that it is truly unique.

I am not going to try to argue that we really need to have two
different business lists. I do not think we do. I do not think that
is defensible. I would argue a couple of things, though. The first
thing I would note is that it is not going to be possible in any very
quick timeframe to get rid of either one or the other. There are two
reasons for that.


123

This situation has led others to suggest a reorganization or
restructuring (some advocate a very dramatic change in the
structure) to improve quality within current resources. Such
suggestions reopen an issue -- often addressed in the statistical
community -- about the pros and cons of a centralized versus a
decentralized statistical system. The bill before your
subcommittee moves toward a centralized system through
reorganization. We have studied that bill carefully and, with
respect, we have grave concerns about it.

Decentralized vs, Centralized Statistical System

We believe there are significant advantages of a
decentralized system and regret that the strength of our system
in that regard is not fully appreciated. First, one of the
particular advantages of our current organizational structure is
that it places statistical agencies within the cabinet
departments with related responsibilities. ‘This means, for
example, that those who are collecting agricultural, energy, or
health statistics know what the issues are in their particular
area and where statistics are needed. Thus, our decentralized
statistical structure fosters the identification of emerging
societal needs and provides objective data fcr the development of
policy priorities and the formulation, evaluation, and refinement
of programs.

In the private sector, a company’s R&D must be customer~
driven, responding to the needs of production managers, who use
innovations in process technology, and to the needs of the
company’s own customers, who use innovative new products. It has
been found that, for the most part, research and development
operations should be located in the operating divisions;
centralized corporate R&D has often been unsuccessful. By
analogy, this experience suggests the difficulties that could
arise with efforts to create a central statistical agency. The
components of the agency would lose touch with the issues and
problems, and thus the data needs, of their current host
departments.

Our decentralized structure has also fostered the
development of extensive vertical integration of individual
subject matter agencies with their State and local government
counterparts. For example, the Bureau of Labor Statistics, the
National Agricultural statistics Service, the National Center for
Education Statistics, and the National Center for Health
Statistics all have long-standing, extensive Federal-state
cooperative programs as core elements of their data gathering
strategies, while the Bureau of the Census has both a cooperative
program to prepare local population estimates and an extensive
network of State Data centers for dissemination of its data
products.


Cond AH eR WN |

Rb Pw NNN Ne Se eB eB See Re es
AR OS fF FS Ce rWISFSERBERES

25

20

ances of appropriations, authorizations, allocations, and
other funds held, used, arising from, available to, or to
be made available in connection with such functions, of-
fices, or portions thereof, as may be necessary to carry
out this Act. The Director shall provide for the termi-
nation of the affairs of all entities terminated by this Act
and, in conjunction with the Administrator, for such fur-
ther measures and dispositions as may be necessary to ef-
fectuate the purposes of this Act.

(b) ALLocATION OF SES Posrtions.—After con-
sultation with the Director of the Office of Personnel Man-
agement, the Director of the Office of Management and
Budget is authorized to make such determinations as may
be necessary with regard to the transfer of positions with-
in the Senior Executive Service in connection with func-
tions and offices transferred by this Act.

SEC. 503. SAVINGS PROVISIONS.

(a) CONTINUITY OF LEGAL FoRCE AND EFFECT.—
All orders, determinations, rules, regulations, permits,
grants, contracts, certificates, licenses, privileges, and any
other similar action—

(1) which have been issued, made, granted, or
allowed to become effective by the President, by any

Federal department or agency or official thereof, or

by a court of competent jurisdiction, in the perform-

HR 2521 11


154

Again, without making it personal, there has been leadership.
We have heard this morning that the two most important things
are confidentiality and data sharing. We have an administrative
order which has been well-received, universally applauded that is
already published in the “Federal Register.” The comment period
closes in a scant week’s time. I suspect that the final order will be
out this spring.

We have legislation on data sharing which has, crosses her fin-
gers, finally cleared the OMB internal clearance process. These are
things which have been in the works for a number of years that
the Chief Statistician and OMB support have made happen.

T hope that as we talk about what needs to be done we give some
credit to the work that has been done, particularly recently, by a
nonpolitical, very effective, professional statistician, who is a coor-
dinator but is bringing the best of what we have to bear and is not
in the context of having to be a political animal, the way many of
us are in this town.

Mr. Horn. Yes, Dr. Haver?

Ms. Haver. Mr. Chairman, certainly I know Katharine Wallman.
I think she is a very professional, competent person. I certainly did
not mean anything against her leadership or what she has accom-
plished. I simply mean that I believe an independent agency with
a manager is important to the very existence of some of our key
economic data.

I also believe that confidentiality becomes an issue when the sta-
tistical agency is part of the Government, in other words, part of
the Department of Labor, or part of the Department of Commerce.

I feel very strongly that if the statistical agency were freestand-
ing that businesses would not have the concerns of confidentiality
that they have today. In other words, I do not believe that most
businesses are concerned about the Bureau of Labor Statistics get-
ting the data collected by the Bureau of the Census only insofar as
they want to be assured that the data is collected for statistical
purposes only.

By segregating and separating the statistical agency, I think we
in large part address the problem of confidentiality. Therefore, that
would facilitate data sharing, which I certainly hope will be accom-
plished. It has been tried many times in the past. Although, we are
en route perhaps to making it happen, it is certainly not a cer-
tainty.

Mr. Horn. Any other reaction?

Ms. BILLARD. You had asked a question right at the beginning
about the role of the Chief Statistician.

Mr. Horn. Right.

Ms. BILLARD. Dr. Haver here has sort of addressed it a little bit
again. I did have a couple of thoughts. I think your particular ques-
tion was, should this person be a trained statistician, per se, as dis-
tinct from a manager?

Mr. Horn. That does not mean you cannot have both.

Ms. BILLARD. That is right.

Mr. Horn. Usually it is very rare if you are in the top profes-
sionally, usually unless you have managed a major scientific lab-
oratory and you have long since gotten away from being up on the
top of the profession, but you have prestige or something, there are


149

Finally. as part of planning for the implementation of the proposed consolidation, it would be
important to identify the operating efficiencies and cost savings anticipated, the specific areas
from which the savings are to be achieved. the specific steps that need to be taken to produce
the desired savings, and the individuals responsible for achieving them. In our opinion, the
likelihood of actually making operations more efficient and capturing savings is critically
dependent on careful and comprehensive implementation planning. This planning must also
take into account the resulting need for realignment of support functions at the Departments
of Commerce and Labor. Such realignment could be significant. Census and BEA together
account for 22 percent of the full-time equivalent staff of Commerce, and BLS accounts for

nearly 15 percent of Labor's total staff.

Sustained congressional oversight will be needed to ensure the effective implementation of the
reorganization envisioned under H.R. 2521. Congress may need to realign its committee
jurisdictions and budget account structure if it 1s 10 provide coherent direction to and

consistent oversight of the new Federal Statistical Service

In earlier statements on principles for government reorganizations, we also have suggested
that one key step would be for congressional committees of jurisdiction to hold
comprehensive oversight hearings, annually or once during each Congress. In the case of the

proposed Service. such hearings should examine performance information that the Service


COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
WILLIAM F. CLINGER, Jr., Pennsylvania, Chairman

BENJAMIN A. GILMAN, New York CARDISS COLLINS, Illinois
DAN BURTON, Indiana HENRY A. WAXMAN, California
J. DENNIS HASTERT, Illinois TOM LANTOS, California
CONSTANCE A. MORELLA, Maryland ROBERT E. WISE, Jn., West Virginia
CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York
STEVEN SCHIFF, New Mexico EDOLPHUS TOWNS, New York
ILEANA ROS-LEHTINEN, Florida JOHN M. SPRATT, Jr., South Carolina
WILLIAM H. ZELIFF, JR, New Hampshire | LOUISE McINTOSH SLAUGHTER, New
JOHN M. McHUGH, New York York
STEPHEN HORN, California PAUL E, KANJORSKI, Pennsylvania
JOHN L. MICA, Florida GARY A. CONDIT, California
PETER BLUTE, Massachusetts COLLIN C. PETERSON, Minnesota
THOMAS M. DAVIS, Virginia KAREN L. THURMAN, Florida
DAVID M. McINTOSH, Indiana CAROLYN B. MALONEY, New York
JON D. FOX, Pennsylvania THOMAS M. BARRETT, Wisconsin
RANDY TATE, Washington BARBARA-ROSE COLLINS, Michigan
DICK CHRYSLER, Michigan ELEANOR HOLMES NORTON, District of
GIL GUTKNECHT, Minnesota Columbia
MARK E. SOUDER, Indiana JAMES P. MORAN, Virginia
WILLIAM J. MARTINI, New Jersey GENE GREEN, Texas
JOE SCARBOROUGH, Florida CARRIE P. MEEK, Florida
JOHN B. SHADEGG, Arizona CHAKA FATTAH, Pennsylvania
MICHAEL PATRICK FLANAGAN, Illinois BILL BREWSTER, Oklahoma
CHARLES F. BASS, New Hampshire TIM HOLDEN, Pennsylvania
STEVEN C. LaTOURETTE, Ohio os
MARSHALL “MARK” SANFORD, South —

Carolina BERNARD SANDERS, Vermont

ROBERT L. EHRLICH, Jr., Maryland (Independent)

James L. CLARKE, Staff Director
KEvIN SABO, General Counsel
duprrt McCoy, Chief Clerk

Bup Myens, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY

STEPHEN HORN, California, Chairman
MICHAEL PATRICK FLANAGAN, Illinois © CAROLYN B. MALONEY, New York

PETER BLUTE, Massachusetts MAJOR R. OWENS, New York
THOMAS M. DAVIS, Virginia JOHN M. SPRATT, Jr., South Carolina
JON D. FOX, Pennsylvania PAUL E. KANJORSKI, Pennsylvania
RANDY TATE, Washington COLLIN’C. PETERSON, Minnesota
JOE SCARBOROUGH, Florida ‘TIM HOLDEN, Pennsylvania

CHARLES F. BASS, New Hampshire

Ex OFFICIO

WILLIAM F. CLINGER, Jr., Pennsylvania CARDISS COLLINS, Illinois
J, RUSSELL GEORGE, Staff Director and Counsel
CounciL NEDD, Professional Staff Member
ANNA MILLER, Professional Staff Member
ANDREW G. RICHARDSON, Clerk
Davip MCMILLEN, Minority Professional Staff Member
‘MARK STEPHENSON, Minority Professional Staff Member

dab


119

easy, I think, to discuss the various paths to that shared common
goal.

Now, I sense some of the motivation for the bill before us may
have come from a hope to save Federal tax dollars. Coming from
OMB, I am sympathetic to that objective. I must say that we have
learned that reorganizations ordinarily do not save money.

That is particularly true where the functions that are being reas-
signed, the boxes are kept in tact. In fact, in those circumstances,
the reorganization ordinarily increases costs. It is expensive in
terms of money. In terms of momentum, disrupting the organiza-
tion, and in terms of the morale as uncertainty, which, as you all
know, has gripped the entire Federal work force, it becomes a para-
mount consideration.

In the long-term, sometimes savings can be achieved, but these
have been more illusive. The stringent budgets that have already
been allocated to our existing statistical agencies I believe leave lit-
tle, if any, fat to be removed. Therefore, I think the hope for sub-
stantial savings is not there. There is precious little to cut.

Also, as I hear the conversations about this new agency, I have
heard that it requires certain various disciplines of statisticians, of
demographics, of other kinds of skills with a management overlay.
T hear that the agency would begin with the three major statistical
agencies, but then ultimately absorb, sort of like an amoeba, some
of the other 11 major agencies, and perhaps some of the 60 smaller
ones,

As I sit here listening, I feel a little bit like Alice in Wonderland,
because I have been in Washington for the last 3 years, where I
have been told Government is too big. I have been told that we
need to get rid of some departments; we need to cut back. Yet, I
see, in effect, something which appears to be going in the other di-
rection. I think that has been a concern to us. We have focused on
what steps, short of reorganization, can achieve the objectives we
want.

I was gratified to hear so much today emphasis on “confidential-
ity” and “data sharing.” We have currently out in the “Federal Reg-
ister” an administrative order proposing uniform rules for confiden-
tial treatment by all statistical agencies. We have been preparing
legislation that we hope your subcommittee will endorse and help
us think through the issue of sharing data.

As you recognized in your opening statement, confidentiality is

a cornerstone of data sharing, and data sharing in turn will enable
us to reduce respondent burden and to eliminate any duplications
or overlap. That is going to help enhance the integrity of the sys-
tem.
Also, to take a break for a public service message. I heard my
earlier colleague here call for “one-stop shopping.” I would like to
announce that next month we plan to establish briefing rooms for
economic and social statistics on Internet’s WorldWide Web.

These releases will build on agencies tremendous progress in
electronic dissemination, and give the general public quick, easy,
informative access to the key economic indicators in social statis-
tics, as well as to a wealth of other statistical information.

Now, as discussed in my written testimony and as referenced
here, there is a framework in place already by the Paperwork Re-


68

Moreover, and this is the last major point I would like to make, statistical consolidation
‘would carry some significant attendant drawbacks. First, it seems certain that a decision to
consolidate BLS, BEA and the Census Bureau into a single agency would divert enormous
amounts of management attention away from the pressing substantive problems that all of us
need to be addressing. Even relatively minor reorganizations require significant amounts of
‘management attention. and this would not be a minor reorganization. Should the responsibilities

assigned to these agencies be substantially mo

ied or curtailed in the years ahead, it might then
make sense to consider some type of consolidation or other other rearrangement; at present,
however. it is my strong sense that the transition costs associated with any such reorganization

would outweigh any potential, but as yet undocumented, benefits.

Second, although I cannot speak to the role that BEA and the Census Bureau play within
the Commerce Department, I do know that BLS both contributes in an important way to, and
benefits in an important way from, being a part of the Department of Labor. Our local area
employment and unemployment statistics, for example, rest heavily on data derived from the
operation of the unemployment insurance system and figure into the allocation of federal funds
for these programs; our aggregate estimates of the incidence of occupational deaths and injuries
assist the Department in targeting assistance and compliance efforts across industries, and the
burden we impose on business is diminished because we tie our collection to records maintained
for other purposes; and our special collection of information on mass layoffs and plant closings is
a key element in the administration of programs to assist workers displaced as a result of these

actions. This synergy between information and program administration is enhanced by a close


152

might aid, along with adequate funding and these other factors in
producing a statistical system as we go into the 21st century.

Certainly, the approach of marketing of coordination, there
seems to be some real advantages there. Of course, we all welcome
the improvements that have occurred on the Internet and such, but
that is somewhat of a Band-Aid system of sticking the agencies to-
gether through a briefing room or whatever. There is lots of room
for more coordination.

I would agree with you, Maurine, about the central focus on sta-
tistics and the importance of leadership. Another point that we
have recognized, COPAFS has recognized, is that this may be a
start toward a broader Federal statistical agency. Admittedly, we
are just focusing on the three major economic statistical agencies.

I think according to this book, if you look in terms of dollars,
maybe they account for about 35 percent of the dollars directly
spent on Federal statistics. But we think it would be a very impor-
tant start and provide a nucleus, a building basis, for eventual
greater coordination of the Federal statistics.

One last point. We certainly concur with the others that we don’t
want to do anything to impair or mess up all the gains that we
have made through our Federal Statistical System, and that a
gradual approach of course is very important as if one were to
merge agencies like this. You would have to go very carefully to en-
sure that the ongoing programs are maintained and we continue to
have the quality that we want.

Thank you.

Mr. Horn. Well, it is very helpful. I want to make the offer now
that I want to hear Dr. Billard. All of you are very bright. You
know this field intimately. I wish you would take a copy of our bill.
On some of those goals and objectives, write in what you think the
goals ought to be that would achieve the kinds of ends I think most
of us are talking about. Organizations should be reflexive of serv-
ing the consumer, the customer; namely, you the taxpayer as well
as the professional.

Dr. Billard, please?

Ms. BILLARD. I will speak mostly for myself. In terms of effi-
ciencies or the idea, Should we have a consolidated or a coordi-
nated or a centralized, whatever word you want to use, system, as
opposed to a decentralized system, I cannot imagine that there
would not be efficiencies of scale and economies of scale.

I find it very interesting that most of the industrialized and
western countries of the world have centralized systems. Really the
only one that is not centralized at the moment outside of ours is
the one in the United Kingdom and they are in the process of going
toward a centralized system.

I do not have the data for our agencies and what it costs, but
I just cannot believe other than intuitively that there have to be
economies of scale. I also think that if you were to try to do it too
fast, too quickly, without going into it carefully, you will spend a
lot of money that you need not have spent, as well. I do think it
has to be done carefully, and learn from other countries.

I mean, I know that in the first panel, and Dr. Norwood in par-
ticular, talked a lot, very impassionately, but I believe very cor-
rectly, about the need for research. She was talking about research


79

Mr. Horn. Well, we thank you. That is a helpful statement. Let
us start from the beginning and ask, Dr. Norwood, so we get a dia-
log going here, what were some of the major constraints under
which you operated as Commissioner of Labor Statistics? Do you
think those have changed substantially from what you have heard?
How do you feel about some of the statements that have been made
that maybe we should not move in this direction, let us just do
business as usual?

Ms. Norwoop. Mr. Chairman, I do not think very much has
changed. There may be somewhat less money available. The prob-
lems are not very different. The CPI problem has been around for
more than a dozen years.

The work on the establishment survey has been going on for
some time. I am pleased to see a lot more emphasis on it. It is typi-
cal for the Congress to become very interested in a program as soon
as it has some problem. Unfortunately, the Congress frequently for-
gets about statistical agencies when things are sailing along
smoothly.

On the issue of the separation of the decennial from the rest of
the Census, I had a provision in my book about some of that. What
I was talking about really was not operational separation but re-
search separation. My concern is that research frequently does not
continue in the period between censuses.

As I have discussed with your staff and with many others, and
as Jim Bonnen so well put it, there are approaches that can be
taken. One is to move toward some sort of beginning at least of
centralization, which I think your bill begins the process. As I have
pointed out, I have a few concerns with a few provisions of it. That
is one approach. That is the approach the British are taking.

Another approach is to leave the agencies where they are and to
provide for the exchange of microdata, with legislative protection.

came to the conclusion that that would never happen, quite
frankly, after many, many years of discussion. One or another
agency—and I think Jim can talk about that at some length, since
he experienced it—finds reason to oppose it.

I think we are further along now, because the OMB draft order
is moving in that direction. It isn’t there yet, but your bill isn’t
there yet, either. I think that is really a terribly important thing.

I am very concerned about budget reduction at this point. I think
I would disagree a little bit with Katharine Abraham. I think there
are, perhaps, a few more areas where there could be some integra-
tion. However, I would underscore many, many times the point she
makes that none of that could be done without research.

I have testified before, before other committees in the past
months about this issue. Unfortunately, what happens is that you
create a situation and then the money gets removed, and so the re-
search cannot be done. That is very dangerous.

This list of business establishments issue is a famous issue. It
has been around for a long time. It will take some time. Even with
the exchange of microdata that is protected, if we have that, it will
still take some time to develop a single list because one has to look
at how that can be done and where the strengths and the weak-
nesses are.


Coe YN AH RW HN

15

10

(5) The term of office for each Director shall be as
specified in otherwise applicable provisions of law, except
that, notwithstanding section 21 of title 13, United States
Code, the term of the Director of the Census shall be 4
years.

(d) GENERAL COUNSEL.—There shall be in the Serv-
ice a General Counsel who shall administer the Office of
General Counsel of the Federal Statistical Service. The
General Counsel shall be appointed by the President, by
and with the advice and consent of the Senate. The Gen-
eral Counsel shall receive basic pay at the rate payable
for level IV of the Executive Schedule under section 5315
of title 5, United States Code.

(e) INSPECTOR GENERAL.—There shall be in the
Service an Inspector General appointed in accordance with
the Inspector General Act of 1978. The Inspector General
shall receive basie pay at the rate payable for level IV of
the Executive Schedule under section 5315 of title 3,
United States Code.

SEC. 203. FEDERAL COUNCIL ON STATISTICAL POLICY.

(a) ESTABLISHMENT.—There shall be in the Service
a Federal Council on Statistical Policy.

(b) CoMPosITION.—The Council shall be composed

of 9 members as follows:


128

efficiency and quality of Federal statistics while protecting the
confidentiality of responses.

CONCERN: RESPONDENT BURDEN SHOULD BE REDUCED

At present some respondents provide the same or related
information more than once to various units of the Federal
statistical system. The system needs to strengthen

the coordination and streamlining of its data collection
processes to eliminate needless duplication of effort for
agencies and their respondents.

SOLUTION: CONDUCT RESEARCH AND IMPLEMENT SOLUTIONS TO REDUCE
RESPONDENT BURDEN

A key advantage of enacting the proposed data sharing law
may well be its potential for reducing reporting burden on the
public and particularly on business respondents. For example,
with this legisiation enacted, it should be possible to ask about
corporate structure only once; businesses would not need to
provide information about their parent or subsidiary companies to
several different statistical agencies.

Other opportunities for collaboration might include
situations where the same respondents are asked related questions
(one survey asking about characteristics of inputs, and another
asking about characteristics of outputs for the same product or
service); where similar adjustments are required (cases where two
agencies make quality adjustments for the same product); or where
similar industry analyses are planned (cases where BEA, BLS,
Census, or industry-specific groups elsewhere in the Department
of Commerce have identified the need to conduct research on an
industry) .

CONCERN: USERS SHOULD BE GIVEN BASIER ACCESS TO FEDERAL DATA

There is no single "place" where a user can go for Federal
statistical information. For example, someone interested in the
health of secondary school students and its effect on their
suitability for employment would have to make separate inquires
to the National Center for Health Statistics, the National Center
for Education Statistics, and the Bureau of Labor Statistics. In
addition, each agency has different dissemination policies,
computer systems, and formats for the release of information.

The extent to which on-line information is provided -- and the
standards for gaining access to these on-line systems -- also
vary across agencies.



134

Mr. Chairman and Members of the Subcommittee

We are pleased to be here today to discuss the proposed creation of a new Federal Statistical
Service. which would be formed by consolidating the Bureau of the Census and the Bureau of
Economic Analysis (BEA) ftom the Department of Commerce and the Bureau of Labor
Statistics (BLS) from the Department of Labor. H.R. 2521 would bring these agencies
together into a new independent agency to be headed by an Administrator appointed by the

President and confirmed by the Senate,

ur testimony today applies five key principles that the Comptroller General has identified as
useful for consideration in efforts to reorganize or streamline government agencies! These

principles are:

Reorganization demands a coordinated approach

~ Reorganization plans should be designed 10 achieve specific. identifiable goals.
Once the goals are identified, the right vehicle or vehicles must be chosen for
accomplishing them, including organizational structure and tools.

~ Implementation 1s critical to the success of any reorganization

-- Oversight 1s needed to ensure effective implementation.

‘Government Reorganization: Issues and Prinwipley (GAO/T-GGD/AIMD-95-166. May 17.
1995).


14

our plans for Census 2000 are built around four fundamental
strategies for change

Strategy One will be to build partnerships with state
local, and tribal governments, community groups, the Postal
Service, the private sector, and individuals. The Census
Bureau realizes it can't do everything alone

Strategy Two is to keep the census simple by having user-
friendly forms, multiple contacts with households, and more
ways to respond. In 1990, people had to find their census
form; in 2000, the form will find them. The simpler and
easier the census is, the less expensive it will be

Strategy Three is to make intelligent use of technology in
processing, tabulating, and disseminating the census
results.

Strategy Four is to use long-established and widely endorsed
statistical sampling techniques in two ways: first, to
complete the basic enumeration for the last few households
that have not had the opportunity to be counted and, second,
to check and correct all our results.

This plan will require expertise from areas across the Census
Bureau--in survey and mathematical statistics, demography
housing, geography, field management, information and technology
management, public relations, customer relations, procurement
forms design, financial management, and so on. We know we cannot
be expert at everything, and need to build partnerships with
outside experts. But a successful decennial census requires
using all the expertise we have within the Census Bureau. The
Census Bureau's core workforce continuously learns and updates
its skills throughout the decade by working on a myriad o!
censuses and surveys, and these skills can be redirected to the
decennial census when needed. Functional segregation, rigidly
enforced, would not allow us to utilize common systems and
knowledgeable staff effectively across program areas, It would
require that we establish two sets of expertise; that would be
inefficient and costly.


32

STATEMENTS OF JANET I. NORWOOD, SENIOR FELLOW, THE
URBAN INSTITUTE, AND FORMER COMMISSIONER, BUREAU
OF LABOR STATISTICS (CARTER, REAGAN, AND BUSH AD-
MINISTRATIONS); JAMES T. BONNEN, PROFESSOR OF AGRI-
CULTURAL ECONOMICS, MICHIGAN STATE UNIVERSITY; EV-
ERETT M. EHRLICH, UNDERSECRETARY FOR ECONOMIC AF-
FAIRS, DEPARTMENT OF COMMERCE; KATHARINE G. ABRA-
HAM, COMMISSIONER, BUREAU OF LABOR STATISTICS; AND
MARTHA FARNSWORTH RICHE, DIRECTOR, BUREAU OF THE
CENSUS

Ms. Norwoop. Thank you very much, Mr. Chairman. It is a
great pleasure to be here this morning to discuss methods to im-
prove the organization and efficiency of the agencies which produce
our Nation’s statistics. I especially want to commend this commit-
tee, and you Mr. Chairman and your staff, for your desire to under-
stand the way statistical agencies operate before proposing changes
in their organizational structure.

All too often today in our efforts at deficit reduction, we take ac-
tion without consideration of the long-run effects. Most statistical
programs take many years to put in place, and we must take a
long-range approach in proposing changes.

I approach these issues with several very strong convictions.
First, I am convinced that the effective operation of democracy re-
quires that our citizens have access to an accurate and objective
data base of high quality that is relevant to policy issues that
confront them.

Second, those responsible for producing the Nation’s statistical
data base must be professionally competent and completely free
from political pressures.

Third, an effective statistical system must be grounded in an in-
stitutional and legal framework which provides the authority and
public credibility to permit the setting of priorities, the protection
of confidentiality, and the flexibility to conduct research for im-
provement.

Over the last several decades, the uses of federally produced
data, both by the private and the public sectors, have increased
greatly. The data themselves have become more and more complex.
At the same time, however, the system producing the data became
increasingly decentralized and the staff responsible for coordinating
it was consistently reduced.

We have one of the most decentralized systems in the world.
Most countries have a cohesive, centralized statistical agency with
the legislative authority and mandate to lead the compilation and
distribution of statistics.

Until recently, the only major country with similar decentraliza-
tion was the United Kingdom. Now that is no longer the case. The
British have begun a series of major organizational changes which
have resulted in the consolidation of several, although not all, of
the statistical agencies from different ministries into the central
statistical office.

The consolidation began with transfer to the CSO of the retail
price index, then the consolidation into the CSO of those respon-
sible for the country’s national accounts and business statistics,
and then employment and other labor statistics. The current plan


103

Mr. Horn. Well, I thank you.

Now we have a vote underway on the floor. We are going to have
to recess for about 15 or 20 minutes. It takes that long to get over,
vote, and get back. I am going to recess this at, roughly, 11:52. We
will try to get this back underway by at least no later than 12:10.

[Recess.]

Mr. Horn. I think some of you are running late. Why do we not
just merge the two panels, so that we will get everybody in here.
Again, I am sorry, but that is the way the House works. I just gave
up time on a major speech. Here we are. We are going to try to
not keep you longer than we have to.

Now, the two witnesses that joined us, Sally Katzen and Nye
Stevens, if you would, raise your right hands?

[Witnesses sworn.]

Mr. Horn. Both witnesses affirm. We will proceed down the line
with Dr. Knapp. Your statement goes in the record. If you can sum-
marize it in 5 minutes, that would be great.

Mr. Knapp. Thank you, Mr. Chairman, and thank you for invit-
ing the Council of Professional Associations on Federal Statistics.

Mr. Horn. You are president?

Mr. Knapp. Yes.

Mr. Horn. I should have said that when I introduced you. I
apologize.

Mr. Knapp. That mouthful is more commonly known as
“COPAFS,” the Council on Professional Association on Federal Sta-
tistics. Thank you for the opportunity to testify on this very impor-
tant proposed legislation. I am John Knapp, president of COPAFS
and research director for business and economics at the University
of Virginia’s Cooper Center for Public Service.

COPAFS’ membership consists of 16 professional associations
and 50 affiliate members. The professional associations include: the
American Economic Association, the American Public Health Asso-
ciation, the Association of Public Data Users, and the organizations
represented by my fellow panelists, to mention a few. Examples of
some of our affiliates are the Dunn & Bradstreet Corp., the Rand
Corp., and the University of California.

Behind me is Ed Sparr, accompanying me today, the executive
director of COPAFS. In addition to Ed—you are there, Ed—in addi-
tion to his encyclopedic knowledge of Federal statistical programs,
his previous marketing experience in the private sector provides a
very helpful perspective in evaluating the Federal statistical sys-
tel

m.

Overall, COPAFS represents tens of thousands of users of Fed-
eral statistics whose interest range from media and market plan-
ning to research on disability. The principal mission of the
COPAFS is to inform statistical users of the major current issues
and capabilities of the Federal statistical system and to advise both
the agencies and Congress about the needs of various user commu-
nities.

My prepared comments have been endorsed by the COPAFS
Board of Directors. We share the concerns that have been voiced
by other panelists about the quality, quantity, and timeliness of
Federal statistics. However, even though problems exist, the U.S.


39

functioning might he made better. While [ do not agree with every itera in the bill, [ believe its
approach 18 an important step toward improving the system. 1 would be happy, Mr. Chairman, to
‘work with your staff in going over the bill in further detail

References
Norwood, Janet L., Organizing to Count. Change in the Federal Statistical System, The Urban
Institute Press, Washington. D.C., 1995

“The Winds of Change: Opportunity or Disaster for U.S. Federal
Statistics?” Chance, vol. 9, no. 1, 1996.

Oifice for National Statistics, A Senior Management Structure for the Office of National
Statistics, Full Report, London, 1995

Office of Management and Budget, Statistical Programs of the United States Government. Fiscal
Year 1996, Washington, D.C., Government Printing Office


64

Although I believe there to be extremely little overlap in the missions of the three
agencies represented here today, I would hasten to correct any suggestion that this means they do
not work closely together. To the contrary, there is an extraordinary amount of collaboration and
interaction among these agencies not only in the ordinary course of getting their jobs done but
also in the pursuit of joint projects designed to improve the offerings of the statistical system as a

whole,

‘You are, I suspect, familiar with the routine interactions among the statistical agencies.
Both BLS and the Census Bureau, for example, supply extensive data from numerous surveys to
BEA, which is charged with the production of the National Income and Product Accounts.
Output data produced by BEA, in turn, flows back to BLS, which is responsible for developing
productivity statistics. It is my perception that these working relationships have functioned
exceptionally well. Similarly, although BLS has responsibility for producing the Consumer Price
Index and collects the information on prices used to calculate that measure, its production also
requires information on consumers’ spending patterns that is collected for us by the Census
Bureau, In addition, the Census Bureau collects the monthly Current Population Survey, the
source of the unemployment rate published by BLS each month. BLS does not collect all of this,
information itself because we recognize that the Census Bureau has a clear comparative
advantage when it comes to the collection of data from households: under these circumstances, it

would make no sense for BLS to attempt to duplicate their capacity.


148

out of two cabinet departments and into a newly created Federal Statistical Service. This
Service would need to provide the supporing systems. such as personnel, payroll, and
accounung, required for continued operation of Census, BEA, and BLS functions, Requiring
that the heads of these agencies, appropriate personnel from the Departments of Labor and
Commerce, and representatives from OMB and other support agencies participate in planning
the consolidation should increase the chances that the proposed reorganization would occur

while

nnimizing disruption of the work of the consolidated agencies and their current parent

departments

Similarly. we have frequently noted that government financiai systems need to be

strengthened to provide agency leadership with the ume!

jy and accurate information needed to
controi costs, measure performance. and achieve needed management improvements. In too
many cases. however, Weaknesses in these <vstems prevented the achievement of these goals
Again, ensuring that an effective and reliable financial system is in place should enhance the
ability of the proposed Administrator of the Federal Statisticat Service and other managers of
the new agency to accomplish their missions, Such a system will be essential if the new
Service is to be able to comply with standards established by the Government Performance

and Results Act, the Government Management Reform Act. and the Chief Financial Officers

1, These three laws are intended to establish a framework for enhancing the management
performance, and operations of federal agencies. In this regard, the Subcommittee may wish

to require that a Chief Financial Officer be appointed for the Federal Statistical Service.


35

Statement of

Janet L. Norwood
Senior Fellow
The Urban Institute

before the
Subcommittee on Government Management, Information and Technology
‘Committee on Government Reform and Oversight

USS. House of Representatives

March 22, 1996,

Mr, Chairman and Members of the Subcommittee:
Ibis a pleasure to be here this morning to discuss methods to improve the organization

especially want to

and efficiency of the agencies which produce our nation’s stat
commend this Committee ~ and you, Mr. Chairman and your staff - for your desire to
understand the way statistical agencies operate betore proposing changes in their organizational
structure. All too often today, in our efforts at deficit reduction. we take action without
consideration of the long run effects. Most statistical programs take many years to put in place,

and we must take a long range approach in proposing changes

{ approach these issues with several strong convictions. First, 1 am convinced that the
effective operation of democracy requires that our citizens have access to an accurate and

objective data base of high quality that 1s relevant to the policy issues that confront them. Second,

those responsible for producing the nation’s statistical data base must be professionally competent
and completely free from political pressures. Third, an effective statistical system must be

grounded in an institutional and legal framework which provides the authority and public

credibility to permit the setung of priorities, the protection of confidentiality, and the Mlexibility to

conduct research for improvement

‘As you know, I spent many years of my professtona) life at the Bureau of Labor Statistics

and served as its Commissioner from {979 through the end of 1991, During that period the uses


67

Having argued strongly that, as a general matter, there is little overlap or redundancy in
the activities of BLS, BEA and the Census Bureau, I would be remiss were I not to acknowledge
the one significant exception to this generalization. That noteworthy exception is the
maintenance of separate business establishment lists by BLS and the Census Bureau. For our
present purposes, the historical reasons for the establishment and survival of these competing
lists are of little relevance. Even here, however, there is less redundancy than it might appear at
first blush: a good deal of the money budgeted for the BLS ES-202 program, in particular, is
devoted to the production of highly valued data products, rather than simply to the maintenance
of the business list, and our recent expenditures to improve the quality of the business list will
have a significant payoff in the form of new measures of job creation and job destruction that
could not be constructed based upon the information underlying the Census Bureau’s list, |
would add that, even were BLS and the Census Bureau to become part of the same organization,
neither of the two agencies’ business lists could be eliminated either easily or quickly without
jeopardizing the ongoing operations of specific surveys that presently rely upon one or the other.
Indeed, at this point, we know relatively little about the strengths and weaknesses of the two lists.
For that reason, in addition to the initiatives that I already have mentioned, BLS and the Census
Bureau recently have begun work on a project to study and compare the two datasets. Most
importantly, whatever our investigations suggest about the best way to compile a master business
list, only relatively modest changes in law -- to allow the two agencies to share confidential data
with one another -- would be required to enable that configuration to be put in place. From my
perspective, statistical consolidation would appear to be a far more drastic solution than is

necessary for a problem that 1 would diagnose to be of quite litnited scope.


104

statistical system is preeminent. Users of Federal statistics are
concerned that nothing be done to jeopardize its leadership.

In Keeping with this observation, we urge that the “Findings”
section of the legislation contain a statement that the US. statis-
tical system is the best in the world. Other items that should be
added to the “Findings” section are the need both for ensuring con-
fidentiality and for fostering data sharing among agencies, two
points that have already been made quite often this morning.

We believe guidance within the bill that would enable all major
statistical agencies to share data would speed the process of full in-
tegration. There are many aspects of the Federal statistical system
that require attention. Changes in organization will not be a cure-
all. If organizational changes are made, they must be done so that
ongoing statistical programs will not be disrupted.

iven the need for change, we think that the bill takes the cor-
rect approach toward the development of a stronger system. The
bill does not disrupt ongoing programs and allows time for the Fed-
eral Statistical Service to work on the task of removing duplication
and adopting more efficient methods.

In our view, a major advantage would be the central focus on sta-
tistics provided by the new agency. However, without either a
major study or at least a public review of possible duplication and
inefficiency, it is impossible to know what savings, if any, might be
accomplished. We recommend that you consider adding the need
for such a survey to your legislation.

I will spend the balance of my time discussing our concerns from
the user’s Perspective and give specific recommendations in this
context. One of the major problems faced by users of data from
more than one agency is the inability to readily retrieve informa-
tion from common systems. Levels of expertise in data dissemina-
tion vary considerably from agency to agency.

For many years, the concept of a one-stop shop has been dis-
cussed. This legislation would create the environment where the
be innings of this approach to data dissemination could be estab-
ished.

We, therefore, recommend that you include in this bill specific
wording for the existence of a centralized process for data dissemi-
nation, along with a recognition for the need to have market re-
search on a continuing basis to determine user needs.

Even though it is the intent of the legislation to segregate, if fea-
sible, the budget and functions of the decennial census from other
Census Bureau functions, the centralization of data dissemination
must include data gathered from the decennial census. The cre-
ation and management of such a proposed centralized system
would be the direct responsibility of the administrator of the new
agency. The proposed legislation maintains the structure of the
three agencies.

We suggest that specific wording be added which calls for further
research to determine how these agencies can be merged into a sin-
gle entity with divisions responsible for subject areas such as cen-
suses, surveys, labor statistics, and national income accounts.

A timeframe should be included in the legislation for both the
completion of the research and the establishment of an agency re-
structured by function. The development of the single agency would


126

research and development, natural resources, and pensions
are needed to provide new views of the economy.

Social statistics, such as those on children and on the
elderly, are collected in several different agencies, but
there has been insufficient coordination. We need to make
it easier for policy-makers or for private data users to get
a complete picture of these groups and how their status
changes over time.

SOLUTION: INTERAGENCY COUNCIL ON STATISTICAL POLICY

The Paperwork Reduction Act of 1995 provides the vehicle for
substantially improved coordination among the various statistical
agencies -- namely, the Interagency Council on Statistical Policy
(ICSP), which consists of representatives from the principal and
smaller statistical agencies and is chaired by the Chief
Statistician of the United States. In 1988, OMB reinstituted
regular meetings of the heads of principal statistical agencies.
over the last few years, this Statistical Agency Head’s Council
has become increasingly effective in improving interagency
communications and served as a model for the new body that is now
based in statute.

We anticipate that the ICSP will assess crosscutting needs
of the statistical system, suggest and elaborate proposals for
consideration in OMB reviews used to set Government-wide
priorities, and oversee the work of expert teams established to
address key issues in the statistical system. We expect the ICSP
to initiate projects that provide benefits for the statistical
system as a whole.

CONCERN: STATISTICAL CONFIDENTIALITY PROTECTION SHOULD BE
PROVIDED ON A CONSISTENT BASIS

A uniform confidentiality policy that substantially
eliminates the risks of sharing confidential data for statistical
purposes would allow us to explore significant improvements in
data used for both public and private decisions without
compromising public confidence in the integrity and security of
reports to statistical agencies. The mechanisms to accomplish
this change must be Government-wide. ‘They must have the full
force of both the Executive Branch and the Congress behind them--
a commitment by the Executive Branch to a consistent and credible
policy to assure the confidentiality of statistical data, and
legislation that permits sharing of confidential data for
exclusively statistical purposes while preserving the
confidentiality privileges afforded to respondents under existing
legislative and administrative authorities.



45

Developments in environmental and natural resource policy, for example, have led to a far greater need to
integrate public data from across the domain of several cabinet departments--something that is necessary but
not easy to do, Consequently, the capacity to coordinate across the entire statistical system, a responsibility
‘of the Chief Statistician, has become far more important. Coordination of official statistics is inherently a
presidential responsibility, and thus by delegation that of the Chicf Statistician In dealing with this
fundamental transformation we also need a major increase for research on the statistical measurement and
‘analytical problems involved, if we are not to fall even further behind in understanding the realities of chis
ew world,

‘The US. statistical system, once the best in the world, is now judged to be slowly falling behind that
of other industrial nations in its capacity to track a society and economy that is experiencing rapid and
fundamental change (Economist). Clearly, technological changes in statistical and information capabilities
‘and improved statistical methods are being implemented at a slower pace in the U.S. government than abroad.
‘Why has this occurred?

T would suggest several major sources of difficulty. First, over recent decades a steadily growing
‘ideological foundation for public policy decisions has made data increasingly irrelevant. Political ideologues
do not need statistics, they already know “what the trouble with the world is” and what they want to do about
‘it, Second, it hus long been observed in both Congress and the Executive Branch, that statistical budgets, with
{ew exceptions, are a low priority. Federal budget deficit pressures now make it even more difficult to
‘generate support for statistical programs. As criticism (some valid, much not) and concem over the
performance of official statistics has grown, efforts were made during the Bush and Clinton administrations
to improve various aspects ofthe system. Despite these and other efforts of statistical system leadership, we
Continue to run well behind the capecity necessary for a first rate performance across our statistical system.
Third, as an institution Congress has ong had difficulty understanding the full role of national statistics and
the need to fund statistics adequately to support important national decision making, public and private. This


87

have to have priorities. The census this year is going to eliminate
its collection of nonresidential building permits, which were data
that were valuable, but still peripheral to our accounts.

I think there are instances to which you address, to which you
speak, but they happen for two reasons. One, I believe is that our
role in collecting that data becomes outmoded. I refer to the leading
economic indicators. The Bureau of Economic Analysis began pro-
ducing them 30 years ago to teach market participants about the
value of econometric and statistical forecasting. I think that job has
been done, so it was safe for us to get out of it.

There are then instances like pollution abatement control ex-
penditures, where we have eliminated programs, but only because
of budget duress. I think we would be better served by taking them
back. I think it goes on for both good and bad reasons.

Mr. Horn. Well, does EPA maintain any of those data?

Mr. EHRLICH. EPA is a regulatory agency, not a statistical agen-
cy. I believe that it is an important distinction to make. We develop
a series for abatement and control expenditures that are culled
from some industry data and also from survey instruments of

firms.

The probability of our getting the right answer in a mode that
is protected by Title XIII and confidentiality, in a mode that is un-
related to regulatory functions is far higher than the probability of
EPA getting the right answer under the same set of circumstances.

I do not think we should look to EPA as an agency that can sub-
stitute for statistical agencies anymore than we want any policy-
regulatory or taxmaking entity to do the work of the statistical sys-
tem.

Mr. Horn. Reality is, that in business, and in Government often
a line agency will have its own statistical operation to keep oper-
ational data so they can make some judgments about, are we
achieving our goals or are we not? Some of that will be goal-ori-
ented, performance-oriented, results-oriented, et cetera.

I think it came up earlier the degree to which the legislation is
being inclusive or exclusive in the sense that we only mention
three agencies rather than petting into getting over the hill with
agricultural statistics and all the rest of it.

However, let me ask the question. If we have an independent
agency, should that agency assume the role of the OMB statistical
policy office and take it out of politics, if you will? OMB is politics
no matter who is in those judgments are made on a value-laden
basis, heavily overladen by particular views on how the world looks
from the sort of view of the political party of the time.

Should that type of function go to an independent agency such
as this, where you are trying to get people in statistics that under-
stand the use of statistics to be on the advisory committees, and
so forth and so on?

Mr. EHRLICH. Were you to have such an agency, I believe that
the CEO would have to become the CEO of statistical systems.
That policy, of course, is made at a very high level, but it is also
made during the daily operational conduct of the agency: they are
not separable. I believe that the draft of the proposal I saw move
too heavily in the Segregation of policymaking authority from the
agency who proposed to OMB.


3

1 and policies and in the administration of public programs,

2 hereby finds and declares that—

3

Co ond HAW

10

12
13
14
15

7
18
19

21
22
23
24
25

(1) improved coordination and planning among
the statistical programs of the Government is nec-
essary to strengthen and improve the quality and
utility of Federal statistics and to reduce duplication
and waste in information collected for statistical
purposes;

(2) while the demand for statistical information
has grown substantially over the past 30 years, the
laek of coordinated planning within the decentralized
Federal statistical system has limited the usefulness
of statistics in defining problems and determining
national policies to deal with complex social and eco-
nomic issues;

(3) a Governmentwide statistical policy needs to
be established to ensure that data available from
Federal statistical programs are responsive to the in-
formation needs of the President and the Congress
in developing national policies, and that necessary
statistical information is collected with the smallest
practical imposition of reporting burden on individ-
uals, businesses, and public entities;

(4) a central statistical policy and coordination

office is necessary to develop and implement a Fed-

HR 2621 TH


H.R. 2521, THE STATISTICAL CONSOLIDATION
ACT OF 1995

FRIDAY, MARCH 22, 1996

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND-TECHNOLOGY,
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT,
Washington, DC.

The subcommittee met, pursuant to notice, at 10 a.m., in room
2154, Rayburn House Office Building, Hon. Stephen Horn, (chair-
man of the subcommittee) presiding.

Present: Representatives Horn and Davis.

Staff present: J. Russell George, staff director and counsel; Coun-
cil Nedd, and Anna Miller, professional staff members; Andrew G.
Richardson, clerk; David McMillen, and Mark Stephenson, minority
professional staff members.

Mr. Horn. The Subcommittee on Government Management, In-
formation, and Technology will come to order. The legislation be-
fore us, H.R. 2521, the Statistical Consolidation Act of 1995, will
consolidate the three primary economic statistics agencies of the
Federal Government—the Bureau of the Census, the Bureau of
Statistics, and the Bureau of Economic Analysis—into a new Fed-
eral Statistical Service.

The economic statistics gathered and analyzed by the Federal
Government are integral to the public and private decisionmaking.
The financial markets rise and fall based on the data produced by
these agencies determined and distributed using this information.
Businesses make a variety of decisions, ranging from developin,
new products to the opening and closing a factory. Although sqund
statistics and analysis do not automatically produce sound public
policy, they do provide a necessary foundation from which to iden-
tify problems, to evaluate options, and to monitor results.

Historically, most Federal statistical programs were established
to serve the information needs of the particular department or
agency in which they were based. However, the increasingly con-
nected nature of major economic and social issues far exceeds the
bounds of any single agency's work program. The information
needs of Congress and the President transcend the data and statis-
tics compiled by any single statistical agency.

An inimitable principle of this Republican majority is that Gov-
ernment is too big and spends too much. Economies should be
sought wherever ‘they may be achieved while not compromising
good statistical practices. H.R. 2521 meets both of these criteria,

ied)


150

would be required to generate to comply with the Government Performance and Results Act
Such hearings should also examine the audited financial statements that are to be developed
wo comply with the Government Management Reform Act, Additional information from
congressional support agencies including us: Inspector General reports; performance
evaluations of the proposed Service's operations, which it would conduct; and expert
assessments of its operations and the quality of its statistical products should be key

components of such hearings

Mr. Chairman, this concludes my statement. { would be pleased to respond to any questions

you or Members of the Subcommittee may have


42

statistical policy is now assigned to the Paperwork Reduction Act
or in the Paperwork Reduction Act to the Chief Statistician.

Second, the council established in H.R. 2521 appears to duplicate
the function of the Interagency Council on Statistical Policy estab-
lished by the Paperwork Reduction Act. My understanding that the
Interagency Council is the current legal forum for governmentwide
statistical policy discussion and debate.

Third, only three of the major agencies are represented on the
council in Title II, which raises questions in my mind about the
council’s purpose. Is it to coordinate the three agencies or to coordi-
nate governmentwide statistical activities?

If it is to coordinate all Government statistical activities, then
the Chief Statistician should be the administrator of the Federal
Statistical Service and chair any interagency council on statistical
policy, which of course raises the question of the relationship to

Is it a statistical policy coordination council or an institution to
provide communication with linkage to national level policymakers
and their statistical needs? The composition specified for the coun-
cil suggests the later, to some extent.

In any case, the purpose and authority of the council needs to be
clarified, and the relationship to the Paperwork Reduction Act and
other statistical authority needs to be addressed.

Fourth, the appointments to the council by the majority leaders
in Congress creates the perception, if not the reality, of
politicization of statistics. I think that is quite dangerous.

Finally, the committee needs to provide authority for the admin-
istrator to create the advisory committees necessary to sustain a
well-run and highly accountable statistical agency.

Statistical agencies are uniquely dependent on linkage to both
users and to technical skills on the outside and to the policymaking
process, and that generally can only be done through some kind of
institutional structure including committees.

The draft bill, it seems to me, is a start on a task that certainly
needs doing. I hope you will continue in your efforts to improve the
performance of the U.S. statistical system. If I can help you in your
endeavors, I would be pleased to do so.

Thank you.

{The prepared statement of Mr. Bonnen follows:]


73

greater efficiency through utilizing common systems--personnel,
automation, technology, geography, field, and so on--across all
programs.

Mr. Chairman, as you know, late last month the Commerce
Department officially presented plans for a 2000 census that will
be faster, less costly, and more accurate. These plans were the
subject of a hearing before the full House Government Reform and
Oversight Committee on February 29. Not only is planning for
Census 2000 completed, but preliminary activities have begun. The
pace will accelerate over the next year or two. Making Census
2000 a success will require drawing on all the expertise we have
throughout the Census Bureau--as well as expertise from outside
partners--and will require a knowledgeable, experienced, and
dedicated field staff to carry out the difficult enumeration
work. Functional segregation would work against these
requirements.

We must draw on expertise from many parts of the Census Bureau to
achieve the goals for Census 2000.

That's because the Census Bureau's overarching goal for Census
2000 is to make the whole process faster, simpler, less costly,
and more accurate. Four objectives are fundamental to these
efforts:

First, to make every effort--from simple, user-friendly
forms design to the design of field operations--to count
every household.

Second, to implement an open process that diverse groups and
interests can understand and support.

Third, to eliminate the "differential undercount" of racial
and ethnic groups.

and, Fourth, to produce a “one number census" that is right
the first time and that unites us as Americans rather than
dividing us as litigants.


82

Ms. Norwoop. Well, it is just, “Why do we need it this year?”
There is not any serious problem until the problem hits you. That
is what happens. Then you have one of the big issues, which is how
frequently? What the problems are with the weights? Well, you
have to pool years of data.

We have some surveys in this Government that are huge. We
have got what, 6,000 households in the Consumer Expenditure
Survey? It should be considerably larger, so that you would be able
to use this, this work.

You have high unemployment, people look at the unemployment
data, you have high inflation, or you have the kind of problem we
have now in budget reduction, and so people begin to look at the
effect of an indicator. As soon as that goes away, the interest goes
away. That is another reason that it had seemed to me that it
would be useful to have a focal point that had some power and
some stature and some size to try to maintain that across a long
period of time.

Mr. Horn. Well, since you brought up the CPI, let me ask Com-
missioner Abraham also: What is the schedule to readjust that, so
it can accurately reflect the bread basket that is out there now as
opposed to what was happening decades ago? What is the timing?

is. ABRAHAM. The timing of that is that we anticipate having an
updated market basket in place by January 1998. It will be a mar-
ket basket at that point that reflects consumers spending patterns
over the 1993-1995 period. That is the short answer.

Mr. Horn. OK. Educate me how you go about this? I mean, this
is the one item that every Member of Congress seems to have an
opinion about, and it starts with the chairman of the Federal Re-
serve Board saying that the CPI is, simply, inaccurate; it is infla-
tionary. Yet, the Fed is trying to control inflation.

Now, is it your survey that Mr. Greenspan tries to control in the
open market committee and whether he increases the monetary
supply or decreases the monetary supply? What are we dealit
with? That is what we are all asking. Why does it take until 1998?

Ms. ABRAHAM. With respect to what Mr. Greenspan is looking at,
I think he would probably tell you he looks at many indicators in
deciding what the appropriate course of action is.

Mr. Horn. Well, that is true, but he has picked on the CPI, as
you know.

Ms. ABRAHAM. Yes. There are a whole range of issues with the
CPI. There are issues related to the fact that by design the CPI is
pricing a fixed market basket of goods and services. If what you
really wanted was a cost-of-living measure, you would have to
allow somehow for the fact that when the relative prices of things
change, people can substitute between items.

One of the points at issue here is that as the BLS has been say-
ing at least since the early 1970’s—I was just looking at a paper
by Julius Shiskin that makes this point—the CPI is not a cost-of-
living measure because it doesn’t allow for that kind of substi-
tution. There is maybe a .2 percent per year difference between
how fast the CPI goes up and how fast a measure that allowed for
that kind of substitution would go up.

There are a set of issues, second, related to what has, unfortu-
nately, come to be termed “formula bias.” There are some issues at


H.R. 2521, THE STATISTICAL CONSOLIDATION ACT
OF 1995

HEARING

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY

OF THE

COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS
SECOND SESSION
ON

H.R. 2521

TO ESTABLISH A FEDERAL STATISTICAL SERVICE

MARCH 22, 1996

Printed for the use of the Committee on Government Reform and Oversight

es

U.S. GOVERNMENT PRINTING OFFICE
41-232 CC WASHINGTON : 1997

For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

3 ISBN 0-16-055241-9



108

I will spend the balance of my time discussing our concerns from the user's
perspective and give specific recommendations in this context

‘One of the major problems faced by users of data from more than one agency
is the inability to readily retrieve information from common systems, Levels of
expertise in data dissemination vary considerably from agency to agency. For many
years, the concept of a one-stop shop has been discussed. This legislation would
create the environment where the beginnings of this approach to data
dissemination could be established. We therefore recommend that you include in
this Bill specific wording for the existence of a centralized process for data
dissemination along with the recognition for the need to have market research on a
continuing basis to determine user needs. Even though it is the intent of the
legislation to segregate, if feasible, the budget and functions of the Decennial Census
from other Census Bureau functions, the centralization of data dissemination must
include data gathered from the Decennial Census. The creation and management of
such a proposed centralized system would be the direct responsibility of the
Administrator of the new agency.

The proposed legislation maintains the structure of the three agencies. We
suggest that specific wording be added which calls for further research to determine
how these agencies can be merged into a single entity with divisions responsible for
subject areas such as censuses, surveys, labor statistics, and national income
accounts. A time frame should be included in the legislation for both the
completion of the research and the establishment of an agency restructured by

function.


131

Mr. Horn. Well, thank you.

Let me just make one comment before I turn to the GAO to sum-
marize all of this, wrap it up, and sort it out. Having been in and
around government since 1959 and the Eisenhower administration,
I understand the role of the OMB in representing the President’s
interest and positions.

Having said that, I understand why you say budget constraints
are the only reason we are discussing this issue today. Then we
make an abrupt shift, and begin a defense of a decentralized statis-
tical system against arguments for a centralized statistical system.
This bill does not address the merits of a decentralized over a cen-
tralized statistical system or vice versa.

We are talking about trying to improve the working relationship
of the three primary economic statistical agencies and how better
to protect the integrity of their work. That is all we are doing. We
have not said, “Hey, let us get every statistical agency and count
cows,” and all the rest of it in there. We have not said that.

We are just saying Census, BLS, and BFA, common sense says
in terms of field surveys, and what not, there are a lot of things
they can share and make still further economies if they have to
think in those terms with an administrator that can relate to both
of them.

Anyhow, I now am delighted to have Mr. Stevens, whether you
play with saxophones or trombones we don’t really care, just as

long as you give us a decent analysis. Mr. Stevens is Director of
the Federal Management and Workforce Issues, General Govern-
ment Division, General Accounting Office. How more general can
we be?

Mr. STEVENS. Thank you very much. I will not attempt to meet
your charge of summarizing everything that has been said, but per-
haps I can just take a moment. I will try to be very, very brief in
view of the hour to provide a framework for the committee’s analy-
sis of the various considerations that go into reorganization propos-
als. I am basing this primarily on principles enunciated YY the
Comptroller General in earlier testimony on the dismantlement of
the Commerce Department proposal.

First, he noted that any successful reorganization demands a co-
ordinated approach. I think this bill certainly recognizes that prin-
ciple. It certainly does not resolve all of the coordination problems
in this tremendously decentralized system with over 70 agencies
and well over a couple billion dollars spent in this area.

It does not spell out also or detail the relationship between the
relatively weak position in OMB of the Chief Statistician and what
would be a quite high level position within the hierarchy of the Ad-
ministrator of the FSS, who would commend thousands of jobs and
millions of dollars and budget, and be by far the dominant statis-
tical agency with authority to report, testify directly before Con-
gress on these matters.

While it is consistent with earlier work we have done, the ability
to share data is the principal cause of duplication and inefficiency
among the statistical agencies. I know that the bill does not actu-
ally remove those impediments, though it does recognize them.

Second, we believe that reorganization should have specific, iden-
tifiable goals in mind. Cost savings, as Ms. Katzen recognized,




109

The development of the single agency would be the responsibility of the
proposed Federal Council on Statistical Policy. In this context, we recommend that
wording be added which recognizes that the three agencies in this legislation are
part of a much larger system and that the possible additional consolidation of other
agencies should be explored.

We believe that the major function of the Federal Council is to act as an
advisory group to the Chief Statistician and the Administrator. At the same time,
the Paperwork Reduction Act of 1995 establishes an Interagency Council on
Statistical Policy which is headed by the Chief Statistician. However, the Chief
Statistician does not play a special role in the proposed legislation. We believe that
this role is best accomplished by having the Chief Statistician as the permanent chair
of the Federal Council. In doing this, the legislation would thereby recognize the
need to see these agencies as part of a larger system. We also recommend that the
Federal Council be expanded to include other federal statistical agencies on a
rotating basis. The Office of Management and Budget would be responsible for
identifying the other statistical agencies. In addition, we recommend that the non-
governmental members of the Federal Council include members of the data user
community, to be chosen by the Chair. Finally, we recommend legislative
recognition of the need for continuing research on the effectiveness of the Statistical
Service and provision for an annual evaluation in relation to goals established by
the Federal Council. The purpose of the evaluation would be to aid the Statistical

Service in improving its performance


30

25

(b) USE oF PERSONNEL.—With the consent of the
appropriate department or agency head concerned, the Ad-
ministrator may utilize the services of such officers, em-
ployees, and other personnel of the departments and agen-
cies from which functions or offices have been transferred
to the Administrator or the Service, for such period of
time as may reasonably be needed to facilitate the orderly
implementation of this Act.

SEC. 507. INTERIM APPOINTMENTS.

(a) AUTHORITY TO APPOINT.—Notwithstanding any
other provision of law, in the event that one or more offi-
cers required by this Act to be appointed by and with the
advice and consent of the Senate shall not have entered
upon office on the date of the transfer of functions and
offices under title III, the President may designate an offi-
cer in the executive branch to act in such office for 120
days or until the office is filled as provided in this Act,
whichever occurs first.

(b) COMPENSATION.—Any officer acting in an office
in the Department pursuant to the provisions of sub-
section (a) shall receive compensation at the rate pre-

scribed for such office under this Act.
O°

HR 2521 TH


89

current limitations on data sharing for statistical purposes? Have
you run into this when you are out doing a particular series?

Mr. EHRLICH. Several years ago we initiated a project called Sta-
tistics 2000 in which Census, BEA, and BLS sat down together to
find opportunities to reduce respondent burden collectively. Tom
Mesenbourg, who is our Assistant Director at Census for Economic
Programs, lead that effort.

fe identified a variety of proposals, most of which were predi-
cated on data-sharing legislation, most of which go to the issue of
business list development that Dr. Abraham discussed.

It was our view that we could save private respondents tens of
millions of dollars in compliance cost. That is a small level of com-
pliance cost for a darge number of units, but it adds up of course
to a real burden. We believe that managing that burden is part of
our responsibility. We look forward to the proposal when it comes.

Ms. ABRAHAM. If I could just add to that?

Mr. Horn. Yes.

Ms. ABRAHAM. It is not only Federal agencies that are out collect-
ing data, there are a lot of State agencies that are out collecting
data as well. I think one of the virtues of the sort of Federal/State
cooperative arrangement that the Bureau of Labor Statistics has
been engaged in for a long time is that that framework gives us
the opportunity to coordinate these efforts.

We are currently engaged in discussions with the States regard-
ing a Federal/State program to collect occupational wage informa-
tion. My hope is that in the long-run that will lead to States that
currently do that sort of survey getting out of the business, so that
we are no longer engaged in duplicative efforts in that regard.

Mr. Horn. Are you working out agreements with a lot of States,
in a sense sharing techniques and so forth based on the experience
with BLS?

Ms. ABRAHAM. We have a long history of doing that in a variety
of programs. We are working with the States to design a program
that would collect occupational wage information. That would, in
addition, also substitute for some of the administrative data that
the Department of Labor currently pays to collect.

Mr. Horn. Would you be taking State data to be the basis for
some of the series you already produce?

Ms. ABRAHAM. Well, we do that now. The employment figures
that we produce each month are based on data collected for us by
the States to our specifications. They both support the production
of State employment estimates and then feed into the national
numbers.

We work with the States to produce occupational safety and
health data. We are working with them to expand our program of
occupational employment statistics to add occupational wage infor-
mation. We do that in a variety of arenas now.

Mr. Horn. Now, talking about BLS and Census, as we under-
stand it, you maintain separate lists of business establishments. As
I understand it, they serve different purposes. One recommenda-
tion of the Boskin initiative was that the two lists be combined.
Where are we on that?

Ms. ABRAHAM. Well, we have established jointly at the BLS and
the Census Bureau a committee that is beginning to do some of the


84

Ms. ABRAHAM. There are actually two pieces of it. There is a
piece that they just sit down with an interviewer and do based on
what they can remember that covers big purchases, and then there
is a diary that they keep for more routine, day-to-day purchases.
That is more like the Nielsen thing, where you keep a log as you
are going along.

Mr. Horn. Now, is one of our problems as to why it is taking so
long that we do not have the funding for a larger sample size? To
what degree does the size of the sample affect the outcome here?

Ms. ABRAHAM. Your question is posed, why is this taking so long?
I told you half the story in terms of what needs to get done. There
is also a piece of this that has to do with getting out to the specific
stores where people shop and identifying the items we are going to
price. I guess I would almost be tempted to say that what surprises
me is not that it takes so long, but that it is possible to complete
it so quickly, given the complexity of the task.

The time that is required here I do not think really has a lot to
do with the level of resources available to us for that purpose.

Mr. Horn. OK. You do not lack the resources to do the job?

Ms. ABRAHAM. Well, what Janet, I think, was talking about was
the fact that because the size of the Consumer Expenditure Survey
is relatively small, we are using a market basket that is based on
responses given to us over 3 years, the period from 1993 to 1995.

If we had a bigger survey, we could use, for example, just data for
1995 and then—

Ms. NORWOOD. Or 2 years.

Ms, ABRAHAM. Or 2 years, perhaps. The market basket would be
a little more current. Certainly, at this point that would not enable
us t0, get the job that we have ahead of us now done any more
quickly.

Mr. Horn. Do you see a statistically significant difference in that
market basket, depending on the region of the country or urban/
rural, and this kind of thing?

Ms. ABRAHAM. Yes. There are some significant differences in the
market basket. There are some significant differences in the mar-
ket basket related to the age of the individuals in the household
as well.

We are also doing some work at the moment to try to look more
systematically at differences in the market basket of purchases re-
lated to the income level of the households. We have a whole series
of publications that would let you look at this. It is a little hard
to pin those down, given the size of the sample.

Ms, Norwoob. Mr. Chairman, if I might just add a footnote. It
does take time. But when you begin, it is important. You cannot
begin it without the resources to do the research. You cannot do
as much research without the data that are needed. That is one

int.

Pethe other point is that, as Katharine indicated, there has been
considerable discussion about a price index versus a cost-of-living
index. I would just like to remind you that that is not a new issue,
and that it has been going on for years.

It is many, many years, something like 30 years ago, that I first
moved into the CPI division as the chief of that division, and we


12

7
(8) The term “Chief Statistician” means the

Chief Statistician of the Office of Management and

Budget.

TITLE II—ESTABLISHMENT OF
THE FEDERAL STATISTICAL
SERVICE

SEC. 201. ESTABLISHMENT.

The Federal Statistical Service is hereby established
as an independent establishment in the executive branch
of the Government.

SEC. 202. PRINCIPAL OFFICERS.

(a) ADMINISTRATOR.—(1) There shall be at the head
of the Service an Administrator of the Federal Statistical
Service, who shall be appointed, from among individuals
nominated for that purpose by the Federal Council on Sta-
tistical Policy who are experienced in the collection and
utilization of statistical data or survey research, by the
President, by and with the advice and consent of the Sen-
ate.

(2) The Service, including all functions and offices
transferred to it under this Act, shall be administered, in
accordance with the provisions of this Act, under the su-

pervision and direction of the Administrator.

oHR 2521 TH


54

Everett M. Ehrlich

Undersecretary for Economic Affairs
U.S. Department of Commerce

Mr. Chairman

L appreciate the opportunity te discuss this morning the impoctant issue of how to improve the
nation’s statistical system

Let me begin my expressing my agreement with the points Ms. Katzen makes in her
testimony. But let me also state my more specific view that the nation's statistical system
faces important challenges and that the bill you are considering will not overcome those
challenges without the improvements we are proposing for the system we have today

My concern about this bill is that it has determined how to reshuffle the boxes in the system
before it has determined the problem it is trying to solve: we can agree that the problem is not
simply that our three agencies do not share a bureaucratic home. So let me begin by
proposing some objectives for our statistical system and then address whether this particular
proposal would pursue them more efficiently than our current efforts.

What do we want out of our system? First, we want it to produce data that are accurate and
timely, Second, we want it to deliver its work efficiently, not only in terms of cost to the
taxpayer, but in terms of the burden it places on its respondents. Third, we want it to be
structured in a way that reinforces its integrity and its accountability, My view is that, in all
of these areas, the current system is making dramatic progress without actual consolidation.

Good Data

The statistical system is as much a part of the nation's infrastructure as are its roads and
bridges: timely and accurate data are of vital imterest to every American who runs a business,
invests in assets. is concerned with their retirement, or takes our a mortgag.

As Undersecretary for Economic Affairs, | administer the Commerce Department's Bureau of
the Census, Bureau of Economic Analysis, and STAT-USA, our data dissemination arm. In
that sense. ] am already involved, more than any other single individual here, in the active,
daily coordination of statistical efforts

The data we produce are acknowledged to be among the world’s leaders in both timeliness and
accuracy. But we are confronted with the challenge of measuring an economy that is changing
rapidly, in terms of composition, technology. and other dimensions. We are like a tailor
trying to measure someone for a suit of clothes as they run full tilt

In response to this problem, the Bureau of Economic Analysis convened last year the first
comprehensive strategic review of the nation's economic accounts in forty years. Ata national
symposium hosted by the U.S. Chamber of Commerce, we sat down with users from business,
finance, universities. and international organizations to define new priorities for our work.

‘The result of that effort was an agreement that the most pressing problems we face in our data
stem from inadequate measurement of the changing quality and character of ourput. In


‘Testimony of
Maurine A. Haver

Chair, Statistics Committee
National Association of Business Economists
and
President, Haver Analytics

to the

104th U.S. Congress
House of Representatives

Government Management, Information and Technology Subcommittee
March 22, 1996

Jam speaking today in my capacity as the chair of the Statistics Committee of the National
Association of Business Economists.

Statistics produced by the BLS, BEA and Census are as vital to the private sector as they
are to the public sector. They provide the basis of many operation and planning decisions
and have real-dollar consequences. Business economists have been concerned about the
decline in the quality and availability of these data since the early 1980s. In 1985 the
NABE created a Statistics Committee with the charter to work for the improvement of our
national statistical system. The Statistics Committee worked closely with CEA Chairman
Michael Boskin in the formulation of a number of recommendations for system-wide
improvement. These recommendations were submitted to the Congress as part of
President Bush's budget proposals but were in large part unfunded

‘The economy of the United States has changed rapidly, but resources to measure that
economy have neither been redirected nor augmented to recognize the growing importance
of our service and high tech sectors. Budget cuts force statistical agencies to defer
programs that track new and emerging sectors. As a result, government statistics continue


75

Let me cite some specific advantages of using our skills across
program areas to do our work effectively

© The current knowledge and skills of our personnel,
financial, and procurement staffs in managing the Federal
administrative processes are an invaluable contribution to
the decennial census program. If we had to obtain these
competencies separately for the decennial census, we would
put the entire process at risk

© The Census Bureau's Master Address File/TIGER System
serves as a fundamental geographic resource for successful
data collection and dissemination for all Census Bureau
programs--demographic and economic surveys and the economic
censuses, as well as the decennial census.

© A single staff of customer specialists is able to serve
customers effectively for all our data products, whether
from census or surveys, whether economic or demographic
Creating parallel systems to handle sales of decennial and
non-decennial products, particularly when many customers are
avid users of both types of products, would be neither cost-
effective nor provide good service to our customers.

© The decennial census program is closely linked to the
operations of the household surveys the Census Bureau
conducts, such as the Current Population Survey. The
decennial census address list is the primary sampling frame
for these surveys, and information collected from the census
is used to improve the design of these surveys.

© Methodological research on decennial census topics--such
as small-area income estimation--has benefitted
methodological research and applications in the rest of the
Census Bureau.

© Research on how to improve the decennial census using
administrative records also will serve to improve the
content and quality of data from current surveys and the
continuous measurement program, which will provide small-
area intercensal data.


36

of federally produced data by the private and public sectors increased greatly, and the data
themselves became more and more complex. At the same time, however, the system producing
the data became increasingly decentralized and the staff responsible for coordinating it was

consistently reduced.

Under these circumstances, we must ask whether our current federal staustical structure 1s
efficient enough to provide the kind of information base needed for the economic and social
challenges of the future, We have one of the most decentralized systems in the world, Most
countries have a cohesive, centralized staustical agency with the legislative authonty and the
mandate to ead the compilation and distribution of staustics. Until recently. the only other major
country with similar decentralization (although somewhat stronger coordination power) was the
United Kingdom, Now, that 1s no longer the case. The British have begun a series of major
‘organizauonal changes which have resulted in the consolidation of several, although not all, of the
statistical agencies from different Ministries into the Central Statistical Office (CSO). The
consolidation began with transfer to the CSO of the retail price index, then the consolidation into
the CSO of those responsible for the country’s national accounts and business statistics, and then
employment and other labor statistics. The current plan calls for the office which compiles

Census and population statistics to be transferred to the CSO later this spring

H.R. 2521 establishes a Federal Statistical Service as an independent executive agency
and brings together in the new service the U.S. agencies which are comparable to those that by
late spring will reside in the U.K, Central Statistical Office. But there 1s a major difference
between the British approach and that of H.R. 2521, In the United Kingdom, the coordinating
arm ~ the CSO-- is the nucleus of the system. H.R. 2521, however, leaves the U.S.
coordinating arm, the Staustical Policy Branch, in the Office of Management and Budget, outside
the new statistical service. The bill, therefore, does not result in creation of a clear “place in the
sun" for stauistics in our government, Rather, it continues much of the decentralization that
currently exists in this country, does litle to strengthen the Chef Statistician’s role and staff, and
does not clanfy the authority and relationship of Statistical Policy to the new Federal Statistical
Service


48

of the Chief Statistician. Such an effort involves complex trade-off in organizational access, linkage and
authority that HR 2521 does not now attempt to address in any detail.

T have several comments oa HR 2521, and some questions, In Title I, section 102 (2) on the Chief
Statistician I strongly support the objective of stronger or clearer boundaries between statistical forms
clearance and regulatory forms clearance. In Title I, section 102 (b) on Confidentiality, { would urge that
subsections (1) and (2) mandate » common statutory basis for the promise of confidentiality and for sharing
of records for statistical purposes between authorized statistical agencies.

In Tile 11 on the Establishment of the Federal Statistical Service, section 202 should provide for
‘fixed terms of 7 or 8 years for the Administrator and Deputy Administrator. These leaders should have fixed
terms and for the same reasons as do the heads of BLS, BEA and Census. In Title Il, section 202 (d) (3)
‘what is the meaning or significance in (A) of the Council report to Congress on “delineating” the decennial
‘census of population from other Census fimctions? Also in Title 1, section 202 (4) (3) (B) what is the
objective in merging BLS and Census field offices? These offices have rather different purposes so there
‘needs to be some important substantive justification for their merger. Otherwise the potential budget savings
are not likely to be worth the grief or costs of a merger.

Finally, let me identify several problems or ambiguities in the authority and composition of the
‘Council on Statistical Policy established in Title Il of HR 2521.

1. The responsibilty for government-wide statistical policy, coordination and standards is now

assigned by the Paperwork Reduction Act to the Chief Statistician in OMB.

2. The Council established in HR 2521 appears to duplicate the function of the Interagency
‘Council oa Statistical Policy established by the Paperwork Reduction Act. My understanding
is thet the Interagency Council is the current legal forum for government-wide statistical
policy discussion and debate within the statistical system. What is intended?


117

5-ASA/

would be initially consolidated into the agency are but 3 of the more than 70
agencies which produce statistical information for the Federal government.
Among the many other agencies outside of this legislation, some that are quite
consequential - the National Agricultural Statistics Service, the National Center
for Educational Statistics, the National Center for Health Statistics, the Energy
Information Administration, the Bureau of Justice Statistics, the Bureau of
Transportation Statistics, and the Statistics of Income Division of the Internal
Revenue Service --- to mention a few. We are not proposing that these
organizations be incorporated into the new agency, but any legislation should
clearly articulate a means of coordinating the functions of all the agencies. In
the same vein, it is probably not realistic to expect that the Council as presently
comprised could "establish a Government-wide statistical policy" as would be
mandated in this legislation,

Thave already mentioned the relationship between this legislation and the
Paperwork Reduction Act, which established the current coordination mechanism.
HR. 2521 has the opportunity to clarify the relationship between the
Administrator of the new agency and the coordination system established by the
Paperwork Act, and we encourage that.

‘Thank you for the opportunity to testify on this important legislation. The
American Statistical Association would be happy to provide additional information
on the matters to which we have testified today.

oe

‘The American Statistical Association, founded in Boston in 1839, is an scientific and educational
society dedicated to excellence in the development and application of statistics to the wealth of human
endeavor. Early ASA members included Florence Nightingale, Alexander Graham Bell, Herman
Hollerith, Martin Van Buren, and Andrew Camegie. ASA’s 19,000 members -- statisticians and users
of statistics -- serve in government, academia, and industry, applying their expertise to mathematics,
medicine, biology, the physical and chemical sciences, economics, and social sciences.


53

we are sending it to Colonial Williamsburg to show school children
how the Colonists did batch programming.

We believe that when we think about making these improve-
ments we should think about the organization of the system. We
should strive for continuous improvement. However, the bottom
line, Mr. Chairman, I believe is resources. We need to come with
those as well.

Thanks so much.

(The prepared statement of Mr. Ehrlich follows:]


138

agencies to share duta more efficiently than they can today and to coordinate their data

collection and analysis activities more effectively However. H.R

1 does not specifically
authorize the three agencies to share data or specify any revision 10 current confidentiality
limitations. Nor does it authorize data sharing among or between the other 69 agencies in the
rest of the federal statistical system. Without the explicit authority to share data, the three

agencies may not be able to realize the coordinative benefits H.R. 2521 aims 10 achieve

NTF

As the Comptroller General has noted. the key to any successful reorganization plan--and the
key to building a broad consensus supporting it--is the delineation of specific. identifiable
goals the reorganization 1s intended to achieve. By designing the proposed consolidation with
such goals in mind. there is a greater chance of a shared understanding among decisionmakers
of what changes will be sought in a reorganization or consolidation. Focusing on these goals
would then provide the Administrator of the proposed Federal Statistical Service with
guidance on how (0 balance competing objectives. such as cutting costs or ensuring better
quality of services, and how to create not only short-term advantages but sustained, long-term
gains, Specific, identifiable goals will also help Congress and the President hold the new

agency accountable for meeting them.

While deciding on the goals to be reached by consolidating tederal statistical activities 1s a

policy decision for Congress 10 make, our work suggests several possibilities that Congress



49

The Council established in HR 2521 leaves out the represeatatives of all but three of the
major agenciea, which raises questions about the Council's purpose.
8) {sit to coordinate the three agencies or to coordinate “government-wide” statistical

7 If tis to coordinate all government statistical activities then the Chief
Statistician should be the Administrator of the Federal Statistical Service and chair
‘any interagency council on statistical policy

b) Is it a statistical policy coordination council or an institution to provide
communication with and linkage to national level policymakers and their statistical
‘needs? The composition specified for the Council suggests the latter.

‘The purpose and authority of the Council need to be clarified The relationship to the

Paperwork Reduction Act and other statistical authority needs to be addressed.

With 4 appointments to the Council by the Majority Leaders of the House and Senate, the

counposition of the Council creates the perception, if not the reality, of politization of

‘statistics. This is dangerous.

There are 3 of 4 kinds of councils or committees that statistical agencies can need for

effective operation. Committees for:

> Suis .

») Outside technical statistical exsesemeat of the agency and its program

©) Outside statistics user advice on relevance of statistical output and changing neede
for satiatics

Linkage to US. government policymakers to anticipste statistical product needed as,
‘ew policies are proposed and/or implemented


78

Strategic Goals

Finally, Mr. Chairman, I want to note that the organizational
inefficiencies that functional segregation of the decennial
census from other activities would cause would have a severely
negative impact on our efforts to meet the mission and strategic
goals of the Census Bureau.

A little more than a year ago, when I became Director of the
Census Bureau, I initiated a strategic planning effort to
position the Census Bureau as the preeminent collector and
provider of timely, relevant, and quality data about the people
and economy of the United States. This effort is also a response
to the congressional mandate for Federal agencies to plan
strategically so they can be more efficient. Over the last year.
we have made significant progress in meeting our four main goals
of 1) increasing customer satisfaction, 2) increasing
productivity, 3) improving public perception and cooperation with
our data collection programs, and 4) developing a more diverse
effective, and skilled work force.

Accomplishing these goals requires that all parts of the Census
Bureau work together as a team, in concert, to apply all our
“core" skills to this enormous task. I believe the functional
segregation called for in this bill would move us in the opposite
direction, fragmenting our efforts rather than maximizing them.

Thank you Mr. Chairman. That concludes my remarks. 1 will be
pleased to answer any questions


88

With that said, as with any other independent agency of Govern-
ment, be it the SEC or this FSS or whatever, there would have to
be some counterpart within OMB and within the executive branch,
as there would be in the Congress, to have the necessary oversight.

I believe that it would be the primary driver of statistical policy
if it were to function successfully. Of course, for that reason, as I
made clear in my statement, one would have to consider expanding
its scope beyond the agencies you address.

Mr. Horn. Dr. Norwood.

Ms. Norwoop. Mr. Chairman, I think there are two ways I
would answer that question. The first is that, yes, at least in my
own experience over the last several decades, there have been sta-
tistical series that have been dropped, partly because they were not
good enough, partly because we at the Bureau considered that they
were no longer relevant or important.

I can tell you that it was extraordinarily difficult because I would
get calls from congressional offices who did not like their being
dropped. I would get calls from the White House who did not like
their being dropped. There are users for almost every single statis-
tical series that is in existence, and someone does not want to see
it dropped.

As for your second question really about the need for policy to
run programs and understand programs, certainly they exist. I
think one good example that I am now familiar with is I have just
finished chairing the Advisory Council on Unemployment Com-
pensation, and we have spent 3 years looking at the unemployment
insurance system.

There is a data system in order to run that Federal/State cooper-
ative program. The States need data, the Unemployment Insurance
System Office in the Department of Labor needs data. It is not du-
plicative of that which the Bureau of Labor Statistics does in learn-
ing about unemployment. It may be complimentary, because BLS
may use some of it. In fact, the tax records from the UI system are
an important element of the BLS program.

The important thing is that those data sets will continue to exist
and should under any system. What you need, however, in a statis-
tical system is something which looks at the economy and social
problems of the country as a whole, and which are entirely free
from particular policy implications.

Mr. Horn. Let me ask you. A lot of experts believe that allowing
the sharing of data for statistical purposes would improve the qual-
ity of Federal statistics, lower the cost of producing those statistics,
lessen the burden on individuals and businesses that now provide
the data. The counter argument is that current limitations on the
data sharing are essential to protect the confidentiality of those
providing the data.

I am just curious, what is the current status of legislative propos-
als to permit data sharing among your agencies and other agencies
and, more broadly, all Federal statistical agencies?

Mr. EHRLICH. We regret that Ms. Katzen cannot be here. I think
we would have to allow her to speak for the administration.

Mr. Horn. OK. Good. What difficulties exist in terms of added
operating costs are burdens on those being surveyed because of the


43

22 March 1996
‘Testimony on HR 2521 To Establish a Federal Statistical Service

James T, Bonnen
Michigan State University

1 congratulate Representative Hom and the Committee for recognizing the growing challenge the
country faces today in providing the broad base of accurate and relevant government statistics necessary for
national decision making, public and private. There is growing evidence that we are falling behind in the
endless race to track accurately a rapidly changing economy and society. Since the lead time on effective
innovation in statistical products is quite long, we need to address this challenge now, not later, Let me begin,
by describing the problems involved and the forces of change in society that have produced the serious
difficulties now facing the U.S. in improving its statistical information base.

Every statistical system, whether highly centralized or decentralized, has to be coordinated nationally,
if its performance is to be relevant or efficient. This is an inherent function of the chief statistician. As the
capacity for coordination has become more strategic, the capscity and authority of the chief statistician’s
office can be sorely tested. ‘The problems faced today in producing accurate and relevant statistics tend to
shift the advantage away from decentralized toward centralized systems and toward those systems that have
strong suthority vested in the chief statistician. The formal authority, position in the hierarchy, access 10
‘national policymakers, an independent, high public profile and command over resources are critical 1o an
effective Office of Chief Statinician. The chief statistician, in coordinating a system, also is responsible to
maintain system-wide relevance, standards (including representing the U.S. in development of international
standards), confidentiality, record sharing, and to protect against politization, to name but a few functions of
the office. This authority can be a administered in a decentralized manner, but it cannot be subdivided or
partitioned between actors in the system.

Coordinating a highly decentralized statistical system has never been easy. This was truc even in the
first decade after World War Il, when the Office of Management and Budget (OMB) had a Statistical Policy

1


129

SOLUTION: ONE-STOP SERVICE FOR USERS

To the maximum practical extent, we should create common
agency data dissemination formats, graphical interfaces, and on-
line access. Agency ownership of each data source would not be
lost, and agencies would not develop a single physical data base
of information products. Instead, the objective would be to make
Federal statistical information dissemination standards and
practices more consistent and transparent for our users. In
addition, this approach would allow users who have questions but
are not certain where to find answers, to approach a single first
point of access and be treated, in large measure, as if they were
dealing with a single centralized information dissemination
organization.

Many statistical agencies have recently made tremendous
progress in developing easy access to their data and databases
through the Internet, and in particular, the World Wide Web
(Www). Data users accessing information from one Federal agency
may even find out about related statistics available from another
agency, thanks to cross-agency links that some agencies are
providing.

Realizing the tremendous opportunity to continue to build on
this foundation, the Office of Management and Budget (OMB) and
the Office of Science and Technology Policy (OSTP) initiated a
coordinated interagency approach last August to improve access to
Federal statistics. Under the auspices of OMB’s Interagency
Council on Statistical Policy, representatives of the major
statistical agencies, with technical coordination and development
from OSTP, have developed briefing rooms for economic and social
statistics that will be accessible through the WHW next month.
These virtual briefing rooms will provide the general public
quick, easy, informative access to key current economic
indicators and social statistics as well as to the wealth of
other statistical products these agencies provide to measure our
national performance,

SUMMARY

At the outset, I referred to criticisms of the Federal
statistical system. As noted in the text, some of these
criticisms are well founded and well taken. The question is
whether to solve these problems we need a legislative
reorganization of the system or whether significant though
incremental administrative and legislative changes can more
promptly and economically achieve the objectives we share. We
believe that the actions I have described are the right way to
respond to the challenges and criticisms we currently face.


113

American Statistical Association

1429 Duke Street, Alexandria. Virginia 22314-3402 USA
(703) 684-322) © Fax: (703) 684-2037 + E-mail asanfo@amsiat org

TESTIMONY ON BR. 2521, STATISTICAL CONSOLIDATION ACT OF 1995
by The American Statistical Association
March 22, 1996

Presented by Lynne Billard, Ph. D.,
University Professor, Statistics, University of Georgia

Good afternoon. I am Lynne Billard, President of the American Statistical
Association I am pleased to testify on HR 2521, The Statistical Consolidation Act
of 1995, on behalf of the 19,000 members of the American Statistical Association.

The American Statistical Association is a scientific and educational society
which, since 1839, has promoted sound statistical practices among its members
and with the American people. In our over 150 years of existence, we have
advised the Congress and the Administration on issues concerning the functions of
the Federal statistical agencies, When called on to provide such advice, we have
generally elected to restrict ourselves to issues central the professional practice of
statistics, I will take that approach in my testimony today.

I will focus on five general aspects of the legislation that is pending before this
Subcommittee:

. The need for good statistics as fundamental to the functioning of government;
. Issues relating to ensuring the integrity, quality, and confidentiality of data;
. The need for independence of data collection from partisan issues;

|. The role of the Chief Statistician; and

. The scope and coverage of the proposed Federal Statistical Service.

Ae eDe


122

ideally anticipate, changes in basic economic and societal
structures. The post-war decades have witnessed dramatic shifts
in these structures, including economic shifts as some industries
and sectors have grown greatly in importance, as have
international markets and transactions; institutional shifts
reducing reliance on regulatory information and increasing
reliance on technology; and demographic shifts toward two-earner
families, increased life-expectancy, and changes in family
structure. These structural changes have confronted the Federal
statistical system with stiff challenges.

As an example in the economic sphere, the great majority of
output and employment is now in the service sector. Complex new
services, such as cellular telephones and rapid delivery of
packages, must now be included in measures of national output and
productivity. Medical care now represents 14 percent of Gross
Domestic Product (GDP), and medical technology is changing at a
rapid pace.

On the social and demographic side, the future
competitiveness and endurance of our Nation depend on the
creativity, productivity, and vitality of Americans who are
children today. The quality of their health, education, and
social environment will greatly influence the extent to which the
United States will be able to maintain its prominent role in
world affairs. As confirmed in last week's White House
Conference on Partnerships for Stronger Families, the statistical
system must provide more relevant and integrated data upon which
sound policies towards children and families can be based.

Concern about our ability to respond to these challenges and
about the general quality of statistics is now widespread,
encompassing more than just the technical users or research
community. A series of media and professional organization
reports suggest that there are many myths about the U.S. economy
that are the result of poorly focussed statistics. While there
is debate among knowledgeable users about what is myth and what
is reality, the lack of confidence in the economic data that is
evident in these articles represents a problem in itself.
Confidence in the system is essential; the Federal statistical
system must demonstrate to all concerned that problems have been
addressed and that the quality of the data is high.

There is a constraint, of course, in that resources are not
unlimited. Indeed, while some have advocated that more resources
are needed in some areas to improve the quality of statistics and
that such investments will pay handsome dividends, it is
unlikely, given the current budgetary situation, that there would
be any growth in funding for statistical programs above the level
requested in the President’s budget.


127

A policy that protects respondents’ legitimate interests is
one of the cornerstones on which public confidence in the Federal
statistical system is built. The complexities of the Freedom of
Information Act (FOIA) and various confidentiality statutes have
created substantial uncertainties about the meaning of
confidentiality pledges. All statistical agencies need to be
able credibly to commit that data they have collected for
statistical uses will never be disclosed for nonstatistical
purposes.

SOLUTION: STATISTICAL ORDER ON CONFIDENTIALITY

On January 29, my office published for comment in the
a draft Administrative Order that would require

each Executive agency to make all determinations affecting the
confidentiality of statistical data under the Freedom of
Information Act and other statutes prior to the time that data
are collected. Under the mandate created by Congress in the
Budget Accounting and Procedures Act and elaborated in the
Paperwork Reduction Act, this Order would establish a uniform
policy for protecting confidential statistical information in any
agency of the Executive Branch.

CONCERN: STATISTICAL DATA SHARING SHOULD BE FACILITATED

Statutes that permit data to be seen only by employees of a
single agency (e. Title 13 for the Bureau of the Census and

5 for the Bureau of Economic Analysis) do aid in
Baineaining the confidentiality of statistical data and hence
confidence in the system. At the same time, having such statutes
may present barriers to effective working relationships among
statistical agencies, inhibit successful joint projects, and lead
to duplication of effort or inconsistencies among related data
sets. The fact that data sharing has been precluded has in many
real ways affected our ability to even determine what
opportunities may be available. We do know, however, that legal
barriers have prohibited the sharing of business lists between
the Bureau of the Census and the Bureau of Labor Statistics.
Consequently, the two agencies maintain separate lists.

SOLUTION: STATISTICAL DATA SHARING LEGISLATION

Even though duplication of effort among statistical agencies
is quite limited, virtually all statistical agencies agree that
improvements in the ability of statistical agencies to share data
solely for statistical purposes would offer important advantages.
The sharing would have to take place under conditions that would
still guarantee confidentiality and that would share data solely
for valid statistical purposes. In cooperation with affected
statistical agencies, we have drafted and are completing
clearance of legislation to accomplish these goals. Passage of
this more modest bill would provide a framework for improving the

7


151

Mr. Horn. OK. We will open it up for questions. Let me first ask
the statistical community based on the three panels now—yourself,
your colleagues, and now the third panel is with you, representing
the administration and GAO, and the first panel are the people
that produced the data—I wonder, are you in agreement on a lot
of these things?

I would like to sort of separate out what the issues are and how
various representatives of the broader statistical community as a
discipline look on it either organizationally or individually. If you
do not want to speak for your organization, make that clear, then
fine. An idea is an idea. We do not care what the source is, as long
as it is a good idea.

Who would like to comment on what they have heard this morn-
ing? Yes?

Ms. Haver. I would. One thing as a business person that I see
missing in our current system is leadership, someone that manages
the process. I know, as someone who runs my own business and
also as someone who works with peers in an association, that it is
much easier to get things done when you are running the oper-
ation. .

I think everyone in these agencies certainly have the best of in-
terest for the overall system. However, in terms of making things
happen, they often get slowed down because of the fact that there
is no one really leading the process. It does not seem to me that
the Chief Statistician has really had the power to do that. The
Chief Statistician has not been a manager, but perhaps at best a
coordinator.

I do think that despite all the statements that there are no
redundancies, I do look at a web site at BLS, which looks different
than the web site at Census, which is different again from Stat
USA where the Department of Commerce releases their data.

Now, this of course does not account for a large number of dol-
lars. I do believe if we bring these agencies together under someone
with the power to make some changes, clearly a well-informed,
proper, professional person, that there are efficiencies to be found
and the end result will be a better, sounder system.

I would like to just add one thing where I agree very strongly,
that data sharing across this group is essential. If we bring these
three groups together without sharing, we have accomplished very

ittle.

Mr. Horn. Any comments, Dr. Knapp?

Mr. Knapp. I think that we are all agreed on some very impor-
tant points about the integrity of the Federal Statistical Service,
that the quality is very important, the need for data sharing, the
importance of confidentiality, the importance of professionally
qualified nonpolitical staff involvement in producing these impor-
tant statistics.

I think most of us have recognized that cost savings from consoli-
dation are problematic. You would have to really get in and work
it through. You cannot say at this stage of the game how much cost
saving, if any, there would be.

ly group, and I think the other groups, seem to be saying,
though, that the important thing here is that a reorganization


155

combinations, we all know. Some people can do it, some people can-
not.

Ms. BILLARD. Well, you are absolutely right. What is important
at that point is that it be someone who is a good administrator and
a good manager.

‘You also want in that person someone who, even if they do not
know the highly specialized statistical techniques, it is certainly
someone who can appreciate what statistics can or cannot do, how
one goes about collecting the right sorts of statistics to get the right
sort of information, to make the right sort of policy, and all the rest
of it, someone who is able to step back and has that broad perspec-
tive and has some sort of vision of statistics and its uses as a field.

I do think that relative to this particular legislation, to me there
are really two Chief Statistician roles: The one that is currently oc-
cupied by Katharine Wallman’s position, and I agree she does a
great job. She is not on trial here.

The other “Chief Statistician” job that I see in this legislation is
the administrator of the whole Federal Statistical Service. I would
think that with time it is that person that other countries will rec-
ognize as the Chief Statistician.

Mr. Horn. You might be right. It is sort of like Pat Moynahan
dreaming up the World Trade Organization, when it was just a lit-
tle group of guys sitting in Geneva, and suddenly it becomes an
international conspiracy.

When we say “Federal Statistical Service,” obviously that is puff-
ing it a little because we are talking about two very fine agencies
and a little small agency in between. We are not taking over the
whole statistical service of the Federal Government.

On the other hand, there is no question if you have a decent,
independent statistical service, respected as a professional oper-
ation, they obviously could give a lot of guidance that is now being
given to OMB, not that that is wrong. The President needs that to
be done. Again, on the decentralization bit, you can do that in var-
ious ways. You do not have to have everything in the White House
to run a good government.

Ms. BILLARD. I would think that it is important that this person
be above partisan influences in either of those two positions, and
that they be a career service person.

Mr. Horn. We need to think about the length of the term. Right
now, for example, the Comptroller General is about to retire. There
will be a new Comptroller General picked. As I remember, that is
14 years, is it not?

Mr. STEVENS. Fifteen.

Mr. Horn. It is 15?

Mr. STEVENS. Fifteen now.

Mr. Horn. Fifteen years. Some are talking about reducing it to
10, et cetera. The whole purpose is, just like a Federal judge, to
give that person independence. Whatever they did in their past or
most previous occupation, prior to being Comptroller General of the
United States, just like Chief Justice of the United States, they are
supposed to be independent, and they try to be and call them as
they see it. It does not matter whose toes they are stepping on.
That is the job.


CONTENTS

Hearing held on March 22, 1996
Text of H.R. 2521 ..
Statement of:
Haver, Maurine A., chair, statistics committee, National Association of
Business Economists (NABE), and president, Haver Analytics; John
L. Knapp, president, Council ‘on Professional’ Associations on Federal
Statistics (COPAFS), Lynne Billard, president, American Statistical
Association, and professor of statistics, iniversity of Georgia
Katzen, Sally, Administrator, Office of Information and Regulatory Af
fairs, Office of Management and Budget; and L. Nye Stevens, Director,
Federal Management and Workforce Issues, General Government Divi-
sion, General Accounting Office ...
Norwood, Janet I., senior fellow, the Urban Institute, and former Com-
missioner, Bureau of Labor Statistics (Carter, Reagan, and Bush Ad-
ministrations); James T. Bonnen, Rrofessor of agricultural economics,
Michigan State University; Everett M. Ehrlich, UnderSecretary for Eco:
nomic Affairs, Department of Commerce; Katharine G. Abraham, Com-
missioner, Bureau of Labor Statistics; and Martha Farnsworth Riche,
Director, Bureau of the Census
Letters, statements, etc., submitted for
‘Abraham, Katharine G., Commissioner, Bureau of Labor Statistics, Pre:
ared statement of, a
Billard, Lynne, presi
of statistics, University of Georgia, prepared statement of
Bonnen, James T., professor of agricultural economics, Mi
University, prepared statement of
Ehrlich, Everett M., UnderSecretary for Economic Affairs, Department
of Commerce, prepared statement of ..
Haver, Maurine A., chair, statistics committee, National Association of
Business Economists (NABE), and president, Haver Analytics, prepared
statement of ...
Katzen, Sally, Administrator, Office of Information and Regulatory Af-
's, Office of Management. and Budget, prepared statement of ...
Knapp, John L., Rissident, Council on Professional Associations on Fed-
eral Statistics © ‘OPAFS), prepared statement of ..
Maloney, Hon. Carolyn, a Representative in Congress from the State
of New York, prepared statement of .
Norwood, Janet I., senior fellow, the Urban Institute, and former Com:
missioner, Bureau of Labor Statistics (Carter. Reagan, and Bush Ad-

ministrations), prepared statement of

Riche, Martha Farnsworth, Director
statement of

Stevens, L. Ny force issues,
General Goveinment vision, General Accounting Office, prepared
statement of ..

dD)

Page

93.

118

32

62
113
43
54

96


145

not evaluate the effectiveness of the Canadian system, we did identify several clear

differences between the Canadian and the U.S. systems.

The Canadian system is much more centralized, with Statistics Canada containing many of the
activities currently divided among the I! principal U.S. statistical agencies and being
responsible for the majority of the government's statistical information. The head of Statistics
Canada has a higher level position than that of the U.S. Chief Statistician, has direct control
‘over the agency's budget. and can set and change priorities and shift resources easily.
Statistics Canada also (1) has access to all of the government's administrative records, (2} can
share survey and other data among its components and other government agencies and
nongovernmental organizations, and (3) is subject to strict and uniform privacy requirements
According to Statistics Canada officials. these privacy requirements also help ensure a high

voluntary response rate 10 data collection efforts.

While Canada’s centralized system may appear to offer several advantages over the U.S
system, several factors need to be considered as part of the comparison. These factors

include the following:

+ Canada's parliamentary system of government may lead to a clearer definition of
government policy and priorities and the ensuing needs for statistical information than

our system, which contains different brancnes of government sharing power.


106

John L. Knapp, Ph.D.

President, COPAFS,

Good morning Mr. Chairman, and thank you for inviting the Council of
Professional Associations on Federal Statistics (more commonly known as COPAFS)
to testify on this very important proposed legislation. { am Dr. John Knapp,
president of COPAFS and research director for business and economics at the
University of Virginia's Cooper Center for Public Service.

COPAFS' membership consists of sixteen professional associations and fifty
affiliate members. The professional associations include the American Economic
Association, the American Public Health Association, the Association of Public Data
Users, and the organizations represented by my fellow panelists, to mention a few
Examples of affiliates are the Dun & Bradstreet Corporation, the Rand Corporation,
and the University of California. Accompanying me is Edward J. Spar, Executive
Director of COPAFS. In addition to his encyclopedic knowledge of federal statistical
programs, his previous marketing experience in the private sector provides a very
helpful perspective in evaluating the federal statistical system. Overall, COPAFS
represents tens of thousands of users of federal statistics whose interests range from
media and market planning to research on disability. The principal mission of
COPAFS is to inform statistical users of the major current issues and capabilities of
the federal statistical system and to advise both the agencies and Congress about the

needs of the various user communities.


66

in EDI reporting jointly and to develop a common protocol for the reports filed by those
employers. The two agencies now are working on a common solicitation framework that will
allow them to reach as many large, multi-establishment respondents as possible in a coordinated,

integrated fashion,

Similarly. the three agencies represented here today, together with a number of others,
have worked to make it as easy as possible for those interested in federal data to find what they
need. In the past, I would acknowledge, the division of responsibility for the Nation’s core
economic statistics among several statistical agencies may have caused problems for data users
who did not know which agencies produced which data series. At least for data users who are
computer literate, however, recent developments largely should eliminate these problems.
Because of the collaborative work by staff from all of the statistical agencies, anyone with access
10 the Internet should find it relatively easy to locate the data they want, whether or not they
know which agency produces it. If you visit the BLS Information Page on the World Wide Web,
for example, you will find links both to the BEA Home Page and to the Census Bureau Home
Page. as weil as to the Web sites of other statistical agencies, Jumping from one to another
requires no more than the click of a mouse. It would be ironic indeed if, at precisely the juncture
where new technologies have begun to make it far easier for data users to locate the information
they want, regardless of where itis produced, concems about user access were to play an

important role in a decision to consolidate the agencies.


52

ferent timeframes for estimation, different stages in the reporting
cycle, and the like. I think I can probably find a better example of
redundant data collection.

The larger point, though, is that the pool of resources will allow
better data collection and planning for end users of the informa-
tion. That may be the case in the long-term. One can’t help but
think that sooner or later that would be true.

I would like to think that before we embarked on this course we
would examine very carefully what the up-front costs of the invest-
ment are. What will it cost to homogenize the technical and com-
puter systems, the methodological systems of BEA, Census, and

abor?

I say this not just as the CEO of statistical agencies, but as
someone who has come from companies that were involved in very
large mergers. I am referring specifically to the combination of
Burroughs and Sperry into Unisys and can tell you that the cul-
tural problems that Dr. Norwood refers to and the logistical and
up-front expenditure issues can be surprisingly large.

‘You also make reference to the need to protect the veracity of the
data during the collection ana interpretation stages of the process.
I think that is an important concern. I think it is a concern that
we saw in the 1990 decennial census where there was the profes-
sion. that there was political muscling of the professional career
staff.

It is a concern that was raised in 1992. There was an allegation
made that BEA had somehow contorted the national income ac-
counts to help the re-election campaign of President Bush. It was
an allegation that was completely unqualifiabiy refuted by the

0.

If there are other such instances in which the committee or any-
one else has concerns about the integrity of the system, I would
very much like to hear about them. Finally, you mentioned a state-
ment that Dr. Haver makes regarding the need to utilize resources
through the increased use of technology and reducing redun-
dancies. All we can say in the agencies to that is “amen.”

I think we are doing a very interesting job in the area of increas-
ing our use of technology and advanced statistical methods. The
Census is becoming a leader not just in the United States, but
worldwide in the use of telemarketing teci.nology, our computer-
based interviewing system has made it pussible to get the last
three current population surveys out under conditions of extreme
duress related to the shutdown to the Federa! Government that we
experienced over the winter.

Our continuous measurement program is going to move us into
a real-time, telemarketing panel, data collection format that wil
give us a frame to consolidate al! of our demographic surveys into
a single instrument and improve their cost-effectiveness and the
accuracy and the adaptiveness of the data col'ection effort that is
represented there.

In BEA’s budget for both 1997, 1996, and several years previous
to that, we have asked for funds to wean BEA from the Honeywell
mainframe that it now works on, a machine so old that the Smith-
sonian will not take it when we kick it off of the premises, instead


101

3, How do you view the trend

-- in accuracy?

Total Macro Regional Induatry Agr Energy Demographic

Improving «16.8 14.9 16.0 15-4 0.0 25.0 17.2
Stable 53.0 49.7 52.2 61.5 40.0 56.3 55.2
Deteriorating 28.4 34.8 © 27.7 23.1 60.0 24.2

+ in timeliness?

Total Macro Regional Industry Agr Energy Demographic

Improving 12.9 9.4 13.8 15.4 0.0 25.0 13.8
stable 64.7 76.6 55.4 61-5 40.0 68.8 55.2
Deteriorating 20.6 14.9 25.5 23-1 60.0 6.3 27.6

++ in coverage?

Total Macro Regional Industry Agr Energy Demographic

Improving = 14.08.68 12.8 11S 0.0 32.3 10.3
Stable 58.3 56.4 61.7 55-8 20.0 62.5 62.2
Deteriorating 28.7 33.1 21.3 32-7 80.0 6.3 24.2

4a. Most important step to improve quality of government dat:

Rank 1 Rank 2

27.9 «17,3 Create a single statistical agency

24.6 28.2 Eliminate obstacles to data sharing

20. 12.7 ‘Increase funding targeted for R&D and technology

a4 9.6 Make surveys mandatory

1s 4:1 Increase RED with current budgets by eliminating programa

4b. Greatest obstacl

to accurate and timely government dat

70.1% Budget cuts
67.0 Lack of coordination among agencies

47.7 Poor reaponse rate on surveys

45.4 Inability of agencies to share data due to confidentiality agreements
38:1 Lack of R&D effort

Sa. Do you aupport the consolidation of the major 12 etatiatical agencies
Anto one STAT-USA similar to Statistice Canada?

Total Academic Government Industry

Yoo 59.1 50.0 Shed 62.2
No rey 9.4 36.2 17
Undecided 27.7 40.6 27.9 26.1


26

21
ance of functions which are transferred under this
Act to the Administrator or the Service; and
(2) which are in effect at the time of such

transfer,
shall continue in effect according to their terms until
modified, terminated, superseded, set aside, or revoked by
the President, the Administrator, or the authorized offi-
cial, a court of competent jurisdiction, or by operation of
law.

(b) PENDING PROCEEDINGS.—(1) This Act shall not
affect any proceedings, including notices of proposed rule-
making, pending on the date of the transfer of functions
and offices under title III before any department, agency,
commission, or component thereof, functions of which are
transferred by this Act. Such proceedings, to the extent
that they relate to functions so transferred, shall be con-
tinued, except as provided in paragraph (3).

(2) Orders may be issued in such proceedings, ap-
peals may be taken therefrom, and payments may be made
pursuant to such orders, as if this Act had not been en-
acted. Orders issued in any such proceedings shall con-
tinue in effect until modified, terminated, superseded, or
revoked by the Administrator, by a court of competent ju-

risdiction, or by operation of law.

HR 2521 IN


22

7
employees of the Service as the Administrator may des-
ignate, and may authorize such successive redelegations
of such functions within the Service as may be necessary
or appropriate. No delegation of functions by the Adminis-
trator under this section or under any other provision of
this Act shall relieve the Administrator of responsibility
for the administration of such functions.
SEC. 413. REORGANIZATION.

The Administrator is authorized to allocate or reallo-
eate functions among the officers of the Service, and to
establish, consolidate, alter, or abolish such offices or posi-
tions within the Service as may be necessary or appro-
priate.

SEC. 414. CONTRACTS.

(a) IN GENERAL.—Subject to the Federal Property
and Administrative Services Act of 1949 and other appli-
eable Federal law, the Administrator may make, enter
into, and perform such contracts, grants, leases, coopera-
tive agreements, and other similar transactions with Fed-
eral or other public agencies (including State and local
governments) and private organizations and persons, and
to make such payments, by way of advance or reimburse-
ment, as the Administrator may determine necessary or
appropriate to carry out functions of the Administrator

or the Service.

HR 2521


105

be the responsibility of the proposed Federal Council on Statistical
Policy.

In this context, we recommend that wording be added which rec-
ognizes that the three agencies in the legislation are part of a
much larger system, and that the possible additional consolidation
of other agencies should be explored.

We believe that the major function of the Federal Council is to
act as an advisory group to the Chief Statistician and the adminis-
trator. At the same time, the Paperwork Reduction Act of 1995 es-
tablishes an interagency council on Statistical Policy, which is
headed by the Chief Statistician.

However, the Chief Statistician does not play a specific role in
the proposed legislation. We believe that this role is best accom-
plished by having the Chief Statistician as the permanent chair of
the Federal Council. In doing this, the legislation would thereby
recognize the need to see these agencies as part of a larger system.

We also recommend that the Federal Council be expanded to in-
clude other Federal statistical agencies on a rotating basis. The Of-
fice of Management and Budget would be responsible for identify-
ing the other statistical agencies. In addition, we recommend that
the nongovernmental members of the Federal Council include
members of the data user community to be chosen by the chair.

Finally, we recommend legislative recognition of the need for con-
tinuing research on the effectiveness of the Statistical Service and
provision for an annual evaluation in relation to goals established

y the Federal Council. The purpose of the evaluation would be to
aid the Statistical Service in improving its performance.

We believe that the name of the new service, the Federal Statis-
tical Service, is too bureaucratic and is likely to be lost in the maze
of other Federal agency names. Instead, we suggest following the
example of our neighbors to the north, who call their central statis-
tical agency, Statistics Canada. The name Statistics USA would
provide high visibility for this important function in today’s Infor-
mation Age.

Admittedly, Statistics USA would initially overstate the coverage
of the agency, since many important Federal statistical programs
are not covered in the initial organization, but it would point to the
greater coverage that is likely to occur as the agency develops its
mission over time.

This concludes my prepared statement, Mr. Chairman, and of
course I will be glad to answer questions later.

Thank you.

[The prepared statement of Mr. Knapp follows:]



34

For 20 years, I worked within the Federal statistical system to
attempt to secure uniform confidentiality protection and data shar-
ing for statistical purposes, but I failed.

Katharine Wallman, Sally Katzen, and Alice Rivlin have accom-
plished a great deal in developing the OMB order and initiating
discussion of it. This OMB order appears entirely consistent with
Section 102(b)(1) of H.R. 2521.

I hope that the OMB order will move quickly to final issuance
and that it will be followed quickly by legislation permitting the
sharing of microdata for statistical purposes which also seems con-
templated by your bill.

Several other sections of the Statistical Consolidation Act of 1995
make a large number of important points which I believe could im-
prove the Nation’s statistical system. An example, for example, is
the statistical agency head reporting relationships and the sense of
the Congress on staff resources and reporting relationship for the
Chief Statistician.

H.R. 2521 focuses entirely on the organization of the executive
branch. While I realize how difficult the legislative process can be,
it would be useful for the bill to include at least some consolidation
of congressional committee jurisdiction over the Nation’s statistical
system.

In our system, statistical agencies in each department must deal
not only with their own subject matter and appropriations commit-
tees and subcommittees, but also with a number of committees
with broader jurisdiction concerned with paperwork reduction, gen-
eral government operations, and individual agency oversight.

Under such circumstances it is difficult, if not impossible, for the
Congress to consider such broad and important issues as data inte-
gration, research needs, and data requirements for the system as
a whole. In these days of serious budget reduction, it seems to me
we cannot afford inefficiencies of that kind.

Mr. Chairman, I am especially pleased to be here this morning
because the bill before this committee is, in my view, a constructive
effort by the Congress to look at how the system operates and how
its functioning might be made better.

While I do not agree with every item in the bill, I believe its ap-
proach is an important step toward improving the system. I would
be happy, Mr. Chairman, to work with your staff in going over the
bill in further detail.

Thank you very much.

[The prepared statement of Ms. Norwood follows:]


115

3-ASA/

operations. In that regard, we believe the legislation should spell out the formal
linkages between the new agency, the Congress, and the policy branches of the
Administration. In the current configuration, the three agencies have strong
linkages to the Departments in which they are located, and are generally
consulted as Administration priorities (the mix of programs) are being considered.
The new agency should have an apparatus for maintaining links to the
Administration's policy process, with appropriate safeguards to ensure the
integrity of its products, just as it has links to Congress through the process of
Congressional appointment of members of the proposed Federal Council on
Statistical Policy.

The need for integrity will be best met when the agency has a strong measure
of independence. Nonetheless, the agency should have a strong measure of
accountability to the public at large for its programs. This accountability
by the Council, but should be supplemented by a governance structure which
provides outside review and guidance of the work of the agency. We hope and

‘ided

expect that present advisory panels from the professional associations and other
groups will be continued and strengthened by the new agency without
requirement for those panels in law, but a statement in the "Findings" to that
effect would be quite useful.

3. The Need for Independence of Data Collection From Partisan Influences

Good statistical practice is grounded in a commitment to quality and professional
standards. The new agency will need to have staff expertise in many disciplines,
among them economics, demographics, statistics, the cognitive sciences, and the
computer sciences. This multidisciplinary approach requires an infrastructure
that supports professional training, development, and advancement in these
disciplines. Presently, most statistical agencies assure the promulgation of those


136

approximately $1. billion” Census, BEA. and BLS accounted for $796.6 million of this

total

Meeting the government's needs for information in an efficient manner is a complex
undertaking that requires coordination among the different statistical agencies. H.R. 2521
takes note of this, finding that “improved coordination and planning among the statistical
programs of the Government is necessary to strengthen and improve the quality and utility of
federal statistics and to reduce duplication and waste in information collected for statistical

purposes.

The needs for statistical information for government decisionmaking and administration are
extensive. Some of these needs are well known, such as the use of the Consumer Price Index
(CPI) to adjust individual income tax brackets and Social Security payments to offset inflation
of the use of Census data in formula grants to states and to apportion congressional and other
legislative representation. There are many others. Work that we are doing at the request of

the Chairman of the House Committee on the Budget has identified over 200 statutory

he other eight principal statistical agencies are the National Center for Health Statistics
(Department of Health and Human Services). Energy Information Administration (Department
of Energy), National Agricultural Statistical Service and the Economic Research Service (both
in the Department of Agriculture). Statistics of Income Division (Intemal Revenue Service,
Department of the Treasury), Bureau of Justice Statistics (Department of Justice). and Bureau
of Transportation Statistics (Department of Transportation)

3


58

Mr. Horn. We thank you. You have approached this subject with
intellectual depth and width, and that cannot hurt us.

The next are the two Commissioners, who have probably two of
the toughest jobs in Government. We will start with the Honorable
Katharine G. Abraham, the Commissioner of the Bureau of Labor
Statistics, in the Department of Labor.

Ms. ABRAHAM. Thank you very much, Mr. Chairman. I would
like to join the other members of the panel in thanking you both
for your interest in this important topic, as well as for the oppor-
tunity to be here this morning to share my thoughts about H.R.
2521 and the general set of issues that it raises with you.

Like you, I am concerned about the quality of Federal statistics.
As you might imagine, I have given a good deal of thought to what
the barriers that stand in the way of improving those statistics are.
I guess it is my perspective that those barriers have much more to
do with limitations in our knowledge about how to measure com-
plicated phenomena and with resource constraints than they do
with any organizational flaw in the way that the system is cur-
rently set up.

By way of example to illustrate my thinking on this, what I
would say is the central issue facing the agencies that produce eco-
nomic statistics, and that is, the problems that we have with accu-
rately measuring output in prices, particularly in the service sector.

If we look at that problem, I think the issues there are very
clearly issues related to both our needing new measurement con-
cepts and tools to measure output and prices in the service sector,
and with our needing resources to put those new approaches into
the field.

I can assure you that we are hard at work together with our col-
leagues in other agencies at trying to develop new measurement
approaches that we have done quite a lot to move resources toward
addressing this high-priority issue within the constraints of our
overall budget.

I guess in the case of this problem in particular I would have to
say that how we are organized has little, if any, relevance to the
problem that we face and how well we are doing at addressing it.

Having said that of course, if it were the case that there were
significant overlap in the programmatic responsibilities of the dif-
ferent agencies that could be eliminated so that resource could be
freed up to devote to these high-priority problems, then consolida-
tion or somehow otherwise eliminating that redundancy clearly
would make sense.

Again, it is my sense that such redundancy is virtually non-exist-
ent, which reflects, I think, the efficacy of the oversight provided
over the years by both the Office of Management and Budget—not
just the Chief Statistician, but also the folks on what historically
was referred to as the “budget side of the house” at OMB—and, in
addition, the oversight provided by the Congress over the years.

Having said this, I would hasten to add that the fact that I don’t
see a lot of overlap and redundancy across the agencies doesn’t
mean that they don’t work together. In fact, it is my sense that
they work together extraordinarily well.

‘You are familiar, I think, with some of the interactions among
the agencies in the course of producing ongoing statistics. The pro-


112

We hope and expect the present advisory panels from the profes-
sional associations and other groups will be continued and
strengthened by the new agency. A statement in the findings to
that effect would be quite useful.

Three, the new agency will need to have staff expertise in many
disciplines, among them economics, demographics, statistics, the
cognitive sciences, and the computer sciences. This multidisci-
plinary approach requires an infrastructure that supports profes-
sional training, development, and advancement in these disciplines.

Presently, most statistical agencies assure the promulgation of
these standards through strong high-level and quasi-independent
methodology organizations. The statistical methodology offices en-
sure objective statistical criteria for validity and accuracy of data
and for conveying measures of uncertainty to data users. We
strongly believe that the new agency should have such an internal
organization, and would support a legislative requirement mandat-
ing such a body.

Four, the commitment to quality and professional standards and
independence are best assured by a strong, independent Chief Stat-
istician. The agencies which would be initially consolidated into
this service are but 3 of the more than 70 agencies which produce
statistical information for the Federal Government.

We are not proposing that these other organizations be incor-
porated into the new agency at this time, but any legislation should
clearly articulate a means of coordinating the function of all the
agencies,

Finally, H.R. 2521 has the opportunity to clarify the relationship
between the administrator of the new agency and the coordination
system established by the Paperwork Act, and we encourage that.
I thank you for the opportunity the testify on this important legis-

lation. The American Statistical Association would be happy to pro-
vide additional information on the matters to which we have testi-
fied today.

Thank you.

[The prepared statement of Ms. Billard follows:]


16

Census Bureau Field Offices

When you look at our field offices, you can see in microcosm the
difficulties of segregating decennial census activities from
other Census Bureau programs. The Census Bureau's regional
offices manage a field force that conducts ongoing surveys
provides data dissemination and data user education services
keeps our geographic support system up-to-date, and maintains
contacts with state, local, and tribal partners throughout the
decade. The highly trained and experienced staff in our regional
offices provide critical management and support during the
massive build-up toward the decennial census and during the
conduct of the census. This direction and management include:
establishing the network of local census offices; recruiting,
training, and supervising staffs of local census offices;
monitoring cost and quality during the census and providing
critical administrative support; conducting decennial census
preparation activities throughout the decade, which will make it
possible to quickly establish the decennial field organization;
and providing critical up-to-date local information and
operational intelligence through ongoing partnerships with
stakeholders

The field organization needed to conduct the decennial census
involves the largest peace-time undertaking of the Federal
Government. The expense of maintaining such a large staff
requires that we assemble it quickly, and once its mission has
been accomplished, disband it quickly. We estimate that we will
need to hire 640,000 temporary census workers for Census 2000
with 285,000 working at the peak of operations in 546 local
offices stateside. Most of these local census offices will be
opened, staffed, complete their mission, and be closed all within
one year. We are doing everything we can to keep our hiring
requirements down--through improvements in the forms, improved
efforts to get people to mail back their forms, and the judicious
use of statistical techniques to complete some of the
enumeration--but Census 2000 still will require a massive field
force.

Neither we nor any other organization can marshal such a force
for Census 2000 quickly and cost-efficiently without drawing on
the experience, talents, and local knowledge of the staff in our
vegional offices. Functional segregation of the decennial census


28

23
official capacity of such officer shall abate by reason of
the enactment of this Act.

(e) CONTINUATION OF PROCEEDING WiTH SUBSTI-
TUTION OF PARTIES.—If, before the date of the transfer
of functions and offices under title III, any department
or agency, or officer thereof in the official capacity of such
officer, is a party to a suit, and under this Act any func-
tion of such department, agency, or officer is transferred
to the Administrator or any other official of the Service,
then such suit shall be continued with the Administrator
or other appropriate official of the Service substituted or
added as a party.

(f) REVIEWABILITY OF ORDERS AND ACTIONS
UNDER TRANSFERRED FUNCTIONS.—Orders and actions
of the Administrator in the exercise of functions trans-
ferred under this Act shall be subject to judicial review
to the same extent and in the same manner as if such
orders and actions had been by the agency or office, or
part thereof, exercising such functions immediately pre-
eeding their transfer. Any statutory requirements relating
to notice, hearings, action upon the record, or administra-
tive review that apply to any function transferred by this
Act shall apply to the exercise of such function by the Ad-

ministrator.

“HR 2621 TH


94

Budget cuts have forced the statistical agencies to defer research
and the development of tracking new sectors. As a result, Govern-
ment statistics continue to measure our economy as if it were still
dominated by manufacturing.

In 1996, many programs important to business were terminated.
Dr. Ehrlich mentioned some of them this morning. The nonresiden-
tial building permits by State and locality, used by many smaller
businesses in the construction industry. The investment plans sur-
vey, important to the Federal Reserve's capacity and capacity utili-
zation program will also be discontinued. Of course, the pollution
abatement by industry, which was mentioned earlier.

NABE surveys its members quarterly, and these surveys have
shown strong support for a balanced budget for more than 30
years. We understand that budget constraints will continue to
threaten these programs, and therefore the statistical agencies
need to achieve a higher level of efficiency. We believe this can only
be achieved through an overhaul of our fragmented system.

A first step is the consolidation of the major agencies, as pro-
posed in H.R. 2521. In a survey we conducted last August, 81.4
percent of our members supported consolidation, only 5.6 percent
were opposed. Consolidation alone will not realize the efficiencies
that must be achieved.

We would caution supporters of this bill to not expect immediate
savings. Consolidation is important because it starts the process of
functional integration, and will bring decisions on program trade-
offs together so that more rational decisions are made.

Only in this budget year did we find Census and BEA moving
forward on a badly needed, new, industrial classification system,
while BLS was forced to drop the program due to lack of funding.
The potential loss of comparability of data across the three agen-
cies would be disastrous to those of us who do industry analysis.

We believe it is extremely important that the bill provide for
data sharing among the agencies. Confidentiality requirements
often preclude data sharing, Yeading to duplication of business lists
as was discussed earlier and increased respondent burden.

Data sharing would permit the creation of a single business
source list. We believe a single list will not only promote efficiency
but will also improve data quality and consistency.

Access to administrative records, especially IRS records, across
this agency with appropriate safeguards should also be provided. If
this data sharing and access to administrative records are not
achieved, we believe many of the potential efficiencies and benefits
of consolidation will simply not be realized.

We commend the Congress for recognizing that consolidation
must be effected slowly and that the starting point is simply bring-
ing these agencies together under one administrator.

We strongly support an independent agency headed by an admin-
istrator, appointed by the President, confirmed by the Congress for
a fixed term of 7 years. We believe that an agency independent
from all regulators will reduce concern about confidentiality and
raise response rates.

We agree that the Federal Council on Statistical Policy should be
created, but believe the four members should be approved from the
user community by the President and confirmed ty the Congress.


Co YN DH PR WN

4

eral statistical policy, to establish priorities for Fed-
eral statistical programs, to oversee and evaluate the
statistical programs of the Government, and to en-
sure that data collected for statistical purposes by
the Government are collected and reported in ac-
cordance with established standards; and

(5) it is conducive and integral to sound policy
that the heads of major statistical agencies within a
department or agency of the Government have direct

access to the head of such department or agency.

SEC. 102. SENSE OF THE CONGRESS.

(a) CHIEF STATISTICIAN.—It is the sense of the Con-

gress that—

(1) a more centralized statistical system is inte-
gral to efficiency;

(2) with increased efficiency comes better inte-
gration of research, methodology, survey design, and
taking advantage of economies of scale;

(3) the Chief Statistician must have the author-
ity, personnel, and other resources necessary to
carry out the duties of that office effectively, includ-
ing duties relating to statistical forms clearance;

(4) statistical forms clearance at the Office of
Management and Budget should be better distin-

guished from regulatory forms clearance; and

BR 2521 If


TT

from other activities would not permit us to make this important
link, and that would have devastating consequences for both the
cost and quality of the next census.

The fact that Census Bureau field offices will be the nuclei for
a massive Census 2000 build-up also presents a strong argument
against merging Census Bureau field offices into those of the
BLS. We will need to utilize the experienced staff and the
ongoing regional networks and linkages in our regional offices to
effectively carry out the decennial census

Even without the decennial build-up, merger of Census Bureau and
BLS field offices would be difficult. The field forces of our
two agencies do not duplicate each others’ work, in part, because
we have different areas of expertise. The field data collection
programs of the BLS are directed nearly exclusively toward
business establishments, with much less emphasis on household
surveys than the Census Bureau programs

In fact, the Census Bureau and the BLS have maintained a more
than 50-year partnership in which the BLS pays us to collect
employment and unemployment data as part of our large household
survey, the Current Population Survey. The Census Bureau field
force is the prime data collector for the entire Federal
Government, has the highest completion rate of any organization--
public or private--in the world, and is the only statistical
agency that is in business to do reimbursable work for other
Federal agencies. Our level of reimbursable work for 1996 will
be an estimated $170 million. Four departments together will
account for over 60 percent of that total: Labor ($46.5
million), for whom we collect labor force and consumer
expenditure data; Health and Human Services ($28.3 million), for
whom we collect the Health Interview Survey and other health
surveys; Housing and Urban Development ($23.3 million), for whom
we collect the American Housing Survey; and Justice ($14.8
million), for whom we collect the American Crime Survey

Mr. Chairman, I began my career working at the BLS and have great
respect for their field force, as I do for that of the Census
Bureau, but merging the two field forces would be like mixing
apples and oranges.


83

the real detailed, detailed level of the way we put the index to-
gether that our researchers identified and that we agree imparts
again a small, upward bias to the measure.

We anticipate announcing within the next couple of weeks what
we are going to do to fix that problem and a schedule for fixing it.
We have said we will fix that problem before January 1997.

Then there are a whole range of issues that have to do with how
we handle the emergence of new goods, how we handle the emer-
gence of new kinds of outlets where people shop, how we handle
the fact that the goods and services that we are pricing are not of
constant quality but of changing quality.

VCRs have different features than they used to. You do not get
medical care the same way that you used to. In terms of the con-
cerns that people have expressed with the CPI, those are the big
things.

I guess that brings me back to the point that I tried to make in
my prepared statement, which is as far as those things go, I think
the biggest issue is really a lack of knowledge either about the
magnitude of those problems or how one would fix them. We are
hard at work on that. Like you, we welcome all the help that peo-
ple are willing to offer us.

Now, the revision of the CPI that we are currently embarked on
is a somewhat separate thing. Within the framework of pricing a
fixed market basket of goods and services, we periodically update
the market basket that we are using. That is what we will be intro-
ducing in January 1998.

Why does it take so long? Well, it takes so long because we are
now in the beginning of 1996. The Census Bureau has done sur-
veys for us of consumers’ expenditure patterns. They are still col-
lecting that data for the end of 1995.

There is a survey in the first quarter of 1996 that gets that infor-
mation. They will be processing that information. We will get it
sometime in the fall. It is a very complicated data set. Once we
have it, we have to then take that information and do the calcula-
tions necessary to figure out what the right market basket weights
are. It is just a time-consuming process.

Mr. Horn. When was the CPI formula last readjusted?

Ms. ABRAHAM. The market basket was last updated in 1987. At
that point, the market basket that was put in place was based on
expenditures over the 1982 to 1984 period,

Mr. Horn. In essence, there is the possibility of lagging a decade
and a half by the next go-around, I take it?

Ms. ABRAHAM. Right. Yes.

Mr. Horn. When they go out and do the expenditure analysis,
is this simply saying on a legitimate random sample, What do you
buy and eat in this household, et cetera?

Ms. ABRAHAM. Yes. It is a random sample of households. The
questionnaire is this [indicating] size and about this thick. It is a
very detailed set of questions intended to get at what people are
spending and what they are buying.

Mr. Horn. Now, does the household maintain that questionnaire
itself as they do in a Nielsen survey, does the dog get into this, or
whatever’


I can assure you we will not hear words tike that coming from the present
Administrator of OIRA. In fact, with Ms. Wallman's support, Ms. Katzen has been one of
the strongest advocates for statistics and statistical agencies we have seen in years. The
Clinton Administration has been one of the strongest administrations in support of
information collection and dissemination we have seen in decades.

This Congress, on the other hand, has shown a general disdain for these agencies.
At one point this Congress proposed sending the Bureau of the Census to Treasury and the
Bureau of Economic Analysis to the Federal Reserve -- moves which would have made both
agencies less effective. This Congress has also refused to find the statistical agencies in
Commerce and the Bureau of Labor Statistics at the levels requested by the President. As a
result, planning for the 2000 census has been constrained and improvements in the Consumer
Price Index -- improvements demanded by Congress -- have been hampered.

Tam concerned that we do not add to the problems these statistical agencies face.
Thave not formed a final opinion about the legislation before us today, but I do have several
questions. What is the problem we are trying to solve? Is it the level of resources allocated
to economic statistics, or is it one of improved efficiencies? If combining these agencies is
going to give economies of scale, I would like to know specifically where those savings are
going to come from, and see specific dollar amounts for those savings. And, I don’t want to
hear about the business lists again.

I would also like to know what this consolidation would cost. This bill creates a new
layer of political bureaucracy, and a competing council on statistical policy. What will those
cost? What will this box shuffling cost in terms of disruption to the agencies involved?
‘What will this reorganization do to the Economic Censuses and the Census of Governments
to be conducted next year? How will this reorganization affect the plans for the 2000
census? What role will the Administrator of the Federal Statistical System and the new
policy council have on those plans?

I do not oppose change. In fact, I would like to see the federal statistical system
institute a number of changes. But I do oppose change that is not grounded in a well
developed plan for improvement based on hard evidence. I have yet to see any hard
evidence that supports the changes proposed in this legislation,


111

Mr. Horn. Well, it is very interesting, that idea of Statistics
USA. Would it be “Statistics USA?” I mean, I hear all that lan-
guage now, so I don’t know if we want to do that. It is a good idea
on the Statistics USA, and we will take that very seriously.

Well, we now have Dr. Billard, university professor of statistics,
University of Georgia. Welcome.

Ms. BILLARD. Thank you, Mr. Chairman.

I am Lynne Billard, president of the American Statistical Asso-
ciation. On behalf of its 19,000 members, I am pleased to testify
on H.R. 2521.

The American Statistical Association is a scientific and edu-
cational society which, since 1839, has promoted sound statistical
practice among its members and with the American people. For
over 150 years, we have advised the Congress and the administra-
tion on issues concerning the functions of the Federal statistical
agencies, generally restricting ourselves to issues central to the
professional practice of statistics, and I will take that approach
today.

I will focus on five general topics of this legislation. One, the
need for good statistics is fundamental to the functioning of Gov-
ernment; two, issues relating to ensuring the integrity, quality and
confidentiality of data; three, the need for independence of data col-
lection from partisan influences; four, the role of the Chief Statisti-
cian; and, five, the scope and coverage of the proposed Federal sta-
tistical service.

One, it is axiomatic that a democratic society needs good statis-
tics to function properly, as understood by the framers of our Con-
stitution in their call for regular census-taking. Statistics are built
into the very fabric of our public policymaking processes.

For example, data from the three agencies referenced in this pro-
posed legislation are used to allocate Federal funds, index taxes
and Federal payments, and establish a basis for the financial mar-
kets. These and other uses have grown as our national life has be-
come more complex.

Two, it is important to build an institutional framework which
enables statistical agencies to meet basic statistical practice pre-
requisites such as integrity, quality, and confidentiality of data.
Others today have addressed these in detail. Still, it seems appro-
priate to highlight a few.

For example, an agency needs a clear statement of its mission in-
cluding how it will assess needs for information and how it will
conduct its statistical operations.

In that regard, we believe the legislation should spell out the for-
mal linkages between the new agency, the Congress, and the policy
branches of the administration with appropriate safeguards to en-
sure the integrity of its products, just as it has links to Congress
through the process of congressional appointment of Members to
the proposed Federal Council.

The need for integrity will be best met when the agency has a
strong measure of independence. Likewise, the agency should have
a strong measure of accountability to the public at large. This ac-
countability is aided by the Council but should be supplemented by
a governance structure which provides outside review and guidance
of the work of the agency.


81

regate the resources that are needed in all of the agencies, in each
of the agencies, to perform the kind of conceptual research that is
really needed in order to have a first-rate system. .

Mr. Horn. Prior to the Second World War, there was a planning
function in the White House headed by Mr. Delano. I think he was
the uncle or so of Franklin Roosevelt. There was a chance to bring
together people from different departments and think about the
questions that ought to be asked and who might best do this—to
gather the data. . .

When you were Commissioner of Labor Statistics, did you run
into many of those sessions where within the Department of Labor,
as they figured through their own strategic plan and what would
the world look like from Labor's point of view, 10, 20, 30, 40 years
from now? That is what we did when Secretary Mitchell was in of-
fice. I think it was the first forward projections of manpower that
Seymour Wolfbine did.

Was there any interest across the executive branch in asking
some basic questions and trying to pull all this intelligence we have
spread throughout the whole Government, little segments here and
there?

I mean, you are the most visible, the two operating Commis-
sioners of Labor Statistics and Census, but there are a lot of things
going on everywhere, as you know better than I do.

Is anybody trying to bring that together and see the missing
pieces, or are there any missing pieces statistically that we ought
to be looking for and trying to get in some relation or series that
could be put to use to help us think through a problem?

Ms. Norwood. One can always have more, but I think it is
wrong to think that there is nothing. When I was Commissioner,
T spent a good deal of time with people, for example, who were
servicing the White House Cabinet with the Council of Economic
Advisors, with Alan Greenspan and the Federal Reserve staff, as
well as with the statistical policy people at OMB, to try to look at
much of that.

The problem really that the agencies face is that much of it re-
quires research which always gets short shrift. I can tell you that
I spent some time, I will not tell you exactly when it was, going
through the entire BLS budget and taking out the word “research
and substituting “evaluation.”

I knew that by the time it got to the White House and to the
Congress that research would all be cut out. You cannot have an
effective statistical system without nurturing the work that needs
to be done so that you do not get into the kinds of problems you

ive.

If you look at the Consumer Price Index, “Why are we there?”
Because the BLS managed, certainly especially lately but even be-
fore, I would like to think, to do research on many of these issues.
They were no surprise to them. The problem is that it is very dif-
ficult to get the resources that are necessary to revise the CPI. I
was turned down three consecutive years.

Mr. Horn. Now, this is at what level, the Department of Labor,
OMB, the Congress, or all of the above?

Ms. Norwoop. All of the above.

Mr. Horn. OK. You got increasingly turned down each year?


107

My prepared comments have been endorsed by COPAFS’ Board of Directors
We share the concerns that have been voiced by other panelists about the quality,
quantity, and timeliness of federal statistics. However, even though problems exist,
the United States statistical system is preeminent, Users of federal statistics are
concerned that nothing be done to jeopardize its leadership. In keeping with this
observation, we urge that the findings section of the legislation contain a statement
that the U.S. statistical system is the best in the world. Other items that should be
added to the findings section are the need both for insuring confidentiality and for
fostering data sharing among agencies. We believe guidance within the Bill that
would enable all major statistical agencies to share data would speed the process of
full integration.

There are many aspects of the federal statistical system that require attention.
Changes in organization will not be a cure-all. If organizational changes are made,
they must be done so that ongoing statistical programs will not be disrupted. Given
the need for change, we think the Bill takes the correct approach towards the
development of a stronger system. The Bill does not disrupt ongoing programs and
allows time for the Federal Statistical Service to work on the task of removing
duplication and adopting more efficient methods.

In our view, a major advantage would be the central focus on statistics
provided by the new agency. However, without either a major study, or at least a
public review of possible duplication and inefficiency, it is impossible to know what
savings, if any, might be accomplished. We recommend that you consider adding

the need for such a survey to your legislation.


92

One of the great efficiencies of our system is, and it is not gen-
erally appreciated outside of the statistical system itself, that it is
incredible the degree to which we are not out there asking ques-
tions to people, but rather are dependent on these administrative
records, and indeed on regulatory records.

One of the problems in the system over the last decade a half has
been that we have been deregulating at a pace that has left some
statistical agencies kind of hanging out in the wind patching things
until they could begin to survey things that are now missing.

The other side of this is, and this is I think one of the inefficien-
cies in the system now, is that we do not have a standard statutory
basis for that promise of confidentiality. Then the flipside of that
is that if you promise that confidentiality, you have to be able to
protect it. That requires a number of things.

The efficiencies come in sharing of records. We are already de-
pendent in this country on administrative and other nonstatistical
sources, private as well as public in many cases. I mean, if you had
to go out and collect all of this on Government money, you would
triple the size or better than that probably of the statistical system.
This is a source of efficiency.

The sharing of records is limited to statistical purposes. Some-
how or other in the political process people do not seem to under-
stand the degree to which statisticians own sense of their profes-
sional integrity depends on their ability to defend that promise of
confidentiality. Yet, if we do not share the records we have less effi-
ciency in the system. There is not just duplication; there is a fail-
ure to be able to do things.

Both that confidentiality and that capacity to share records be-
tween statistical agencies who are authorized, not every statistical
agency because some of them are so small and limited that they
do not have the capability, full capability, to protect statistical
records coming in from sources where the confidentiality protec-
tions are higher.

The problem is every agency has a different situation. Indeed, in
these Fed/State local systems there are a lot of problems often be-
cause you do not have the same rules as you go from the Federal
to the State to whatever local institutions you are dealing with.
That can be a problem. Although in the old cooperative systems,
they generally work those things out, at least at a minimally satis-
factory level.

If we had a sophisticated legislated base, a statutory base, for
the sharing of statistical records with the boundaries defined clear-
ly, which is what you indeed have to do, and every knowledgeable
statistician feels very importantly about that, and I think that the
public should too. That is a source of inefficiency today that we
could do something about.

I applaud, as Janet has, the efforts of the Chief Statistician’s Of-
fice and OMB to address both of those frontiers. When I came in
here and looked up and saw that yellow, dog Democrat up there
[indicating], it brought back great memories of encountering him
on just this subject 15 years ago. It is an old issue.

Mr. Horn. Yes.

Mr. BONNEN. It is one that damn well ought to be resolved.


60

One, we have got survey operations that are ongoing that rely on
using one or the other. To take one of them away on short notice
would be extremely disruptive to those survey operations.

Beyond that, we really do not know at this point much about the
strengths and the weaknesses of these two lists. I think before we
did anything with them we would want to study those strengths
and weaknesses and come up with a sensible plan for a new con-
figuration. We have begun to study the two lists with an eye to-
ward that end.

Once we have come to some kind of a conclusion, I think all we
would really need in order to be able to put whatever configuration
we had agreed made most sense in place would be the ability to
share data between the Census Bureau and the BLS. I guess it is
my view that a rather more modest solution would be appropriate
to what I would consider the problem to be in this case.

That leads me, I guess, to the last major point I would like to
make, which is that consolidating these three agencies would be a
big step. I think that it is a step that carries the risk of some sig-
nificant drawbacks. I see those drawbacks as being two.

First, I am extremely concerned about the potential for short-
term disruption associated with trying to make this reorganization
work. If I could maybe try to be a little bit more concrete about this
than I was in my written statement.

T look at what is going on at the Bureau of Labor Statistics al-
ready. In the area of producing price statistics, we are embarked
on a major revision of the Consumer Price Index. In the area of em-
ployment statistics, we are embarked upon a major overhaul of our
employer payroll survey. In the area of our compensation statistics,
we are embarked upon a major integration effort that would bring
the several different compensation surveys that we currently con-
duct together.

The staff of the Bureau of Labor Statistics are wonderful. We
have a top-flight, dedicated management team, but I can tell you
that they are all working at capacity. I am truly concerned about
the risk of disruption to all of the other things that we need to be
doing at this point, were we to add on top of that the requirement
that these folks take on in addition to dealing with a major reorga-
nization at this time.

I guess the second potential drawback of consolidation that con-
cerns me, in the case of the Bureau of Labor Statistics, is the
weakening of our ties to the Department of Labor. Although it is
true that much of what we produce is of general interest rather
than specific Department of Labor interest, there are also impor-
tant things that we do that are very important to the program ad-
ministration within the Department of Labor.

On the flipside, we benefit a lot from being in the Department
because a lot of our data builds on their administrative data sys-
tems. While it is certainly not the case that you couldn’t make it
work, I am worried about weakening the ties between the Depart-
ment and the Bureau and what the long-run consequences of that
would be.


56

agencies is complementary, not overlapping. In its simplest form, Census collects all of the
nation's invoices and receipts, BLS provides us with measures of prices for the goods and
services they cover, and BEA adds them up to produce the national economic accounts.

This division of labor has already produced a level of coordination greater than that imagined
in this proposal. Several years ago, for example, | initiated a project called “Statistics 2000,”
in which BEA, Census, and BLS identified over forty proposals to rationalize the burden we
place on respondents, with savings of tens of millions of dollars for the businesses who
respond to our forms. The Administration's new proposal to allow data sharing among our
agencies will move us closer towards those goals. Census also has an active independent
program for reducing respondent burden that uses administrative records, shared data with
other nations, easier reporting techniques, and better sampling. Several years ago, the
National Performance Review designated our STAT-USA entity as the government's lead
source for data on economic and business topics: it now regularly disperses our economic
releases and trade promotion information to thousands of recipients, even as our Census
Internet homepage is host to half a million visits every week. All of these initiatives, plus
others that Dr. Abraham will discuss, speak to the level of coordination and the pace of
activity already underway in the system,

To use our limited resources more effectively. we need to establish priorities across all of our
statistical system, just as we have done at Census and BEA. But the proposal we're discussing
retreats from setting such priorities by not including within the so-called consolidated entity
the agencies that deal with statistics outside of our two Departments. ‘The Administration is
already setting priorities at this higher level -- witness, for example, our proposal in the 1997
budget to shift the responsibility for the 1997 agriculture census from Census to USDA, where
it belongs. Until the proposal before us similarly enlarges its scope, it will be unable to set
system-wide priorities and therefore will not improve the effectiveness of our system

‘Responsible and Responsive

There are also important issues regarding how the unified agency imagined in this proposal
‘would be run, to whom it would report, and how both its integrity and accountability would be
assured.

AAs this bill now stands, the principal executive of the consolidated agency is given every
responsibility except that of running it, On the one hand, she is enjoined from doing what any
good executive would do if entrusted with this new entity - that is, take it apart and put it
back together so that it might run better. Instead, the executive is told fairly straightforwardly
not to manage this new agency but only to preside over an organization chart that simply takes
the three entities and calls them something else. This is in stark contrast 1o the organization of
consolidated agencies abroad, which is built around skills and missions, rather than the
bureaucratic origins of the offices involved.


od nwnw Fw NHN

Roy

16
17
18
19
20
21
22
23

18

- 13
(2) The Council shall study and, not later than 18

months after the date of the enactment of this Act, submit
to the Congress a written report relating to procedures
for the release of major economic and social indicators by

the Federal Government.

(3) The Council shall study and, not later than 12

months after the date of the enactment of this Act, submit

to the Congress a written report relating to—

(A) whether or not the functions of the Bureau
of the Census relating to decennial censuses of popu-
lation could be delineated from the other functions
of the Bureau; and

(B) if so, recommendations on how such a de-
lineation of functions might be achieved.

(4) The Council shall study and, not later than 12

months after the date of the enactment of this Act, submit

to the Congress a written report relating to—

(A) as appropriate, making the field offices of
the Bureau of the Census part of the field offices of
the Bureau of Labor Statistics; and

(B) any savings anticipated as a result of the
implementation of subparagraph (A).

(e) COMPENSATION.—Members of the Council under

24 subsection (b)(6) shall be entitled to receive the daily

25 equivalent of the rate of basic pay for level IV of the Exec-

HR 2521 TH


aT

‘The altemative futures for governance of the federal statistical system are, brosdly speaking, only
two. We can 1) build a strong statistical policy, coordination and standards unit directed by the Chief
Statistician to coordinate the world’s largest, most decentralized statistical system or we can 2) centralize the
system in some major degree creating an integrated core of multi-purpose agencies presided over by the chief
“Statistician with the responsibilty for coordinating the entire system. There are, of course, differing levels of
authority that can be vested in a coordinating unit and differing degrees of centralization that can be imposed
(00a statistical system.

Jt seems to me that the most immediate purpose served by moving BLS, Census and BEA into a
single administrative structure is to facilitate the development and integration ofthe major multiple purpose
Statistics 0 critical today for national level policy decision, public and private, Most of the statistics
produced by these three agencies are used, not just in their own cabinet agency, but across the entire
‘government and very widely outside in many different venues and for many different purposes, In addition,
they are dependent on each other for data, for contracted data collection, and for processing and other
services. No other major statistical agencies have the same leve! of obligation to so brosd a range of
multipurpose users. The output of other statistical agencies is more narrowly focused on supporting their
cabinet departments and the part of society that their department serves. While BLS, Census and BEA
collaborate in coordinating their efforts better today than in the past, presumably in an independent
administrative structure closer coordination could eventually be achieved in integrating the statistical design,
collection, analysis and dissemination of their current statistical products and services. The organizational
cultures ofthese three agencies are very different, so this can be done only slowiy and carefully and with good
leadership. All three would still be responsible to support Commerce and Labor Department needs for
statistical information. Any potential budget savings would come very slowly. This is probably where the
focus should be in HR 2521, unless you wish to address directly the question of bow to strengthen the office


51

Mr. Horn. Thank you for that very fine statement. We eagerly
accept all views. Get all parties in the room at the same time.

OK. We now have Mr. Ehrlich, the Undersecretary for Economic
Affairs, in the U.S. Department of Commerce. Welcome.

Mr. EuRLICH. Thank you, Mr. Chairman.

I want to say that I appreciate the committee’s invitation, and
the fact that my written statement will be in the record. I appre-
ciate as well the committee’s interest in this topic.

It is refreshing and it is important that the committee and the
Congress and our agencies arrive at a consensus as to where we
think the statistical system should be going, the kinds of resources
that are acquired for it, and what its problems are.

Let me say, Mr. Chairman, that while my written statement or
my other remarks may at times be critical of the specific proposal
that they are offered in the spirit of building that kind of consensus
and moving us forward as I believe this committee wants us to do.

Instead of working from my prepared statement, let me develor:
one or two points that were in that statement as they were referred
to by your very excellent statement opening this hearing, Mr.
Chairman. Let me see if I can do so within my allotted time.

In your opening statement, you make the remark that Federal
statistical programs were established to serve the information
needs of the particular department or agency in which they were
based. To some extent that is true, but I would accept from that
the Commerce two agencies, Census and BEA, which in fact were
established for expressly a national purpose.

The Census Bureau of course emanating from the Constitution,
its requirement for a decennial census, a tradition we have had
now for 200 years. BEA established as really part of the context
created by the Full Employment Act of 1946 and by the use of the
National Income Accounts to plan the World War II production ef-
fort.

I think that it is not surprising that both of those agencies ended
up in Commerce, which is the fogical place for them, lacking the
regulatory tax or other kinds of policy responsibilities that would
conflict with data collection that had to be prepared on that na-
tional scope.

Ivan Felichy, the director of Statistics Canada, points out that he
reports to the Ministry of Industry, the Canadian Secretary of
Commerce, so that he can have such a political shepherd in a way
that doesn’t compromise the integrity of his efforts.

Your statement also points out that the three principal agencies

cannot continue to operate in an independent and unrelated vacu-
um. I don’t know if that would be the characterization that I would
make.
I think that both Dr. Abraham and Dr. Riche in the course of
their testimonies will discuss a variety of areas in which we have
an active program of coordination on the problems that we share
on the economic side of the statistical programs, particularly our
consistent tendency to undercount real economic growth and over-
state inflation.

The Heritage Foundation Report points out that there are what
you might call redundant presentations of data. Let me race to
point out that the specific example involve different samples, dif-


80

Generally, there are a lot of series where there are strengths and
weaknesses and sometimes, by the way, it is in the public interest
to have duplication because you look at things in a very different
way and that can help analysts.

There is one major drawback, as I see it at least, to an integra-
tion of these agencies; and that is, that it can involve more separa-
tion from policy particularly for the Bureau of Labor Statistics
which has a unique relationship in its department. I believe, how-
ever, that steps can be taken to continue that relationship.

In fact, I was recently at a conference in Bologna of the Euro-
pean Communities on the “Social and Economic Challenges of the
21st Century and the Statistical Response,” and had the oppor-
tunity to discuss exactly that issue with the head of the British
system, who was very concerned about that. We discussed various
techniques that could be used, so it is possible.

It is also possible, as I think I made clear in everything that I
have written, to achieve this through a strengthening of the statis-
tical policy function and the exchange of microdata protected by
law, for statistical purposes of course.

The question is, which has the greatest chance of achievement?
That is where I come out, and that is why I have proposed moving
the agencies. I think there is a greater chance of doing that.

Mr. Horn. Let us get to the OMB Office of Statistical Policy.
They primarily, I assume, monitor the various surveys that agen-
cies want to prepare and send out. That has been a long-running
battle, I guess. As I remember in the Second World War, when
Henry Wallace ran into a farmer that told him all the surveys that
were coming, he came back with a different view of how we should
control those. What else does that agency do as far as you, an oper-
ating officer, are concerned?

Ms. Norwoop. Well, that is one part certainly of that agency’s
operation, but what I would consider the more important part is
the policy area, to try to develop approaches to the improvement
of data, to try to bring agencies together to discuss the issues, the
problems that they have. Those functions are extremely important.

I have to tell you that I am tremendously impressed with the
good work that has been done under the current Chief Statistician
and the previous Chief Statistician, but it is very difficult to give
an enormous job to a person who has a staff of about four people
to call upon.

I do not see very easy ways to put more people in the office of
the President, so that is a problem. Sure, they can rely upon other

eople. There are a lot of committees in place which use leadership
Rom the various agencies to do this, but it is not quite the same
thing. That is why one of the things that I had proposed was the
possibility of having a research organization that the Chief Statisti-
cian could rely upon.

There are problems of that kind, not because of the capability of
those people. I think we are in a wonderful situation and have been
for the last several years that way. The leadership of OMB has
been extremely supportive of statistics. The problem is that there
just are not the bodies to get the research done.

My major concern is that we do a lot of things operationally, and
we are extremely good at them. However, it is very difficult to seg-


142

feasible in the near term, Among the recommended actions were (1) accelerating
improvements in estimates of international trade in services, including financial services; (2)
better measuring service sector production and prices: (3) separating quality and inflationary
changes in prices: (4) revising the current U.S. National Income and Product Accounts to be
consistent with the System of National Accounts used by most other major industrialized
nations; and (5) making it easier for statistical agencies to share data for statistical purposes.
In reviewing the status of these recommendations, we found that the agencies had made plans
to implement most of the recommendations* However. only about half of the
recommendations were funded, and the funding levels varied considerably among the different
agencies producing economic statistics. Agency consolidation alone would not address the
problems with the quality of data, Accordingly, the Subcommittee may want to include
provisions in the bill 10 address these issues of quality, such as a requirement for an action

plan for fixing them

In considering any change in the organizational structure of the federal statistical system, an
Important question is whether consolidation 1s the most effective way of ensuring that the
system produces the high-quality statistical information needed by decisionmakers and that it

does so in a costeffective manner that avoids needlessly burdening individuals and

“Economic Statistics: Status Report on the Initiauve to Improve Economic Statistics
(GAO/GGD-95-98, July 7. 1995).

9


135

In applying these principles to the proposed bill to create the Federal Statistical Service, we
have drawn on our previous work on the statistical agencies (see appendix) as well as
ongoing work requested by the Chairman of the House Committee on the Budget, who raised
‘no objection to our discussing the preliminary results from this work on statistical agency

funding, legal mandates, and the organization of the Canadian statistical system.

Statistical activites are spread throughout the federal government. The mission of the
agencies forming the federal statistical system is, in general, to collect, produce, and
disseminate statistical information that is relevant to the needs of data users both within and
outside the government itself. The agencies are to ensure that the information is accurate,
reliable, and free from political interference and are to impose the least possible burden on

individuals, businesses, and others responding to data cotlection requests.

The Office of Management and Budget (OMB) has identified 72 agencies as comprising the
federal statistical system. Its criterion in identifying these agencies was that each spend at
least $500,000 annually on statistical activities. Together, these 72 agencies requested over
$2.7 billion for fiscal year 1996. Of the 72 agencies, 11 are considered to be the principal

statistical agencies. These 11 agencies, which include Census, BEA, and BLS, together spend


CO YN DH RP WN

NW NNN YD SE ee eee ee eG
ARON =F FSO wM AXA A BF wWwHKH HEH SD

13

8

(3) The Administrator shall receive basic pay at the
rate payable for level II of the Executive Schedule under
section 5313 of title 5, United States Code.

(b) DEPUTY ADMINISTRATOR.—(1) There shall be in
the Service a Deputy Administrator of the Federal Statis-
tical Service who shall be appointed, from among individ-
uals nominated for that purpose by the Federal Council
on Statistical Policy who are experienced in the collection
and utilization of statistical data or survey research, by
the President, by and with the advice and consent of the
Senate.

(2) During the absence or disability of the Adminis-
trator, or in the event of a vacancy in the office of the
Administrator, the Deputy Administrator shall act as Ad-
ministrator. The Deputy Administrator shall perform such
other duties and exercise such powers as the Adminis-
trator may from time to time prescribe.

(3) The Deputy Administrator shall receive basic pay
at the rate payable for level III of the Executive Schedule
under section 5314 of title 5, United States Code.

(¢) BuREAU DirEcToRS.—(1) There shall be in the
Service—

(A) a Director of the Census who shall, on the

transfer of functions and offices under title III,

serve as the head of the Bureau of the Census;

HR 2521


187

references to uses of statistical information and reporting requirements relative to the 11

principal statistical agencies.

Under the Paperwork Reduction Act of 1980, OMB is charged with coordinating the budgets
and statistical activities of the agencies in the federal statistical system. As we have noted in
the past, there are concerns that OMB's effectiveness in this role is limited by the small staff
available to carry out the function of coordination.’ While H.R. 2521 describes a continued
role for the Chief Statistician in OMB in coordinaung the system. it also would be useful if
the bill were to more explicitly describe the relationship that Congress envisions between
OMB and the proposed Federal Statistical Service, which would be the dominant statistical
agency. It would also be instructive to consider whether the protections the bill contains to
ensure that the new Service would be free from political interference might also complicate

OMB's task of coordinating the federal statistical system.

Coordination within the federal statistical system has also been limited by statutes that restrict
data sharing among statistical agencies in order to protect the confidentiality of individuals,
businesses, and organizations that provide data. Sharing data would allow statistical agencies
to meet the needs of data users without imposing added burdens on data providers, We

would expect that consolidaung Census, BEA, and BLS is intended to enable these three

‘Staustical Agencies: Adherence to Guidelines and Coordination of Budgess (GAO/GGD-95-
65, Aug. 9, 1995)

4


55

essence, as the Wall Street Journal noted in a recent editorial, our data assume that the
telephone on your desk is more or less the same as the one found on your grandmother's
credenza. This problem exists in a host of sectors, among them telecommunications, finance,
retail, transportation, and health. As a result, we probably understate growth and overstate
inflation.

But a simple reorganization, as outlined in this proposal, does not substantially address these
problems. Our agencies are already working together to implement a joint research effort to
measure these sectors more accurately. And we are taking important individual steps as well.
BEA and Census are aggressively eliminating other programs so that they can focus on new
data or methods that address this highest priority. We have already transferred our program of
cyclical indicators (the so-called “Leading Economic Indicators” and others) to a private entity
~- the Conference Board. We have already reduced our collection efforts regarding regional
economic data, data on foreign direct investment, data on pollution abatement and control
expenditures, and other data in order to shift funding to the priorities we've identified. We
have already eliminated a variety of Census tabulations to free up resources for data collection
in the areas we now underreport or miss.

Mr. Chairman, the problem regarding accurate and timely economic data in our country does
not stem from the organization of the system that produces them or the will of the officials you
have before you here today to change. The problem is resources. The President's budget
proposal for 1996 contained enough funding to deliver the two main goals for my agencies:
accurate national economic accounts and the investments needed for an accurate and cost-
effective decennial census in the year 2000, But the President's proposed funding was cut in
the Congress so that BEA, despite its pressing mission, will receive this year 93 percent of
what it received last year. Reorganization cannot and will not substitute for adequate
resources to improve these programs, as requested in the President's budget.

Working Smarter

This raises a second issue: how we get the most out of our resources and produce good data at
the least possible cost, particularly when we define cost, as we do, to include the time spent by
our respondents filling out our forms. Again, I believe that our current efforts offer more
proven and prospective improvement than simply housing these agencies under the same roof.

Ms. Katzen made an important point in her testimony: consolidating BEA, Census, and BLS
will not produce meaningful cash savings. My observation is that the general and
administrative costs at these bureaus are on the order of ten to twelve percent. A
consolidation could produce minor savings in these areas after a period of transition, but the
costs of that transition -- including putting all of the administrative and technological systems
on a common platform — are entirely unknown.

As Dr. Riche will discuss, the field forces of Census and BLS are entirely different in function
and character and offer little in the way of cost reduction as well. In fact, the work of our


2

and goes further by fostering more efficient and effective Govern-
ment.

The new Federal Statistical Service would streamline and im-
prove the quality and efficiency of the key production of economic
data. The three principal economic statistical agencies affected by
this legislation cannot continue to operate in independent and un-
related vacuums.

Duplication of effort happens the collection, limits the usefulness
of statistical data. The Heritage Foundation reported in “Rolling
Back Government” that the Bureau of Labor Statistics and the
Census Bureau both collect data on the Nation’s small businesses,
the results of which are many times inconsistent and in some cases
contradictory. Public and private sector planning relies heavily on
the accuracy of these statistics which are collected through an as-
sortment of sources. By eliminating duplicative functions and com-
bining the three existing agencies into one, the pool of resources
will provide better data collection and planning for the end users
of the information and equally important lower costs for the tax-
payers. Additionally, the independence of a consolidated Federal
Statistical Service will ensure freedom from partisan influences. I
cannot emphasize enough the need to protect the veracity of the
data during the collection and interpretation stages of the process.

The Director of the Census and the Commissioner of Labor Sta-
tistics must demonstrate an absolute commitment to the integrity
of the statistics and be willing to take decisive action if he or she
believes the statistics are not being protected from external politi-
cal pressures.

Confidentiality issues must also be addressed. The uniform con-
fidentiality standard that permits the sharing of data for statistical
purposes with Federal and State agencies is integral to the success
of the consolidation. Title 13 of the United States Code has strict
provisions that relate to the use and dissemination of information
collected by the Census Bureau. While the proposal before us does
not address this, it is my intention to do so in a future proposal
or amendment.

As for those concerned that in the current atmosphere of reduc-
ing Government size and cost, this bill creates more Government,
we anticipate that the bill once enacted into law will result in sig-
nificant savings due to the streamlining of personnel, field and pro-
curement offices.

HLR. 2521 will take existing resources and reallocate them to
meet future statistical needs, while also improving the accuracy of
existing statistical measures. As Maurine Haver, one of today’s wit-
nesses recently noted, “Statistical agencies must better utilize their
resources through increased use of technology and by reducing
redundancies.”

The time has long since passed to bridge the chasm between the
responsibilities given the statistical agencies and their capabilities.
H.R. 2521 is a long-awaited logical extension of decades old collabo-
rative relationship between these three agencies.


12

DR. MARTHA FARNSWORTH RICHE
Director
Bureau of the Census
U.S. Department of Commerce

Thank you, Mr. Chairman, for the opportunity to testify today and
to give the Census Bureau's views on your bill, H.R. 2521, the
"statistical Consolidation Act of 1995." 1 would like to limi
my remarks to only two provisions in the bill that relate
directly to the Census Bureau, my colleagues will address other
concerns.

Provisions of HR. 2521

The bill states that “it is the sense of the Congress that the
budget and functions of the Bureau of the Census relating to any
decennial census of population should be segregated from the
ether budget and functions of the Bureau of the Census." The
bill would establish a Federal Council on Statistical Policy and
require that this Council conduct a study and submit a written
report on this issue to the Congress within 12 months after
enactment of the bill. The bill also would require that the
Council prepare another report on the appropriateness of making
the field offices of the Bureau of the Census part of the field
offices of the Bureau of Labor Statistics (BLS).

I believe these two provisions are contrary to the bill's
underlying goal of greater coordination and efficiency within the
Federal statistical system, would make it less likely that we
will have a successful 2000 census, and would undermine other
strategic goals of the Census Bureau. If work on the single
largest statistical undertaking of the Federal government --the
decennial census--is made less coordinated and less efficient
the whole statistical system would suffer

There already is an appropriate level of functional and budgetary
separation between the decennial census and other Census Bureau
programs. We have a separate directorate to plan and manage the
decennial census, which ensures continuity from one census to the
next, and we have separate funding for the decennial census
program. But we also have a flexible organization that achieves


27

22

(3) Nothing in this subsection shall be considered to
prohibit the discontinuance or modification of any such
proceeding under the same terms and conditions and to
the same extent that such proceeding could have been dis-
continued or modified if this Act had not been enacted.

(4) The Administrator may prescribe regulations pro-
viding for the orderly transfer of proceedings continued
under this subsection to the Service.

(ec) No EFFECT ON JUDICIAL PROCEEDINGS.—Ex-
cept as provided in subsection (e)—

(1) the transfer of functions and offices under
title III shall not affect suits commenced prior to the
date of such transfer; and

(2) in all such suits, proceedings shall be had,
appeals taken, and judgments rendered in the same
manner and effect as if this Act had not been en-
acted.

(a) NON-ABATEMENT OF PROCEEDINGS.—No suit,
action, or other proceeding commenced by or against any
officer in the official capacity of such individual as an offi-
cer of any department or agency, functions of which are
transferred by this Act, shall abate by reason of the enact-
ment of this Act. No cause of action by or against any
department or agency, functions of which are transferred

by this Act, or by or against any officer thereof in the

HR 2521 TH


70

Mr. Horn. Thank you. We now have Dr. Martha Farnsworth
Riche, the Director of the Bureau of the Census, the U.S. Depart-
ment of Commerce.

Ms. RICHE. Thank you very much, Mr. Chairman, for the oppor-
tunity’ to testify today and to submit my written statement for the
record.

In the interest of coordination and to avoid duplication, I would
like to limit my remarks to only two provisions in the bill that re-
late directly to the Census Bureau. One is that the bill states that
it is the sense of the Congress that the budget and functions of the
Bureau of the Census relating to any decennial census of popu-
lation be segregated from the other budget and functions of the Bu-
reau of the Census. The other one is that the bill would require a
report on the appropriateness of making the field offices of the Bu-
reau of the Census part of the field offices of the Bureau of Labor
Statistics.

I believe these two provisions are contrary to the bill’s underly-
ing goal of greater coordination and efficiency. I believe they would
make it less likely that we would have a successful 2000 census,
and I believe they would undermine other strategic goals of the
Census Bureau.

There is already an appropriate level of functional and budgetary
separation between the decennial census and other Census Bureau
programs. We have a separate directorate to plan and manage the
decennial census. That ensures continuity from one census to the
next. We have separate funding for the decennial census program.

Mr. Chairman, as you know, late last month the Commerce De-
partment officially presented plans for a 2000 census that will be
faster, less costly, and more accurate. Preliminary activities have
begun, and the pace is beginning to accelerate.

Implementing this plan will require expertise from areas across
the Census Bureau: expertise in survey and mathematical statis-
tics, demography, housing, geography, field management, informa-
tion technology management, public relations, customer relations,
procurement, forms design, financial management, and so on.

Our core work force learns and updates its skills throughout the
decade by working on a myriad of censuses and surveys and we re-
direct these skills through the decennial census when they are
needed and only when they are needed. Functional segregation rig-
idly enforced would not allow us to use common staff and knowl-
edge of systems effectively across program areas.

I think when you look at our field offices you can see in micro-
cosm the difficulties of segregating decennial census activities from
other Census Bureau programs. Our regional office manages a field
force that conducts ongoing surveys, provides data dissemination
and data user education services, keeps our geographic support sys-
tem up to date, and then maintains regular contacts with State
and local governments and with tribal governments as well.

The highly trained, experienced staff in our regional offices pro-
vide critical management and support during the massive buildup
toward the decennial census and during the conduct of the census.
People don’t usually realize it, but the temporary work force need-
ed to conduct the decennial census represents the largest peacetime
undertaking of the Federal Government.


146

The United States is a much larger nation and has a larger and more comptex
economy than Canada Canada, with a population of 29 million people, 1s also much
smaller than the United States, which has a population af 264 million, The task facing
the federal statistical system in the United States thus is larger and more complex than
that facing Statistics Canada. For example, financial markets in the United States
involve greater reliance on sophisticated financial products. such as futures and other
derivatives. than theit Canadian counterparts, The volume of transactions conducted in
the United States using derivatives and similar financial products is difficult to

measure for statistical purposes

The Canadian statistical system 1s much smaller than the U.S, system, For example.
the fiscal year 1996 budget for Statistics Canada was about $210 (in U.S. dollars)
million compared to the nearly $800 mithon combined budget for BEA. BLS. and
Census: the approximately $4.1 billhon budget for the 1} prineypat agencies, and the

$2.7 billion budget for the entite federal statistical yystem

The Canadian public has accepted that a government agency will have broad access to
all government records for statistical purposes Statistics Canada officials attribute this
acceptance to strong controls designed to ensure confidentiality of individual data and

to the Canadian policy of identifying the intended uses of data to data providers,

While similar confidentiality controls exist in the United States, proposals that would


63

phenomena and with the limitations imposed by stagnant or declining budgets than with any flaw
in the existing structure of the statistical system. Consider, for example, the most common
criticism levied against the federal statistical agencies producing economic statistics: that we do
4 poor job of measuring output and prices, especially in the service sector. What action is needed
to address this criticism? Improving these measures, I would submit, requires the development
of better measurement concepts and better measurement tools, together with the resources to put

those concepts and tools into the field. Speaking from the Bureau of Labor Statistics (BLS)

perspective, [can assure you that, together with our colleagues in other agencies, we are working
actively to develop the necessary measurement approaches. To the extent possible, we also are
reallocating our scarce resources so that we are able to apply them to this high-priority task.

How the statistical system is organized, however, has little, if any, direct relevance to our ability

to improve our output and price measures.

Were there significant overlap and redundancy in the programmatic activities of the
various statistical agencies, it might be possible, in principle, to free resources to address the sort
of problems to which I have just alluded by eliminating that duplication of effort, either through
consolidation of the agencies in question or some other means. In my view, however, this
rationale for'statistical consolidation simply does not hold water. Both because the missions of
the BLS, the Bureau of Economic Analysis (BEA) and the Bureau of the Census are
fundamentally distinct, and because of the oversight exercised over many years by the Office of
Management and Budget and by the Congress, there is little, if any. overlap or redundancy in the

programmatic activities of the three agencies,


20

15
SEC. 304, TRANSFER DATE.

The transfers of functions and offices under this title
shall be effective 180 days after the date of the enactment
of this Act.

TITLE IV—ADMINISTRATIVE

PROVISIONS
Subtitle A—Personnel Provisions
SEC. 401. OFFICERS AND EMPLOYEES.

(a) The Administrator may %»point and fix the com-
pensation of such officers and employees as may be nec-
essary to carry out the functions of the Administrator and
the Service. Except as otherwise provided by law, such of-
ficers and employees shall be appointed in accordance with
the civil service laws and their compensation shall be fixed
in accordance with title 5, United States Code.

SEC, 402. EXPERTS AND CONSULTANTS.

The Administrator may as provided in appropriation
Acts obtain the services of experts and consultants in ac-
cordance with section 3109 of tile 5, Unized States Code,
and may compensate such experts and consultants at rates
not to exeeed the daily rate prescribed for level IV of the
Executive Schedule under section 5315 of title 5, United
States Code.

SEC. 403. ACCEPTANCE OF VOLUNTARY SERVICES.
(a) IN GENERAL.—Notwithstanding section 1342 of

title 31, United States Code, the Administrator may ac-

HR 2521 1H


37

The three agencies brought together into the new Federal Statistical Service are very
different. But each produces data that are used across the entire government, and each of the
agencies is in some way dependent on the other. Although the Bureau of Labor Statisucs
produces data important to policy makers in its Department, the BLS is, like Census and BEA, a
general purpose agency. Nevertheless, integration of these agencies will come very slowly
because the internal culture of each is quite different from that of the others, and because
‘combinations of programs and possible economies must be based on careful research that takes
time. [am concemed about the large size of some of the budget reductions for these agencies
that are currently under discussion, Reductions in statistical agency budgets must be carefully
weighed: the long lead time for efficient survey design and high quality conceptual research makes

it very difficult. if not impossible, to tum statistical series on and off.

1 applaud the provisions in the bill establishing a fixed term of office for the Census
Bureau Director . I am somewhat surprised, however, that H.R. 2521 does not seem to provide
fixed terms of office for the Administrator and the Deputy Administrator of the new Federal
Statistical Service. 1 believe strongly that efficient statistical operations requires conunuity of
leadership and treedom from political interterence. My experience as Commissioner of Labor
Statistics. in both Republican and Democratic Administrations under six Labor Secretaries, made
very clear to me that a fixed term of office was an important element in the Bureau's ability to

temain free from political interference.

In addition, I strongly support the provisions of the bill which state the sense of the
Congress on the need for “uniform confidentiality standards that permit the sharing of data for
statistical purposes” and am pleased to note that OMB has already begun action in that direction.
For 20 years, |_ worked within the statistical system to secure uniform confidentiality protection
and data sharing for statistical purposes. But I was unsuccessful, Katherine Wallman, Sally
Katzen, and Alice Rivlin have accomplished a great deal in developing the OMB order and
initiaung discussion of it. This OMB order appears consistent with Secuon 102 (b) (I) of HR.


157

Ms. BILLARD. Well, I think if this Statistical Service were a
standalone agency, as apart from being embedded in some other
agency, I think it can have, you know, a lot more stature, I think.
It will gain the sort of stature I think it should have.

The administrator or chief statistician or whatever you call that

rson, I think, has to be just one step away or one office away

‘om the heads of all of the other agencies and appointments politi-
cal and otherwise. I think that they have got to be accountable, but
they have got to be independent as well. They have got to be able
to reach them and be able to sort of know what it is that is needed.

Mr. Horn. I think that a model, that some of you will remember
in this city, was Jim Webb, the administrator of the National Aero-
nautics and Space Administration. He was one of the great entre-

reneur public servants that has been in Washington in the last

If century. There are others we could name in the first half cen-
tury.

He was not an expert in space, he was not an engineer, but he

ut all the pieces together. He related to Congress, related to the

resident, related to the broader community, and got the job done.
He did it superbly. There are some people like that. They have got
generalist skills or whatever and the ability to communicate, which
is what Mr. Stevens was suggesting here.

I realize you have got some other appointments, Ms. Katzen, I
am sure they all do. How would you respond to those who say that.
the quality is uneven in a decentralized statistical system? Would
greater consolidation produce better data overall? What do we
know about that? Have we got any case studies or punches from
interacting with all these agencies?

Ms. KATZEN. Apart from the three agencies that are the subject
of the bill, and focusing for this purpose on sort of the 11, the next
tier, one of the important components is that they are located in
the departments that use their product and that call on them to
do the kind of analysis that is necessary for that particular con-
stituency.

The comment I make in my written testimony is that in the cor-
porate world sometimes corporate R&D works. Sometimes it is
more successful to have it in the program offices where it can be
responsive to the demands. What we have in some of these areas,
whether it be Energy, Health, Agriculture, of the bigger, smaller
agencies, is a customer awareness that I think is important to
drive those particular agencies.

One of the things that the Interagency Council has done, under
the Paperwork Reduction Act, and its predecessor the Statistical
Agency Heads Council is to identify data gaps. That is our eco-
nomic statistics initiative, is to see where it is that we are missing
something out of all of this.

_, Whether a gap is due to a failure of a particular entity to product
it or whether it comes about because not all bases are covered is
something that I do not think is clear in each instance. It can be
attributable to either or both.

_ My impression, after having served in two aspects of the execu-
tive branch in different capacities, is that usually the quality of the
work is a function of the leadership that is given, the resources
that are available, and those have not always been adequate, as


57

‘And while the bill ties the hands of the statistical system's new chief executive, it places
someone to look over both his shoulders. An external review board would be put in place and
given quasi-official authority. This board would have the ability to direct statistical policy, but
lack the authority or responsibility to enact it, leaving the executives of the consolidated
agency in an untenable position. If we are to have such a consolidation, we must be prepared
to make the executive of the new entity the CEO of the nation’s statistical system. And her
board members should not be outside users, but the Cabinet-level economic policymakers who
can be held responsible for the agency's activities. Along these lines, I understand that the
Justice Department is reviewing the composition and responsibilities of the Board from the
standpoint of the appointments clause of the Constitution.

This is an important distinction. Who will fight for the statistical agency once it is
independent? Frankly, both our users and the Congress have not proved equal to the task.
Only Cabinet-level stewardship can protect such an agency, which is precisely why Statistics
Canada reports to the Canadian equivalent of the Secretary of Commerce. We should not
delude ourselves into thinking that once we have a consolidated agency, statistics will become
less of a political orphan. In fact, it may become more of one.

Along these lines, I would state my opposition to making the position of BEA Director a
political one. This is the one statistical position where having steady and apolitical leadership
is most important, and we should respect it as such.

As both Secretary Brown and I have stated in the past, we are prepared to discuss any proposal
that might improve the performance of our statistical system. But the one before you would
accomplish little while diverting us from our ongoing work. Moreover, by implying that there
are significant gains to be realized through bureaucratic box-shutfling, this proposal distracts
us from the fundamental problem -- that the Congress is unwilling to pay for a statistical
system suitable for an economy as dynamic and innovative as our own.


eS

a

13
14

16
17
18
19
20
21

23

18

(b) APPROPRIATION AUTHORITY REQUIRED.—No
authority to enter into contracts or to make payments
under this Act shall be effective except to such extent or
in such amounts as are provided in advance under appro-
priation Acts.

SEC. 415. REGULATIONS.

The Administrator may prescribe such rules and reg-
ulations as the Administrator considers necessary or ap-
propriate to administer and manage the functions of the
Administrator or the Service, in accordance with chapter
5 of title 5, United States Code.

SEC. 416. SEAL.

The Administrator shall cause a seal of office to be
made for the Service of such design as the Administrator
shall approve. Judicial notice shall be taken of such seal.
SEC. 417. ANNUAL REPORT.

The Administrator, in conjunction with the Council,
shall, as soon as practicable after the close of each fiscal
year, make a single, comprehensive report to the President
for transmission to the Congress on the activities of the

Service during such fiseal year.

oHR 2521 TH


144

ability to set priorities for use of the agencies’ funds and provide mechanisms that would
enable the agencies to shift resources, including staff. easily OMB previously played a
stronger role in setting priorities for use of statistical agency funding when it had more staff

assigned to this function

A third option would be to consolidate the three major agencies as proposed in H.R. 2521
Potential advantages of such a consolidation seem to include better quality data through such
means as the use of common data collection methods and more efficient survey designs: a
better use of funds through clearer priorities: and cost savings and reduced burden on data
providers through a greater sharing of data and agency resources. thereby avoiding
duplication. Potential disadvantages could include the possible lessening of the
responsiveness of the consolidated agencies to the needs of their current parent departments
and their constuencies, the possibility of reaches of confidentiality by housing so much
information about individuals and businesses in one agency. and the possible power such an

agency might have, given its possession of so much information

A fourth option would be to consolidate more than the three agencies covered in HR. 2521
In exploring this option, it mght be helpful to consider models in other countries. Because

Canada has long had a single statistical agency, Statistics Canada, it is often used as a

reference point for considering proposed consolidations in the United States. We are
currently preparing a report for the Chairman of the House Committee on the Budget that

describes the Canadian statistical system. While this reports not yet complete and we did


90

research that Dr. Norwood mentioned to see what are the
strengths, what are the weaknesses of such lists in the eventuality
that there would be data-sharing legislation and that we could
move forward.

, Mr. Horn. Well, so what you now do is you have two separate
lists?

Ms. Norwoop. They are two separate lists with different his-
tories. They have different procedures and some differences as to
frequency, updating and ways that multi-unit structures are han-
dled. There are a number of things that need to be addressed.

Mr. Horn. Is this a regular group based on a sample, or does the
sample change, but is still random or what?

Ms. ABRAHAM. The business list is based on administrative
records in both cases. The Census Bureau’s list is based on admin-
istrative records from the Internal Revenue Service. Our list is
based on administrative records that come to us through the unem-
ployment insurance system. They are both, in principle, censuses.
They are both comprehensive in coverage. They are not samples.
We, in turn, use them to draw samples for our probability surveys,
but they are both comprehensive in coverage.

Mr. Horn. Well, would you say, just looking at it objectively, if
we can, that there is a data collection burden when you have these
two lists and could that be narrowed down?

Ms. ABRAHAM. I think, in fact, that the data collection burden is
minimal in the sense that employers have to file their tax returns,
they have to deal with the State unemployment insurance agencies
when they pay their unemployment insurance tax. This is adminis-
trative information that they are providing anyway, by and large.
The burden on employers of our using this information is relatively
minimal.

Mr. Horn. Just how does the system work? Does somebody call
on a particular employer and says, “Here is my inspector’s wallet
card, and I want to see these data?”

Ms. ABRAHAM. No. I can describe more clearly how our process
works, and let Marty describe how hers works. In our case, employ-
ers have to every quarter file unemployment insurance taxes. They
have to get an employer identification number. They then have to
be recorded as an employer who is going to be paying unemploy-
ment insurance taxes. Then every quarter they have to file a report
that includes, among other things, what their payroll is—that is
relevant to calculating their tax liability—and number of employees
that they have. In constructing our list, we are just taking that ad-
ministrative information and compiling it.

Mr. Horn. You have got a total universe, I take it?

Ms. ABRAHAM. Yes.

Mr. Horn. There is no random sample with you?

Ms. ABRAHAM. No. There is no sampling. Except in special cir-
cumstances, no direct contacting of the employers. There are two
exceptions to that. We do contact employers periodically every sev-
eral years to verify what line of business they are in, so that we
can adequately code the industry where they are located.

However, that feeds back into the administration of the unem-
ployment insurance system, which, as you know, is experience
rated. For that purpose, the UI administrators need to know accu-


44

Division led by an Assistant Director of OMB with 50 to 65 professionals handling statistical policy,
coordination and standards and the clearance of all data collection forms. Since 1947, the real or inflation
adjusted dollar budget for federal statistics has increased 19 times over while the number of professionals
‘assigned to the Chief Statistician in OMB for statistical policy and coordination of the system fell from about
65 to 5 (Bonnen, 1983; OMB, 1995) This is a continuing, highly visible disaster and a disgrace. Thus,
while the statistical system has become many times larger since World War Ul, the resources devoted to its
coordination have all but disappeared. But the situation is much worse and more complicated than this.

‘The growing complexity of industrial societies has changed the agenda and processes of policy
‘making and, thus, also changed the nature and value of information needed for informed decision making
Since World War II, both the society and economy have become more complex and specialized, and therefore
increasingly interdependent. Many markets are global. Various processes and sectors interac, each sector
‘and process dependent on others creating many kinds of positive and negative interactions and impacts that
policymakers, public and private, must consider in making decisions. The distinction between public and
private sectors has become blurred. Public and private decision-making now requires much more complex
official statistical products than was the case just a few decades ago, Decision makers today face problems
that require sophisticated analysis and data that must be integrated from many diverse subject matters and
from many different private sources and public agencies. Indeed, today the statistics of many nations must be
constructed around common concepts and standards before they can be effectively combined for use by the
US. and other policymakers all over the world.

‘The demand for government statistics and statistical information (ic, data plus analysis) has shifted
from its long historical focus on cabinet department by cabinet department subject matters (agriculture,
education, transportation, health, manufacturing, etc.) toward complex, specific decision-focused information
requiring the integration of multiple subject matter data bases plus increasingly sophisticated analysis
Individual statistical agencies now experience pressure to collaborate in producing a very different product.


85

looked at this issue of different market baskets. We had research
going on with that issue, which has been brought up now. .

We looked at the question of how you develop a cost-of-living
index. We went to our advisory committees. Their eyes glazed over
when we talked about “constant utility.” They told us to go away
and not come back with that sort of thing.

When we had in the sixties the tremendous need to change the
homeownership component of the CPI, which moved it somewhat
more toward a cost-of-living index, with a flow of services concept,
the very people, the very people in the political arena who are now
criticizing the CPI, because it is not oriented toward the cost-of-liv-
ing, were the people who opposed any change of that kind in the
inde;

I guess we have come a long way because we have helped to edu-
cate people to what the issues are. I would like to commend the
BLS staff for having participated in that educational process, even
though it has brought them some trauma and some heartaclie.
Nevertheless, I think they have been instrumental in doing that.

That kind of research should be ongoing, and there should be sig-
nificant amounts of data to be able to do that. BLS does a lot; the
Census Bureau does a lot. However, in today’s world, given the
amounts of money that ride on this and more importantly the
amounts of changes in policy that reflect statistical indicators, it
seems to me that we as a country have just not understood the im-
portance of these data.

Mr. Horn. Well, I could not agree with you more that it should
be ongoing, continuing research, ] think if we had this built up
with the proper series being “poled,” for want of a better word. I
have forgotten when you do it now. How often do you do it for the
market basket?

Ms. ABRAHAM. The market basket is updated in terms of produc-
ing the CPI about once every 10 years.

rr. HORN. Well, that I gathered. It just seems to me that there
ought to be a way to do that where you could get a much more
rapid response as to how you are judging the cost of living.

I mean, let us face it. All you have to do is ask the typical person
in a kitchen around here, which could be male or female, in terms
of moving off beef years ago and moving to chicken and fish and
little things like that. Maybe they have been properly reflected.

Talking to some of the political people down there, I do not get
the sense of urgency, I guess, out of it. They are quite happy with
the way things are going is what I read. “Just do not rush fellows.
We will be around in 1997 and maybe something will get done.”
Now you tell me it is 1998. Maybe they do not know in their own
department what it is.

That has bothered a number of us who went down there, sat
down with the powers that be in that department and raised the
question. This is a year ago. These were not a group of nuts that
went down there. These were fairly thoughtful people. I came away
with the feeling that they just do not care, period.

I realize you will tell me they do care, and that is great. If they
do, why can we not do it early? Why can we not do it sooner? That
is all. I am not going to spend any more time on this really, but
it is interesting. That is what Members worry about.


62

‘Statement of

Katharine G. Abraham
Commissioner

Bureau of Labor Statistics

before the

‘Committee on Government Reform and Oversight

UNITED STATES CONGRESS

March 22, 1996

Mr. Chairman and Members of the Committee

| appreciate the opportunity to be here today to offer my comments regarding HR 2521,
The Statistical Consolidation Act of 1995. Together with the other members of this panel, I

thank you for the interest in the work of the statistical agencies that has motivated this proposal.

Like you, I am concerned about the quality of federal statistics and the ability of the
statistical system to meet the needs of those who rely upon our data. 1 would argue, however,
that the barriers to improving the statistics produced by the ageaicies represented here today have

far more to do with the limitations of our knowledge about how to measure complicated


86

Ms. ABRAHAM. Perhaps, outside of the context of this hearing, I
could send you some information that explains what we are doing
and why the schedule is what it is then we could discuss it further
if it does not look reasonable to you when you look at it. I can as-
sure you that we feel a great sense of urgency, both to complete
the scheduled revision and to address these other issues insofar as
we are able to do so.

Mr. Horn. OK. Let me now ask a general question. In your expe-
rience over the last 10, 20, 30 years, have we ever had a series that
we were keeping up fairly consistently that for one reason or an-
other had to stop? How much damage is done when that series
stops? I am assuming you are looking at series constantly to look
at their utility and effectiveness and all the rest of it. Are there
any prize series that go back forever, and what happened when
they did stop?

Mr. EHRLICH. We have slaughtered more children than Abraham
in the last several years, and we can speak to that.

Not you, Dr. Abraham.

Ms. ABRAHAM. I assumed that, not me.

Mr EHRLICH. Excuse me. I had not thought about that. [Laugh-
ter.

For a couple of specific examples, the BEA divested itself of the
leading economic indicators and the Conference Board won a na-
tional competition to be their steward. We did that because the in-
dicators were an econometric extrapolation from data collected for
other purposes.

It was our view that our job was to produce data and not to add
value to it, that that was the job of a very broad and diverse pri-
vate analytic industry that exists on top of our data, and that was
not our job.

We should be using the money we saved from that on the very
research we were talking about a moment ago, that went into the
quality of goods that went into the chain-weighting measures that
we introduced last year.

This year there are other series that we are terminating. We are
terminating our regional economic projections. Once again we be-
lieve that those are value-added extrapolations of data that we are
producing and that they are not as important to our goals of pro-
ducing good, national, economic accounts, as are the other activities
that we have to fund.

We are getting rid of our annual data on the cost of abating and
controlling pollution. Let me tell you, Mr. Chairman, I regret very
profoundly giving up these data that address a very important eco-
nomic question as to the efficacy of regulation and the economic
value of the environment.

They simply did not support as directly the calculations of GDP
that are highest on our list of priorities, and therefore it was more
important that we do other thin; that we collect data on the
quality of changing quality of goods or upgrade our computer sys-
tem or get more source data on service industries—than it was to
collect that.

We are also taking our benchmark on foreign direct investment
data from annual to quinquennial, to every 5 years. Again, that
creates analytic losses, it gives us less nuance and depth, but you


121

STATEMENT OF SALLY KATZEN
ADMINISTRATOR
OFFICE OF INFORMATION AND REGULATORY AFFAIRS
OFFICE OF MANAGEMENT AND BUDGET
BEFORE THE
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION AND TECHNOLOGY
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
U.S. HOUSE OF REPRESENTATIVES
MARCH 22, 1996

Thank you, Mr. Chairman and members of the Subcommittee. I
am Sally Katzen, Administrator, Office of Information and
Regulatory Affairs in the Office of Management and Budget (OMB).
this is my first opportunity to engage in what I hope will be a
continuing dialogue with your subcommittee on how best to
organize and manage our Federal statistical activities.

I’m pleased to be here this morning to share with you some
reflections on the problems of, and prospects for improving, the
Federal statistical system. First, I would like to provide as
context for our discussion some background on the current status
and structure of the system; then I will highlight a few
initiatives that we have undertaken under new authorities
provided by the Congress in the Paperwork Reduction Act of 1995;
and, finally, I/11 outline some additional initiatives that we
are planning.

Background

The Federal Government collects and disseminates statistics
because the efficient functioning of a market-oriented democracy
depends on a continuing flow of unbiased, timely information for
both public decision makers and those in the private sector about
the state of our economy, our natural environment and resource
base, and our social institutions. The Congress has established
three principal general purpose statistical agencies (Bureau of
Economic Analysis, Bureau of Labor Statistics, and Bureau of the
Census) with distinct missions as well as al i
discrete missions within the subject matter departments they
serve to provide relevant information to policy officials.

These statistical programs have a distinguished history of
providing reliable, accurate, and timely information for public
and private decision-makers. They have done this while
maintaining the integrity of the data ~- as the messengers of
both welcome and unwelcome news. Over the years the professional
staffs of the statistical agencies have worked continuously
within the tight constraints of the budgetary process to improve
the quality of the information they provide. As a result of
their efforts, the current U.S. statistical system is among the
finest in the world.

The demands on that system, however, are ever changing and
ever increasing. The statistical system must react to, and


124

Critics of the decentralized system we have in the U.S. have
described it as "statistical anarchy." But as we know from the
study of economic systems, decentralized systems often work much
better than centralized ones. Particularly in the case where a
single statistical agency would have a virtual monopoly on the
collection and release of essentially all of the Government's key
economic data, a centralized system might well be less, rather
than more, responsive to its users’ needs.

Moving to the centralized agency envisioned in H.R. 2521
would also entail significant short-term costs as well as
disruptions to current operations. Notwithstanding the claims of
others, we do not see significant savings from simply rearranging
boxes. Claims that large savings in overhead costs can be
realized through consolidation are not based on fact. Moreover,
the stringent budgets that already have been allocated for the
statistical agencies offer scant potential for other savings.
There simply is precious little to cut. Agencies have already
eliminated what were heretofore considered core programs. The
abolition of additional programs as well as smaller work forces
are likely under current funding allocations. Thus the agencies
are already working hard to increase their efficiency and reduce
costs.

There are three advantages that have been suggested for a
single statistical agency. First, it is said that such an agency
would have more independence and be able to resist political
pressures to manipulate data. In our judgement the existing
agencies have demonstrated a clear and unassailable independence
from political pressure. This is simply a nonproblem.

Second, it is said that a single agency would be able to
allocate resources more readily in order to better match
collection efforts with the shifting structure of the economy.
Third, it is said that a single agency, properly structured,
could facilitate greater cooperation among its branches. While
these are legitimate objectives, those who believe they can only
be achieved through a single agency may not sufficiently
appreciate the shifts in funding patterns for statistics that
have been proposed by Administrations over the years, or the
long-standing history of cooperation among statistical agencies.
Moreover, while the creation of a single statistical agency might
offer sone incremental advantages in achieving these objectives,
both could also be achieved within the existing system without
sacrificing the strengths I have just discussed.

Framework for Improving the Statistical system

As this Subcommittee is well aware, last year Congress
passed the Paperwork Reduction Act of 1995 (PRA) without a single
dissenting vote. That Act requires the Director of the Office of
Management and Budget (OMB) to appoint a Chief Statistician and

4


31

Mr. Horn. Does the gentleman from Virginia have some com-
ments he would like to make in opening?

Mr. Davis. Just very briefly. First of all, I think these organiza-
tions are currently doing a good job with what they have. No criti-
cism is meant in this, but the collection of data, the analysis of raw
statistics, the distribution of information, and the timely utilization
of that information, data, statistics, and analyses is more critical
today than ever before.

The securing and maintaining the veracity of that data free from
tampering and political manipulation, I think becomes more critical
as we move forward in Government. Coordinating a highly decen-
tralized statistical system has never been easy.

I think that H.R. 2521 is an attempt to try to do that. I think
we have an all-star list of witnesses today, that will share with us
their opinions on this issue as we move forward.

I hope that together we can make what is already becoming a
much more important part of governing, even better in the out
years. I appreciate the chairman holding these hearings today and
the all-star cast that he has assembled to lend their testimony.

Mr. Horn. I thank the gentleman.

The witnesses on panel one—the Honorable Janet Norwood, sen-
ior fellow, the Urban Institute, former Commissioner, Bureau of
Labor Statistics in the Carter, Reagan, and Bush administrations;
Mr. James T. Bonnen, professor of agricultural economics, Michi-
gan State University; the Honorable Everett M. Ehrlich, Undersec-
retary for Economic Affairs, U.S. Department of Justice; the Honor-
able Katharine G. Abraham, Commissioner, Bureau of Labor Sta-
tistics, Department of Labor; and the Honorable Martha
Farnsworth Riche, Director, Bureau of the Census, U.S. Depart-
ment of Commerce.

If you would all come forward. There is a sign for each of you.
Ms. Norwood starts down here [indicating] at the first chair, then
Mr. Bonnen, Mr. Ehrlich, Ms. Abraham, and Dr. Riche. Now, we
have a practice in the Committee on Government Reform and
Oversight that all. witnesses are asked to take an oath as to the
truthfulness of their testimony.

If you all will rise, and raise your right hand?

[Witnesses sworn.]

Mr. Horn. The clerk will note that all five witnesses affirmed.
I might add that if those of you who have prepared statements, we
put the statement in after I introduce you in sequence. We will
have all of you make your summary.

Generally, we limit witnesses to 5 minutes. I can take a little
more freedom today, because we do not have that many Members
to question. We limit ourselves to 5 minutes in various rounds, so
that everybody gets a chance and we alternate between the major-
ity and the minority.

We are going to give some leeway on this because we want to
hear your thoughts first, and then we do want to have a dialog
among you as experts and a dialog with us, so we learn something
out of this. I am sure we will.

Dr. Norwood, let us start with you. If you would like to summa-
rize your statement, as I say, it is automatically included in the
full hearing record at this point.


156

Ina way that is this job, as we see it. When I heard that maybe
they should chair the Advisory Board, I have been on a number of
part-time assignments for about six presidents. The model in a way
of a good Advisory Board is the National Institute of Corrections,
where actually the lay members do recommend to the Attorney
General who the director should be. The lay members set the agen-
da of the agency.

It has worked because the Attorney General in their appoint-
ments, and I think I served 11 Attorneys General, if you can be-
lieve, it in 18 years on that board, they can sort out, we put in cri-
teria, people like me who are not professionals in corrections, and
just ask them questions like, “Why?” That is always a good ques-
tion, if you do not know what else to do. Then they all say, “Gee,
I do not know.”

You have earned your stipend for the day. They had a good mix
of national practitioners, people of distinction, people affiliated with
corrections. You covered a whole range of people that, I’m sure, you
have exactly those nuances in the statistical profession.

I mean, it is represented by the three of you. You come at it from
different perspectives: a university perspective; a business perspec-
tive; and then the professional association itself, and you have got
more than one apparently. Of course, there is only one, I mean, I
realize that.

If you can get that mix of people, usually you will have a pretty
good board of people that know what they are talking about and
will defend its integrity. I think that is what we are all after here.

You would like to?

Mr. STEVENS. Well, since we seem to be talking about qualifica-
tions, Mr. Chairman, I would add another one that would apply
equally to the Comptroller General as to, I think, the administrator
of the Federal Statistical Service; and that is, an ability to deal
with Congress.

Ultimately Congress is going to have to understand the issues in-
volved in making decisions that will affect the statistical commu-
nity, the confidentiality problems that cannot really be solved until
the Congress understands them, the data sharing problems, prob-
lems of preparation for the year 2000 census.

All of these demand an ability to explain what the statistical
community knows to be true, to members who have many other
concerns, and not much bac! und. I am not really talking about
a partisan political capability here.

Mr. Horn. Yes. Well, that is an excellent point. You see it in
higher education. As president of a university, I was part of what
is now a 22-campus system. We went through three chancellors.
There is finally one there now that knows what the mission is. The
mission is to get the resources out of the State government in Sac-
ramento. If you cannot succeed in that, forget all the other non-
sense you engage in.

You are right that this individual has to relate to the resource
base which is the Congress. If we do not put it in the budget, it
is not going to happen. The President can veto it. The President
can maybe have a Line Item Veto, if we ever get it through here.
However, if we do not put it in to start with, there is not much he
can do about it. He cannot make it out of thin air.


RW WN

See.
See.
See.

101. Findings.
102. Sense of the Congress.
103. Definitions.

TITLE II—ESTABLISHMENT OF THE FEDERAL STATISTICAL

EEF

See.
See.
See.
. 304. Transfer date.

See.
See.
See.
See.

See.

See.

See.

See.

See.
See.

See.
See.

SERVICE

. 201. Establishment.
. 202. Principal officers.

203. Federal Council on Statistical Policy.
TITLE I1I—TRANSFERS OF FUNCTIONS AND OFFICES,

301. Transfer of the Bureau of the Census.
302. Transfer of the Bureau of Economie Analysis.
303. Transfer of the Bureau of Labor Statisties.

TITLE IV—ADMINISTRATIVE PROVISIONS

Subtitle A—Personnel Provisions

401. Officers and employees.
402. Experts and consultants.
403. Acceptance of voluntary services.

Subtitle B—General Administrative Provisions

411. General authority,
412. Delegation

413. Reorganization.
414. Contracts.

415. Regulations.

416. Seal.

417. Annual report.

TITLE V—TRANSITIONAL, SAVINGS, AND CONFORMING
PROVISIONS,

501. Transfer and allocation of appropriations and personnel
502. Incidental transfers,

503. Savings provisions.

504. References

505. Proposed changes in law.

306. Transition

507. Interim appointments.

TITLE I—GENERAL PROVISIONS

SEC. 101. FINDINGS.

The Congress, recognizing the importance of statis-

tical information in the development of national priorities

BR 2521


139

may find useful in its deliberations. These include:

enhancing the efficiency of operations,
+ enhancing adherence to professional standards,
+ establishing clear national priorities for statistical programs, and

-- ensuring the quality of data

Enhancing the Efficiency of Operations:

In a time of declining budgets. making government operations more efficient is a constant
goal. Eliminating duplication of government operations through a consolidation presents
opportunities for increasing such efficiency Two potential sources of greater efficiency and
cost savings are the avoidance of duplicative data collection by agencies and the use by one
agency of another agency's staff to collect data when that use would be more economical
‘Our work has shown significant areas in which these three agencies have avoided duplication
by relying on one another for data collection. on both a reimbursable and nonreimbursable
basis. For example, Census now conducts the Consumer Expenditure Survey for BLS; data
from this survey are used in developing the market baskets that underlie the Consumer Price
Index. Thus, some of the savings that might be sought in a consolidation may have already
been realized. However, the statistical agencies’ inability to share data has led to a
duplication in data collection efforts; such duplication can increase both the cost of operating

the staustical activities and the burdens on data providers While we do not know how much


147

allow data sharing and broaden statistical agency access to other data have not been

approved

In earlier testimony before this Subcommittee,” we noted that our 1981 report on six new or
reorganized agencies formed under the Reorganization Act of 1977 found that reorganized
agencies experienced problems as a result of adequate planning for the implementation of
the reorganization” The problems that the new agencies experienced included delay’ in (1)
obtaining the participation of key agency officials and adequate staffing and office space and
(2) establishing support functions, such as accounting and payroll systems. In our 1981
report. we recommended that future reorganization plans establish a high-level task force or
‘other mechanism to facilitate implementation of the reorganization. In particular. we said that
agencies that would lose or gain resources or functions and support agencies, such as OMB.
the General Services Administration, and the Office of Personnel Management, should be

represented on the task force

In our view, reorganizing statistical agencies would impose similar requirements for

successful implementation. Under the proposed bill. staff and responsibilities would be moved

iv d n (GAO/T-
GGD-95-233, Sept. 6, 1995)
“Implementauon: The Missing Link in Planning Reorganizations (GAO/GGD-81-57, Mar. 20,

1981).

4


153

really in that context of the types of data one should be collecting,
how you should go about it. I absolutely underscore every word
that she said there. I would say it again, but I have said it again
for you.

I think you also want to add to that the research of how you inte-
grate the agencies. It is not just simple merging into two stacks
and putting into one stack the data that you have. That is not as
simple as that, and there are problems. One would need to do the
research to see how it should be done correctly.

Once it is done correctly and once we take however many years
it takes to do it, I think there have to be economies of scale. I think
whatever we do, and now I would speak for myself, but I am sure
my association would agree with this as well, as part of a basic
principle of statistical practice is that whatever we do we have to
have high credibility. Statistics information is only as good as it is
believed.

If no one believes it, in our information, no believes our agency,
no one believes our Government. It is very important that what-
ever we do we have practices which guarantee high, public credibil-
ity. Of course, there are many aspects that go into this, but fun-
damental that it be free from any undue political influence. I use
“political” in the broad sense.

There could be partisan conflict of interest. Data, for example,
that becomes available should be available to every single person.
There should be no priority data. We absolutely have to have an
ironclad guarantee of confidentiality.

If we have confidentiality, if we protect the privacy, I think we
will get better data from surveys. We will get better cooperation.
We will somewhere along the line have better data and have better
information, and the cycle goes back.

I would think those are the most important principles, that we
have public credibility, that they be free from undue political influ-
ance, and that there be ironclad guarantees of confidentiality of

lata.

Ms. KaTzEN. Mr. Chairman, may I address that question in
slightly different way?

Mr. Horw. Please. I was headed for you.

Ms. KaTZEN. Probably with a different question. As I sit and lis-
ten, I am concerned that we are speaking about a lack of leader-
ship or a relatively weak position of the Chief Statistician.

I would like to give a slightly different perspective on that wholly
apart from the person who fills the job now, Katharine Wallman,
who is a very well-qualified statistician. I have the sense that she
spends most of the time doing her job and very little time promot-
ing herself. As a result, some of the things that she has accom-
plished and that some of her predecessors have accomplished are
not fully appreciated.

I say this because we are hearing, I hear—I guess people tend
to hear what they want to hear—the importance of professionalism.
I hear the importance of nonpolitical leadership in the statistical
realm. One of the things that I do, as the political official to whom
she reports, is stay out of her way and not try to affect the deci-
sions but support her initiatives.


46

1s especially important in a ime of fundamental international economic and social restructuring, as at present
ourth, during four to six years in the early 1980s an assault was mounted on government statistics in the
‘erroneous belief that the only justification for federal expenditures on statistics was to support US
government decision making, and that large parts of ths limited statistical base ought to be privatized. When
faced with budget cuts progress was made by agencies on immediate problems, but in many cases survey
frequency and sample sizes were reduced, statistical R&D was cut to the bone and litte energy or resources
‘were available to address long term statistical agency challenges or problems of the federal staisucal system
as a whole. Despite efforts by some statistical agencies and the Chief Statisticians affice, we are now living
fon past capital and RAD investment, and most significantly on the prior investment in human capecity that,
‘9 substantial degree is not being replaced as experienced statisticians and analysts retire~the latter duc to
real budget erosion and reductions in the number of personnel authorized.

In 1978-80 1 directed a White House project to analyze the problems of and recommend
ianprovements in the coordination of our very decentralized U'S. statistical system. The focus was on the
‘organization, location, authority and functions of the Office of the Chief Statistician. Our legislation did not
snake it through Congress. This effort is described in the current issue of CHANCE, a magazine published by
the American Statistical Association. I was then a strong proponent of the advantages of a decentralized
staustical system. However, after decades of failure by both the exccutive and legislative branch to do the
things necessary to achieve strong coordination of a highly decentralized system, one is forced to consider
sirematives. If we are not going to create a stronger Chief Statistician's office to coordinate a decentralized
system, then some degree of centralization is the only alternative likely to lead to improved coordination.
“Thus, { support the basic idea of moving the Bureau of the Census, the Bureau of Labor Statistics and the
‘Bureau of Economic Analysis into a common independent agency framework. This should be done with care

foe the unique aspects of the organization and nature of each agency


104TH CONGRESS
moe ALR, 2521

Mr.

an U FF wWN

To establish a Federal Statistical Service.

IN THE HOUSE OF REPRESENTATIVES

OcToBER 24, 1995

Horx (for himself, Mr. CuINGER, Mr. PETRI, Mrs. JOHNSON of Connecti-
cut, Mr. CHRYSLER, Mr. EHLERS, Mr. FaLEOMAVAEGA, Mr. Hopson,
Mr. KNOLLENBERG, Mr. LEACH, Mr. ROGERS, and Mr. Davis) intro-
duced the following bill; which was referred to the Committee on Govern-
ment Reform and Oversight, and in addition to the Committee on Eco-
nomic and Educational Opportunities, for a period to be subsequently de-
termined by the Speaker, in each case for consideration of such provisions
as fall within the jurisdiction of the committee concerned

A BILL

To establish a Federal Statistical Service.

Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE—This Act may be cited as the
“Statistical Consolidation Act of 1995”.

(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—GENERAL PROVISIONS


40

Mr. Horn. Well, we thank you for an excellent background and
perspective, and we thank you for your offer. We will take you up
on it.

We now have Mr. James T. Bonnen, professor of agricultural eco-
nomics, Michigan State University.

Mr. BonNEN. Thank you, Mr. Chairman.

I congratulate you and the committee for recognizing the growing
challenge the country faces today in providing the broad base of ac-
curate and relevant Government statistics that are necessary for
national decisionmaking, public and private.

I really have to say I second the motion for what Janet just said.
She makes many points that I do not. The first point is that every
statistical system, whether highly centralized or decentralized, has
to be coordinated nationally if its performance is to be relevant or
efficient. This is an inherent function of the Chief Statistician.

I must point out that since 1947 the real resources expended on
Federal statistics have increased 19 times over, while the number
of professionals assigned to the Chief Statistician in OMB for sta-
tistical policy and coordination of the system fell from about 65 to

Now, it is also true that the pressure for more statistics has
grown even more rapidly than the increase in the budget base, and,
indeed, we have been through substantial budget reductions in real
sources in various periods.

Today, the situation is worse and more complicated than this.
This is one of the main points I want to make, is that as a student
of the changes in the economics of information, I have observed
that since World War II both the society and the economy have be-
come more complex and specialized, and therefore increasingly
interdependent.

Many markets are global. Various processes and sectors interact.
Each sector and process dependent on others creating many kinds
of positive and negative interactions that policymakers, public and
private, must consider in making decisions.

Decisionmakers today face problems that require sophisticated
analysis and data that must be integrated from many diverse sub-
ject matters and from many different private sources and public
agencies.

Consequently, the demand for Government statistics is shifting
in composition from its traditional focus on Cabinet department by
Cabinet department subject matters, as for example, in agriculture,
education, transportation, and so on, toward a complex, specific fo-
cused decision information requiring the integration from across
Government of multiple subject matter data bases plus more analy-
sis.

The U.S. statistical system, once clearly the best in the world, is
now judged by many to be slowly falling behind that of industrial
nations in its capacity to track a society and an economy that is
experiencing very rapid and fundamental change. In my written
testimony, I suggest some of the sources of that problem.

In 1978 to 1980, I directed a White House project to analyze the
problems of and recommend improvements in the coordination of
our very decentralized U.S. statistical system. It is not only the
most decentralized in the world; it is also the largest. The focus


120

duction Act, which was passed without a single dissenting vote in
Congress and which the President gleefully signed; and that is, the
creation of the interagency council that is chaired by the Chief
Statistician.

This provides, I think, the kind of framework that we need to im-
prove the interagency communications, to set priorities, and to
work toward achieving the various benefits of an improved statis-
tical system. We believe that these incremental administrative and
legislative changes build on our existing system and taking into ac-
count the framework established by the PRA can promptly and eco-
nomically respond to the current challenges and criticisms and
achieve the objectives. We join you in wanting to get there.

We thank you, Mr. Chairman, for your concern about the effec-
tiveness of our Nation’s statistical system that you have evidenced
in introducing this bill and in holding this hearing. We applaud
your efforts in this regard and look forward to working with you
and other members of the subcommittee to create a system that
better serves the American public.

Thank you.

[The prepared statement of Ms. Katzen follows:]


© eI DA HW PB wWwN HS

RN RP ee Be Be Be we ee ee
Noe 6S 6G em A DAARBHzA SS

19

14
utive Schedule under section 5315 of title 5, United States
Code, for each day (including travel time) during which
they are engaged in the actual performance of duties vest-
ed in the Council.
(f) CHATRMAN.—The Chairman of the Council shall

be elected by and from the members for a term of 1 year.

TITLE INI—TRANSFERS OF
FUNCTIONS AND OFFICES
SEC. 301. TRANSFER OF THE BUREAU OF THE CENSUS.

There is transferred to the Service the Bureau of the
Census of the Department of Commerce, along with all
of its functions and offices.

SEC. 302, TRANSFER OF THE BUREAU OF ECONOMIC ANAL-
YSIS.

There is transferred to the Service the Bureau of
Economic Analysis of the Department of Commerce, along
with all of its functions and offices.

SEC. 303, TRANSFER OF THE BUREAU OF LABOR STATIS-
TICs.

There is transferred to the Service the Bureau of

Labor Statistics of the Department of Labor, along with

all of its functions and offices.

HR 2521 It


COD mI DH PWD

RPRBBRBSRARZBARESEA SA

4

9
(B) a Director of the Bureau of Economic

Analysis who shall, on the transfer of functions and

offices under title III, serve as the head of the Bu-

reau of Economic Analysis; and

(C) a Director of the Bureau of Labor Statis-
tics who shall, on the transfer of functions and of-
fices under title III, serve as the head of the Bureau
of Labor Statisties.

(2) Each of the Directors shall be appointed by the
President, by and with the advice and consent of the Sen-
ate.

(3) The Director of the Bureau of Labor Statistics
appointed after the date of the enactment of this section
shall receive basic pay at the rate payable for level IV of
the Executive Schedule under section 5315 of title 5,
United States Code. The Director of the Census shall re-
eeive basic pay at the rate payable for level IV of the Exec-
utive Schedule under section 5315 of such title.

(4)(A) The position of Director of the Bureau of Eco-
nomie Analysis shall be a Senior Executive Service posi-
tion.

(B) For purposes of this paragraph, the term “Senior
Executive Service position” shall have the meaning given

to it by section 3132(a) of title 5, United States Code.

HR 2521 IH——2


3

Fortunately, we have an impressive assortment of witnesses to
help us consider this important measure. I appreciate each one of
you who has come here to join with us on this, We look forward
to your testimony.

(The prepared statement of Hon. Carolyn Maloney and the text
of H.R. 2521 follows:)


132

could be one of those goals, others could be enhancement of meet-
ing professional standards and greater clarity in the choice of prior-
ities among statistical issues and addressing deficiencies in data
quality such as those addressed by the Boskin initiative in 1991.

A third principle is to choose the right vehicle to achieve those
goals. H.R. 2521, as you just pointed out, Mr. Chairman, is a sig-
nificant but only a partial consolidation. Statistics Canada provides
a model of an even more sweeping consolidation, but that would
admittedly be much more difficult to achieve in our less centralized
political system.

We do suggest that the subcommittee may want to task the Fed-
eral Statistical Service looking at alternatives to direct Federal
data collection, such as privatization of some statistical activities.

A fourth principle is that careful and-detailed implementation
planning is essential to the access of any reorganization. Our past
work has shown that it has all too often been Tecking. I think that
is certainly one reason why Ms. Katzen’s observation that savings
have been illusive, why that has been the case. Implementation is
often an afterthought of these matters, and it should be dealt with
very clearly up front.

Finally, the role of Congress itself, is something the Comptroller
General always brings up, is the key to any successful initiative in
the executive branch through oversight. The Government Perform-
ance and Results Act provides a comprehensive framework for Con-

ss to hold agencies accountable for meeting goals, that it would
e agreed on with Congress and other stakeholders.

We think that Congress should use that in its dealings with
these agencies, whether they are in a consolidated format or re-
maining where they are. That is just a very short summary, Mr.
Chairman, but we will respond to any questions you have.

(The prepared statement of Mr. Stevens follows:]


110

We believe that the name of the new serve—the Federal Statistical Service—
is too bureaucratic and is likely to be lost in the maze of other federal agency names.
Instead, we suggest following the example of our neighbors to the north who call
their central statistical agency “Statistics Canada.” The name, “Statistics USA”
would provide high visibility for this important function in today’s information
age. Admittedly, Statistics USA would initially overstate the coverage of the agency
since many important federal statistical programs are not covered in the initial
organization. But it would point to the greater coverage that is likely to occur as the
agency develops its mission over time.

This concludes my prepared statement, Mr. Chairman. I would be glad to

respond to any questions you or other members of the Subcommittee may have.


69

and effective interplay between our statistical agency and the agencies responsible for

implementing the important missions that the Department of Labor has under law.

On a related note, our funding streams are tied to Department of Labor funding sources.

We obtain significant funding for our Federal-State cooperative programs through appropriations

from the unemployment insurance trust fund because our statistical data collections are part and
parcel of the administration of these programs at the Federal and State levels. Were that to
change, these funds might no longer be available to support our activities, and any resulting

shortfall would need to be addressed.

In short, although I am truly grateful for the interest in the work of BLS and the other
statistical agencies that lies behind the introduction of HR 2521, I do not believe that the
reorganization contemplated there would help the statistical agencies in any significant way and,

indeed, might well do them harm.


Soo wm YN DH BwWN

24

19

TITLE V—TRANSITIONAL, SAV-
INGS, AND CONFORMING
PROVISIONS

SEC. 501. TRANSFER AND ALLOCATION OF APPROPRIA-

TIONS AND PERSONNEL.

Except as otherwise provided in this Act, the person-
nel employed in connection with, and the assets, liabilities,
contracts, property, records, and unexpended balance of
appropriations, authorizations, allocations, and other
funds employed, held, used, arising from, available to, or
to be made available in connection with, the functions and
offices, or portions thereof, transferred by this Act, subject
to section 1531 of title 31, United States Code, shall be
transferred to the Administrator for appropriate alloca-
tion. Unexpended funds transferred pursuant to this sub-
section shall be used only for the purposes for which the
funds were originally authorized and appropriated.

SEC. 502. INCIDENTAL TRANSFERS.

(a) IX GENERAL.—The Director of the Office of
Management and Budget, in conjunetion with the Admin-
istrator, shall make such determinations as may be nec-
essary with regard to the functions, offices, or portions
thereof transferred by this Act, and make such additional
incidental dispositions of personnel, assets, liabilities,

grants, contracts, property, records, and unexpended bal-

HR 2521 TH


148

businesses. At least four options. viewed independently or in some combination. seem
conceivable for addressing problems associated with the federal statistical system.
Understanding these options, we believe, will provide a conceptual framework useful for

considering the merits of H.R. 2521

‘One option would be to consider alternatives to the dominant paradigm of having federal
employees collect, analyze. and disseminate information through the use of appropriated

funds. Alternatives include the privatization of at least some aspects of data collection,
analysis, or dissemination; additional contracting out: or the imposition of user fees. We have
noi explored these alternatives for the federal statistical system and are, therefore, not ina
position to elaborate on them. However, we believe that the Subcommittee should consider
charging the proposed consolidated agency with exploring the best tools for accomplishing the

goals desired from consolidation.

‘A second option would be to consider alternatives for improving the current decentralized
federal statistical system, One approach could entail enacting legislation that allows the three
agencies to share data and information with appropriate safeguards to protect against breaches
of confidentiality. Proposals to enable greater data sharing among statistical agencies have
been made in the past: both the Economic Statistics Initiative under President Bush and the
National Performance Review under President Clinton have recommended such actions. The
proposals have not been adopted, in part because of general concerns that greater data sharing

might endanger the privacy of individuals. Other actions could be to strengthen OMB's


10

5

(5) recognizirig that the Chief Statistician has

2 numerous responsibilities with respect to statistical
3 policy and coordination, the Chief Statistician should
4 have a direct reporting relationship with the Direc-
5 tor of the Office of Management and Budget.

6 (b) CONFIDENTIALITY.—It is the sense of the Con-
7 gress that—

8 (1) Government entities (including the Federal
9 Council on Statistical Policy and the Interagency
10 Council on Statistical Policy) and private entities
ll should examine the efficacy of replacing the individ-
12 ual confidentiality provisions of statistical agencies
13 with a single, uniform standard that guarantees con-
14 fidentiality across the affected agencies; and

1S (2) those entities should also examine the shar-
16 ing of confidential data for statistical purposes with-
17 in the Federal Statistical Service and special ar-
18 rangements to permit the sharing of confidential
19 data for statistical purposes with State agencies co-
20 operating with Federal agencies in statistical pro-
21 grams.

22 (ec) DECENNIAL CENSUSES.—It is the sense of the

23 Congress that the budget and functions of the Bureau of

24 the Census relating to any decennial census of population

HR 2521 I


141

agency efforts to coordinate their activities and share data, contrary to the committee's

Buidelines

Establishing Clear National Priorities for Statistical Programs

Our work as well as work done by others has shown that the United States lacks an effective
means for setting national priorities for the use of funds for statistical activities, This is due,
in part, to the independent manner m which each agency in the federal statistical system
decides how to use its funds and. in part, 10 the limits on OMB's ability to influence decisions
on allocaung funds by other agencies. The proposed bill should resolve this issue for the three
agencies to be consolidated to the extent that the head of the proposed Service would be able
10 set priorities for the use of its funds. Although H.R. 2521 would create a Federal Council
on Statistical Policy. the proposed bill does not directly address the issue of setting funding

priorities for the other 69 federal statistical agencies.

Ensuring the Quality of Data

Another goal that could be set for a consolidated agency is resolving existing concerns with
the quality of statistical data collected. Most notable are the concerns identified in the
Economic Statistics Initiative, led by Michael Boskin who was Chairman of the Council of
Economic Advisers for President Bush. Completed in 1991, this initiative resulted in 38

recommendations to address well-known problems m economic statistics for which action was


Co word An PF WN

Sas

13

29

24
SEC. 504. REFERENCES,

With respect to any function transferred by this Act
and exercised on or after the date of such transfer, any
reference in any other Federal law to any department,
commission, or agency or any officer or office the func-
tions of which so transferred shall be deemed to refer to
the Administrator, other official, or component of the
Service to which this Act transfers such functions.

SEC. 505. PROPOSED CHANGES IN LAW.

Not later than 90 days after the date of the enact-
ment of this Act, the President shall submit to the Con-
gress a description of any changes in Federal law nec-
essary to reflect any transfers or other measures under
this Act.

SEC. 506. TRANSITION.

(a) USE oF FuNps.—Funds available to any depart-
ment or agency (or any official or component thereof), the
functions or offices of which are transferred to the Admin-
istrator or the Service by this Act, may, with the approval
of the Director of the Office of Management and Budget,
be used to pay the compensation and expenses of any offi-
cer appointed pursuant to this Act and other transitional
and planning expenses associated with the establishment
of the Service or transfer of functions or offices thereto
until such time as funds for such purposes are otherwise

available.


98

Subcommittee on Government Management
Page 3
March 22, 1996

‘The business community and financial markets derive significant benefits from the
collection and dissemination of economic data, Complaints of respondent burden are often
misinterpreted. Many businesses are ready to provide data but object to rigid reporting
requirements which preclude the submission of computer generated reports. Some
progress has been made in allowing for computer input but no single standard exists
among the agencies. Duplication of requests due to confidentiality barriers which cause
different agencies to request identical or similar data is another familiar complaint. We
hope consolidation would free resources for the creation of one automated reporting
standard which we believe would lower costs and improve response rates.

We commend the Congress for recognizing that consolidation must be effected slowly and
that the starting point is simply bringing the three existing agencies together under one
administrator. We strongly support an independent agency headed by an Administrator
appointed by the President and confirmed by the Congress for a fixed term of seven years.
We believe an agency independent from all regulators will reduce concerns about
confidentiality and raise response rates.

We agree that the Federal Council on Statistical Policy should be created and believe the
four members who are not officers or employees of the Government should be appointed by
the President from the user community to assure the Federal Statistical Service remains
responsive to user needs. The members should be confirmed by the Congress. We suggest
that at least two of these members should have no past work experience within the
agencies.

We share the sense of the Congress that the budget and functions of the Bureau of the
Census relating to the decennial census of population should be segregated from the other
budget and functions of the Bureau of the Census and recommend that a director for the
decennial census be appointed and report directly to the Administrator.

We also share the sense of the Congress that the Chief Statistician of the United States
should be provided resources adequate to do the job for which the office is responsible.

We all recognize the importance of our national statistics in the development of national
policies and the administration of public programs. Businesses use these data everyday in


140

might be saved if these three agencies had a greater ability to share data, we have identified
instances where duplication of effort exists between Census and the other agencies included in
the proposed consolidation. For example, because of an inability to share data, both Census

and BLS survey businesses, and each has had to compile 1ts own list of businesses

Enhancing Adherence to Professional Standards

The statistical agencies do many things well today, and efforts to consolidate them should
recognize and ensure that the consolidated agency will be at least as able, and ideally better
able, to adhere to professional standards compared to its predecessor agencies. In August
1995, we evaluated the adherence of four statistical agencies. including Census. BEA, and
BLS, to guidelines for the operation of an effective federal statistical agency’ The guidelines
‘were proposed by the Committee on National Statistics of the National Academy of Sciences
and represent statements of “best practices."* While they are not scientific rules or legal
requirements, the guidelines are intended to be consistent with current laws and statistical
theory and practice. Our review concluded that the agencies generally adhered to the

guidelines. although in some cases ind

vidual agencies had not sufficiently communicated to
data users the procedures that they had in place to ensure their independence from political

interference. We also concluded that laws intended to protect confidentiality had limited

*GAO/GGD-95-65, August 9, 1995.

“Committee on National Statistics, National Academy of Sciences, Principles and Practices for
a Federal Statistical Agency (Washington. D.C.; 1992).

7


91
rately what industry a given employer is in. We also do some con-
tacting of employers who are large to get additional information
from them on the separate establishments that make up their busi-
ness. Except for that, we are using administrative data. We are not
imposing additional burden.

Mr Horn. One last question on my part, and then we will close
this out and get to the next panel. You have got other agencies
around town that ask certain questions that obviously are related
to consumption in the sense of either health or agriculture or what-
ever.

What is the relationship with those other agencies that are doing
their own thing? Are you incorporating those data into some of
your basis series, and is that a longtime ongoing relationship, or
what? I am thinking of the Public Health Services’ National Medi-
cal Care Survey.

Mr. EHRLICH. For example, the work of HCFA and the medical
and health statistics go into the calculations of GDP and the like.
There is a source of practitioner data there. The areas that you
talk about are generally in the service industries, where it is hard-
est to get primary data because the idea of production process is
so much harder to define. That is going to be an important source
of interrelatedness as we go forward as we build more data about
the service industries into our estimates.

Mr. Horn. Mr. Bonnen, we have let you be quiet there with that
academic background of yours at Michigan State. In your testi-
mony, you strongly supported the bills objective of delineating
stronger, clearer boundaries between statistical forms clearance
and regulatory forms clearance. Tell me why is this important and
how can this legislation help? You seem to have a real concern on
that?

Mr. BonNEN. Well, as an outsider who wandered into this scene
about 25 years ago, I was amazed at a number of things, and one
is how tight all the tradeoffs are. You are suspended between, and
have to be linked to the political decisionmakers. You have to know
what is going on.

On the other hand, if your data is questioned by users as being
politicized, the economics of information tells you instantly that
data is worth substantially less to the society and to those individ-
ual users.

One of the most important distinctions or I call it a “fire wall”
that you need between the day-to-day activities and goals, if you
will, of policy and policymakers in a Cabinet agency or on the Hill
and the production process, and indeed the decisions about how
you are going to collect things and what you are going to collect.
You do need linkage to those decisionmakers, those policymakers.

That separation between the statistical process, which is called
“functional separation,” and the regulatory activities which are po-
litically radioactive, are always contentious, the normal activities of
an action agency, whether it is regulatory or administrative pri-
marily, they really have to be separated.

In some Cabinet environments, it has been very difficult to main-
tain that. You have to educate the assistant secretaries and the
secretary, and then they turn over and you start all over again. It
is well that that is embedded in legislation.


Ro eS Oo, Sd

mee
Anh oN EH Oo

17

n

6
should be segregated from the other budget and functions
of the Bureau of the Census.
SEC. 103. DEFINITIONS.
As used in this Act, unless otherwise provided or indi-
cated by the context:

(1) The term “Service” means the Federal Sta-
tistical Service.

(2) The term “Administrator” means the Ad-
ministrator of the Federal Statistical Service.

(3) The term “Deputy Administrator” means
the Deputy Administrator of the Federal Statistical
Service.

(4) The term “function” includes any duty, ob-
ligation, power, authority, responsibility, right, privi-
lege, activity, or program.

(5) The term “office” includes any office, bu-
reau, institute, council, unit, or organizational en-
tity, or any component thereof.

(6) The term “Council” means the Federal
Council on Statistical Policy under section 203.

(7) The term “census of population” has the
meaning given such term by section 141(g) of title

13, United States Code.

HR 2521 IH


97

‘Subcommittee on Government Management
Page 2
March 22, 1996

to measure our economy as if it were still dominated by manufacturing. Also of great
concern is that in 1996 many programs important to business have been terminated. For
example, nonresidential building permits by state and locality used by many smaller
businesses in the construction industry are no longer collected. The investment plans
survey, important to the Federal Reserve's Capacity and Capacity Utilization program, will
also be discontinued. Information on spending for pollution abatement by industry will no
longer be available.

NABE surveys its members quarterly on public policy issues, and these surveys have
shown strong support for a balanced budget for more than 30 years. We understand that
budget constraints will continue to threaten important statistical programs. For their
part, the statistical agencies need to achieve a higher level of efficiency, and we believe this
can be achieved through an overhaul of the fragmented aystem we have today. A first step
is the consolidation of the major economic statistical agencies - BLS, BEA and Census ~ as
proposed in HR 2521. The results of a NABE member survey conducted last August is
attached. In this survey 81.4% supported consolidation of these three agencies. Only 5.6%
were opposed.

Statistical agency consolidation alone will not realize the efficiencies that must be
achieved, and we would caution supporters of this bill not to expect immediate budget
savings. Consolidation is important because it starts the process of functional integration
and will bring decisions on program tradeoffs together so that more rational decisions are
made. Only this year did we find Census and BEA moving forward on a new industrial
classification system while BLS dropped the program, at least in this budget year, due to
lack of funding. The potential loss in comparability of data across the three agencies would
be disastrous for analysis of industry data.

We believe the bill should provide for “data sharing” among the agencies. Confidentiality
requirements often preclude data sharing among agencies today leading to duplication of
business lists and increased respondent burden. Data sharing would permit the creation of
a single business source list. A single list would not only promote efficiency but would also
improve data quality and consistency. Access to administrative records, especially IRS
records with appropriate safeguards, should be provided for. If data sharing and access to.
administrative records are not achieved, many of the potential benefits of a consolidated
system will not be realized.


102

5b. If no or undecided, would you support consolidation of only BEA, BLS,
Census and the Statistical Policy Office of OMB?
Total Academic Government Industry
x 22.3 31.3 19.2 22.3
No 5.6 9.0 5.9 4
Undecided aie 18.8 16.2 10.2

Yes
¥o

What would be the advantages of a single statistics agency?

75.1% data sharing could eliminate duplication of surveys

74.6 higher productivity -- expertise would not be duplicated
65.5 ease of locating data

54.8 investment in technology could have higher payoffs

43.9 data gathering would be separate from regulation

38-6 unified budget could be reallocated based on priorities
34.8 would have more clout in budget negotiations

What would be the disadvantages of a single agency?

49,5 might be less responsive to user ni
45.4 priorities might not coincide with needs of busin:
45.4 easier to politicize data in a single agency
18-8 agency with all data would have too much power
11.7. data gathering should be in same agency as regulatory work

6.6 congressional committees would be less able to control allocation
of resources

‘economists:

Would you be willing to pay higher user fi

if the money collected
could be applied directly to data improvement?

Total

Would your company agree to extend existing confidentiality agreements
to all parts of a consolidated agency?

Total Academic Government Industry
32.0 18.8 30.9 34.3
4:6 0.0 8.8 4.2

Don't know S15 sit 39.7 55.5


118

Mr. Horn. Well, thank you. The three of you. We are going to
go to Dr. Katzen in a minute. All three of you have given excellent
testimony. I want to follow up on a lot of those things.

I think one of my concerns, and you might be thinking about it
because I am going to ask all of you this, the person that should
fill the role of Chief Statistician might not be the person you want
to manage the statistical agency. I think that needs to be given
some thought by you experts as to the skills involved. It is like
being the chief actuary, in a sense, for the Social Security Adminis-
tration, which is a very prestige job and a very important job, that
might not qualify you to run the Social Security Administration.
Somewhere we have got to sort of get an agreement there that be-
cause you are a brilliant statistician does not mean that you are
a brilliant manager.

OK. Dr. Katzen, we are delighted to have you with us. You are
sort of, as I remember, a one man, one woman band around this
town, a lot of responsibility, so we know you are busy, Adminis-
trator, Office of Information and Regulatory Affairs, Office of Man-
agement and Budget.

‘Welcome. Nice to see you again.

STATEMENTS OF SALLY KATZEN, ADMINISTRATOR, OFFICE OF
INFORMATION AND REGULATORY AFFAIRS, OFFICE OF MAN-
AGEMENT AND BUDGET; AND L. NYE STEVENS, DIRECTOR,
FEDERAL MANAGEMENT AND WORKFORCE ISSUES, GEN-

ERAL GOVERNMENT DIVISION, GENERAL ACCOUNTING OF-
FICE

Ms. KATZEN. Well, thank you, Mr. Chairman, it is a pleasure to
be here in what I hope is the first of many opportunities to engage
with your subcommittee on how best to enhance the efficiency and
effectiveness of our Federal statistical activities.

I appreciate particularly your accommodating our schedules by
rearranging the panels. You have had a long morning. Rather than
extend it, I would like to keep my oral statement very brief and
make a few points. You have my written testimony which provides
the administration’s views on H.R. 2521.

Some reflections on the problems and progress of the Federal sta-
tistical system and some discussion of how we think we can best
respond to the challenges and criticisms that have been raised.
Now, to some extent, what witnesses have been discussing this
morning is a question that has long been debated in the statistical
community; and that is, the relative benefits and cost of a central-
ized versus a decentralized statistical system.

From our perspective, our existing decentralized system, though
not perfect, yas served us well. As one of the earliest panelists
said, it is preeminent in the world. We also recognize that the rel-
evancy, accuracy, and usefulness of our statistics should be im-
proved and can be improved. We would like to do so by building
on the strengths of our diversified system, rather than by ignoring
them.

The important point, I think, is to focus on the improvements we
seek in our measurement capability, and not necessarily on how we
get there. As we can agree on the end points, it will be much more


65

Even good working relationships can, of course, always be improved. You may be
interested in some of the concrete steps that have been taken towards that end in recent years,
though I would emphasize that the examples I will cite are illustrative of the close working
relationships involving staff at all levels of our several agencies, rather than in any way a
comprehensive enumeration of such activities. First, the Director of BEA and I last year
established an interagency coordination group on which we serve together with senior program
‘managers from our two agencies. The group meets on a regular basis to facilitate communication
and coordination on critical issues that impact both agencies and to explore new ways to improve
our data, The group also has chartered two subgroups that have been working on specific
measurement issues in particular areas. Similarly, BLS and the Census Bureau have established
the Current Population Survey Oversight Committee, which includes members from both
agencies and is charged with overseeing all matters related to this especially important survey.
Again, this group meets regularly, and has proven to be an extremely productive forum for

‘communication and coordination.

‘The agencies’ joint act

ies also have included collaboration in the collection of data
from survey respondents and collaboration in the dissemination of data to the general public.
With respect to data collection, for example, both BLS and the Census Bureau have become
enthusiastic about the potential for reducing our costs and simultaneously reducing respondent
burden by collecting survey reports from large reporters via Electronic Data Interchange (EDI).
Earlier this month, Census Bureau Director Riche and | signed a Memorandum of Understanding

that will permit representatives of our two agencies to solicit the participation of large employers


71

Neither we nor any other organization can marshal such a force
quickly and cost-efficiently without drawing on the experience, tal-
ents, and particularly the local knowledge of the staff in our re-

ional offices who work for us every day, every year. I feel that
functional segregation of the decennial census would have dev-
astating consequences for both the cost and the quality of Census

The fact that the Census Bureau field offices are the nuclei for
the massive decennial buildup also presents a strong argument
against merging the Census Bureau field offices into those of the
BLS. The decennial deluge would overwhelm any organization
without experience in handling the magnitude of the decennial cen-
sus.

Even without the decennial buildup, the merger of the Census
Bureau and BLS field offices would be difficult, in part, because
they have different areas of expertise. The field data collection pro-
grams of the BLS are directed nearly exclusively toward business
establishments, while our census programs focus on households.

Mr. Chairman, I began my career working at the BLS. I have
great respect for the agency and its field force, as I do for that of
the Census Bureau, but merging the two field offices would be like
mixing apples and oranges.

In conclusion, Mr. Chairman, a little more than a year ago, when
I became director of the Census Bureau, I initiated a strategic
planning effort to position the Bureau as the preeminent collector
and provider of timely, relevant, and quality data about the people
and the economy of the United States.

Accomplishing those goals requires that all parts of the Census
Bureau work together as a team in concert to apply all our core
skills to this enormous task. I believe the functional segregation
called for in this bill would move us in the opposite direction, frag-
menting our efforts rather than maximizing them.

Thank you very much, Mr. Chairman, I would be pleased to an-
swer any questions.

(The prepared statement of Ms. Riche follows:]


Ro a io, a SoS)

RPBBESSRBUAREBANR=AS

16

ll
(1) The Administrator of the Federal Statistical
Service.
(2) The Director of the Census.
(3) The Director of the Bureau of Labor Statis-
ties.
(4) The Director of the Bureau of Economic
Analysis.
(5) The Chief Statistician of the Office of Man-
agement and Budget.
(6) 2 members appointed by the Majority Lead-
er of the Senate from among individuals who—
(A) are not officers or employees of the
Government; and
(B) are especially qualified to serve on the
Council by virtue of experience relating to one
or more of the bureaus referred to in title III.
(7) 2 members appointed by the Speaker of the
House of Representatives from among individuals
who—
(A) are not officers or employees of the
Government; and
(B) are especially qualified to serve on the
Councei] by virtue of experience relating to one

or more of the bureaus referred to in title III.

HR 2521 TH


99

Subcommittee on Government Management
Page 4
March 22, 1996

making business decisions. ‘The importance of economic data to financial markets was
demonstrated earlier this month when the market fell over 170 points on a strong
employment report.

Problems of data quality or lack of economic information pose heavy costs on our society.
We must begin a renewed effort to improve our statistical system so it can provide us with
the information we need to make appropriate decisions for the twenty-first century.


CoM YN DAH PB WN

NM NR NRK Ye Se ee Be ee we eB
ASR ON = FSF GC HMPA AAR HHH STS

21

16
cept, subject to regulations issued by the Office of Person-
nel Management, voluntary services if such services—
(1) are to be uncompensated; and
(2) will not be used to displace any employee.

(b) TREATMENT.—Any individual who provides vol-
untary services under this section shall not be considered
a Federal employee for any purpose other than for pur-
poses of chapter 81 of title 5, United States Code (relating
to compensation for injury) and sections 2671 through
2680 of title 28, United States Code (relating to tort
claims).

Subtitle B—General Administrative
Provisions
SEC. 411. GENERAL AUTHORITY.

In carrying out any function transferred by this Act,
the Administrator, or any officer or employee of the Serv-
ice, may exercise any authority available by law with re-
spect to such function to the official or agency from which
such function is transferred, and the actions of the Admin-
istrator in exercising such authority shall have the same
foree and effect as when exercised by such official or
agency.

SEC. 412. DELEGATION.
Except as otherwise provided in this Act, the Admin-

istrator may delegate any function to such officers and

HR 2521 TH


50

After the Committee clarifies some of these questions, it needs to provide by law for the
advisory committees necessary to sustain a well run and highly accountable stanstical
agency.

“The draft bill isa start on a task that urgently needs doing. [hope you will continue in your efforts to
inzprove the coordination and performance of the U.S, statistical system. The alternative is drift. And to drift
leads toward statistical and policy disasters, asthe capacity to track economic and social change falls further
behind the complexity of the real world. We are well into a world-wide transformation of society as
fundamental as that of the industrial revolution. Central to this transformation is the revolution in
information technologies and the rapid growth of private and public networks and organizations transcending
ail national geography, with a consequent erosion of national sovereignty. Statistical governance and policy
‘processes (public and private) face a growing challenge to ther ability to track societal change accurately and
to deal with it intelligently. If can belp you in your important endeavors, | would be pleased to do so,

References

‘Bonnen, James T. (1983). “Federal Statistical Coordination Today: A Disaster or a Disgrace?” American
‘Statistician, Vol. 37, No. 3, August, pp. 179-92, 199-202.

The Economist. (1993). “The Good Statistics Guide.” September 11, p. 65.

Office of Management and Budget, Executive Office of the President, (1995). Statistical Programs of the
United States Government. Washington, DC: Government Printing Office


95

We would also suggest that two of these members have no past
work experience within the agencies. Problems of data quality or
lack of economic information pose heavy costs on our society. We
must begin a renewed effort to improve our statistical system, so
it can provide us with the information that we all need to make
appropriate decisions for the 21st century.
‘hank you.
[The prepared statement of Ms. Haver follows:]


33

calls for the office which compiles census and population statistics
to be transferred to the CSO later this year.

H.R. 2521 establishes a Federal statistical service as an inde-
pendent executive agency and brings together in the new service
the U.S. agencies which are comparable to those that by late spring
will reside in the U.K. Central Statistical Office. However, there is
a major difference between the British approach and that of H.R.
2521.

In the United Kingdom the coordinating arm, the CSO, is the nu-
cleus of the system. H.R. 2521, however, leaves the U.S. coordinat-
ing arm, the Statistical Policy Branch, in the Office of Management
and Budget, outside the new statistical service.

The bill, therefore, does not result in creation of what I would
call a clear place inthe sun for statistics in our Government. Rath-
er, it continues much of the decentralization that currently exists
in this country, does little to strengthen the Chief Statistician’s role
and staff, and leaves open the need to clarify the authority and re-
lationship of statistical policy to the new Federal Statistical Serv-
ice.

The three agencies brought together into the Federal Statistical
Service are very different, but each produces data that are used
across the entire Government, and each of the agencies is in some
way dependent on the other. Although the BLS produces data im-
portant to policymakers in its department, the BLS is also, like
Census and BEA, a general purpose agency.

Nevertheless, integration of these agencies will come very slowly
because the internal culture of each is quite different from that of
the others and because combinations of programs and possible
economies must be based on careful research that takes time.

I am concerned, Mr. Chairman, about the large size of some of
the budget reductions for these agencies that are currently under
discussion. Reductions in statistical agency budgets must be care-
fully weighed. The long lead time for efficient survey design and
high-quality conceptual research makes it very difficult, if not im-
possible, to turn statistical series on and off.

I applaud the provisions in the bill establishing a fixed term of
office for the Census Bureau director. I am somewhat surprised,
however, that H.R. 2521 does not seem to provide fixed terms of
office for the administrator and the deputy administrator of the
new Federal Statistical Service.

I believe strongly that efficient statistical operations require con-
tinuity of leadership and freedom from political interference. My
experience as Commissioner of Labor Statistics in both Republican
and Democratic administrations under six labor secretaries made
very clear to me that a fixed term of office was an important ele-
ment in the Bureau’s ability to remain free from political inter-
ference.

In addition, I strongly support the provisions of the bill that
state the sense of the Congress on the need for uniform confiden-
tiality standards that permit the sharing of data for statistical pur-
poses. I am pleased to note that OMB has already begun action in
that direction.


133

GOVERNMENT STATISTICS:
PROPOSAL TO FORM 4 FEDERAL STATISTICAL SERVICE

Statement By L.
Director, Federal Management and Workforce Issues

As Congress considers H.R. 2521, which would consolidate the Bureau of the Census,
Bureau of Economic Analysis, and Bureau of Labor Statistics into a new Federal
Statistical Service, GAO suggests that Congress use as criteria five key principles that
the Comptroller General has identified as useful in efforts to reorganize or strearaline
government agencies.

First, reorganization demands a coordinated approach. The current federal statistical
system is complex. It consists of 72 agencies and GAO has identified over 200 statutory
references to uses of statistics produced by the 11 principal agencies alone. While H.R.
2521 describes a continued role for the Chief Statistician of OMB in coordinating the
system, it would also be useful to more explicitly describe the relationship Congress
envisions between OMB and the proposed Federal Statistical Service, which would be
the dominant statistical agency. Also, H.R. 2521 does not remove any confidentiality
provisions which currently limit sharing data among the three agencies.

Second, the key to a successful reorganization is delineating specific, identifiable goals.
GAO's work suggests several possibilities that Congress may find useful: enhancing the
efficiency of operations and achieving cost savings; enhancing adherence to professional
standards, such as those of the National Academy of Sciences; establishing clear national
statistical priorities; and ensuring the quality of data, for example by fixing deficiencies
identified by the 1991 Economie Statistics Initiative,

Third, choose the right vehicle--organizational structure and tools--to meet the goals. In
addition to the consolidation proposed in H.R. 2521, Congress may want to consider
other potential options, such as greater reliance on the private sector; improved
coordination and data sharing within the current system; or a broader consolidation
along the lines of Statistics Canada,

Fourth, implementation planning will be crucial to any successful reorganization. Past
reorganizations have suffered from poor implementation. Planning for implementation
should ensure that the new agency has an effective and reliable financial management
system.

Finally, congressional oversight is needed to ensure effective implementation, Effective
oversight may entail realignment of committee jurisdictions and regular oversight
hearings.



Cwm rd AH PWN

ia
12
13
14
15
16
17
18
19
20
21
2
23
24
25

7

12
(ec) TERMS—(1) Each member under subsection
(b)(6) shall be appointed for a term of 5 years, except
that, of the members first appointed—

(A) 1 shall be appointed for a term of 5 years;
and

(B) 1 shall be appointed for a term of 3 years.
(2) Each member under subsection (b)(7) shall be ap-

pointed for a term of 5 years, except that, of the members
first appointed—

(A) 1 shall be appointed for a term of 5 years;
and

(B) 1 shall be appointed for a term of 2 years.
(d) Functions.—(1) The Council shall—

(A) make any nominations required under sec-
tion 202(a)(1);

(B) serve as an advisory body to the Chief Stat-
istician on confidentiality issues, such as those relat-
ing to—

(i) the collection or sharing of data for sta-
tistical purposes among Federal agencies; and

(ii) the sharing of data, for statistical pur-
poses, by States and political subdivisions with
the Federal Government; and

(C) establish a Governmentwide statistical pol-

icy as described in section 101(3).

HR 2521


61

In sum then, I would reiterate how much I appreciate your inter-
est in the issues that we face, but would have to say that I have
concerns about the direction being contemplated in H.R. 2521.

Thank you.

[The prepared statement of Ms. Abraham follows:]


130

Mr. Chairman, we thank you for the concern about the
effectiveness of our Nation’s statistical system that you have
evidenced in introducing H.R. 2521, and look forward to working
with you on solutions that will create a system that better
serves the American public.

I would be pleased to answer any questions that you may
have.

10


114

2-ASA/

1. The Need for Good Statistics as Fundamental to the Functioning of Government

Good statistics are fundamental to functioning of democratic societies. It is almost
axiomatic that a democratic society needs good statistics to function properly.
This was understood by the framers of our Constitution in their call for regular
census-taking

The need for good statistics has never been more apparent than it is today. That
is because statistics are built into the very fabric of our public policymaking
processes. For example, data from the three agencies which are referenced in this
proposed legislation - the Bureau of the Census, the Bureau of Labor Statistics,
and the Bureau of Economic Analysis - are used to allocate Federal funds, index
taxes and Federal payments, and establish a basis for the financial markets.
‘These and other uses have grown as our national life has become more complex.

2. Issues Relating to Ensuring the Integrity, Quality, and Confidentiality of Data

Good statistics are a function of good statistical practice. It is important to build
an institutional framework which enables statistical agencies to meet basic
statistical practice prerequisites. An excellent description of good national
practice is contained in the 1992 report. , Principles and Practices for a Federal
Statistical Agency, by the National Research Council’s Committee on National
Statistics. These principles provide a basis for judging the adequacy of the
legislation before us today. Others here today are addressing these in detail. Still
it seems appropriate to highlight a few.

For example, an agency needs a clear statement of its mission, including how

it will assess needs for information, and how it will conduct ite statistical


116

4-ASA/

standards through strong, high level, and quasi-independent methodology
organizations. The statistical methodology offices have provided the valuable
function of ensuring objective statistical criteria for validity and accuracy of data,
and for conveying measures of uncertainty to data users. They have managed
quality assurance programs which enhance the integrity of the internal processes
of the agencies. We strongly believe that the new agency should have such an
internal organization and would support a legislative requirement that mandated
such a body.

4, The Role of the Chief Statistician

‘The commitment to quality and professional standards and independence are best
assured by a strong, independent Chief Statistician. The legislation recognizes
the continued, important role of the Chief Statistician, who is currently housed in
the Office of Management and Budget, and would remain there under this
legislation. The Chief Statistician continues to be the link between this new
agency and the larger statistical community, and thus is more than a member of
the Council, The legislation reflects that understanding in the atatement of the
Sense of the Congress but a means of carrying out that sense is not specified.
Certainly, as a minimum, a reference to the Paperwork Reduction Act which
establishes the important roles of the central statistical coordination function of
the Office of Management and Budget should be incorporated.

5. The Scope and Coverage of the Proposed Federal Statistical Service

Formalizing coordination in the system beyond Census, BEA, and BLS. _I would
be remit

if I did not point out that the very name of the proposed organization -
the Federal Statistical Service - is somewhat of a misnomer. The agencies which


CAROLYN B MALONEY

Congress of the United States
Wouse of Representatives
Washington, BE 20515-3214

STATEMENT OF THE HONORABLE CAROLYN MALONEY
HEARING ON H.R. 2521, THE STATISTICAL CONSOLIDATION ACT

MARCH 22, 1996

Thank you Mr. Chairman. 1am glad your are having this hearing because T have a
umber of questions about this legislation. I have just come from my first hearing of the
Joint Economie Committee. As you know. that Committee has a long history of concem
about the quality of the statistics we use to monitor our economy. In fact, many of today's
‘witnesses testified before the JEC just over ten years ago - March 17, 1986 -- on the Quality
of the Nation's Economic Statistics, At that hearing Katherine Wallman was testifying as the
Director of the Council of Professional Associations on Federal Statistics. Martha Richie
was an editor with American Demographics, and Dr. Bonnon was ~ is -- the rock of
stability, He was then and 1s now a Professor at Michigan State University.

I would like to take a moment to consider some of the issues raised at that hearing.
They are, unfortunately. frighteningly familiar. Dr. Cortney Slater, a former Chief
Economist, testified betore the JEC in 1986 about three problems with federal statistics: the
level of funding for statistical programs: the coordination of statistical programs and budgets
across agencies, and the need 10 revise the definition of poverty. I do not think we will get
into the poverty definition today, although itis still a problem, but the other two topics are
central to today’s discussion.

To illustrate duplication across agencies Dr. Slater talked about the list of businesses
kept by the Census Bureau and the Bureau of Labor Statistics. An example we may hear
about again today. She also used these lists to illustrate the lack of coordination across
agencies. It seems that in 1987 the Census Bureau proposed to absorb a $1 million cut in
their budget by spending less on maintaining the quality of this list. At the same time, the
Bureau of Labor Statistics requested a $1 million increase in spending to improve the quality
Of their list.

‘The environment for federal statistics was quite different in 1986. As Ms. Wallman
pointed out in her testimony then, the Administrator of the Office of Information and
Regulatory Affairs was quoted as saying: “Each of these information collections requires the
expenditure of public and private resources that might be more profitably spend on something
else, The more we spend to collect. process, and disseminate information, the less there is
available for government service.”


93

Mr. Horn. Well, you make a good point. We will be writing agen-
cy heads and others. Our mandate does include technology and in-
formation for this subcommittee.

Mr. Bonnen. Yes. The technological bases has changed substan-
tially in 15 years.

Mr. Horn. Right. We have, as you know, various proposals going
through the Senate and the House in terms of confidentiality from
one side, but you are quite correct in terms of internal use. We
ought to get that clarified. We would welcome any further thoughts
any of you have. Please send them to Council Nedd, who is nursing
over these hearings here, sitting on my left. We will see what we
can develop in that area. I think you are absolutely correct.

Well, let me thank each one of you. We appreciate you coming.
We know you have major operational responsibilities. It is nice of
you to take this time to educate us on the subject. I thank you.

We will ask panel two to come up.

We have, you pronounce it Haver?

Ms. HAVER. Yes. I got promoted here.

Mr. Horn. Dr. Knapp and Dr. Billard. If you will stand and raise
your right hand.

[Witnesses sworn.]

Mr. Horn. All three witnesses affirm. We will start with you, Dr.
Maurine A—do you pronounce it Ha-ver or Haver?

Ms. Haver. Ha-ver.

Mr. Horn. Dr. Maurine A. Haver, chair of the Statistics Commit-
tee, National Association of Business Economists and president of
Haver Analytics.

Welcome.

Ms. Haver. Thank you.

Mr. Horn. You know the ground rules. You have been here now.
If you can summarize it, great. Your full statement goes in the
record right now.

STATEMENTS OF MAURINE A. HAVER, CHAIR, STATISTICS
COMMITTEE, NATIONAL ASSOCIATION OF BUSINESS ECONO-
MISTS (NABE), AND PRESIDENT, HAVER ANALYTICS; JOHN L.
KNAPP, PRESIDENT, COUNCIL ON PROFESSIONAL ASSOCIA-
TIONS ON FEDERAL STATISTICS (COPAFS); LYNNE BILLARD,
PRESIDENT, AMERICAN STATISTICAL ASSOCIATION, AND
PROFESSOR OF STATISTICS, UNIVERSITY OF GEORGIA

Ms. Haver. Thank you.

I am speaking on behalf of our association this morning, which
has a membership of over 3,000 business economists who use Gov-
ernment statistics every day in their work. The statistics produced
by the BLS, BEA, and Census are as vital to the private sector as
they are to the public sector. They Provide the basis for many oper-
ational and planning decisions and have real dollar consequences.

Business economists have been concerned about the decline in
the quality and availability of these data since the early 1980’s. In
1995, we created our Statistics Committee with the charter to work
for the improvement of our national statistical system.

The economy of the United States has changed rapidly, but, as
we have noted here this morning, the resources to measure the
growing service and hi-tech sectors have simply not been available.


38

Thope that the order will move quickly to final issuance and that it will be followed quickly

by Te

gislanon permitung the sharing of micro data fir statistical purposes which seems

contemplated by Section (02 (bh) (2) of HR.

Several other sections at the Statistical Consolidation Act of 1998 make a large number of
important pointy which | believe could improve the nation’s staustical system. One example ts
the finding in 10} (5) about staustical agency head reporting relationships, and the sense of the
Congress in 102 (43 (3) and (5) on stuff resources and reporting retationship tor the Chief

Stauistieran,

But HR 2521 tocuses entirely on the organization of the Execunye Branch. While {
realize how difficult the legistative process van be. it would be useful for the bill to include at least
some consolidation of Congressional Committee jurisdiction over the nation’s statisucul system. 1

can tell you trom my own expenence how difficult it was to develop effi

nt plans tor redesign of

the important labor force survey. af

1 example of cooperation between two statistical agencies
BLS and Census. All plany and appropriation requests had to be reviewed hy two different
appropnations subcommittees and two different subject matter committees of the Congress

Sometimes, the Congressional Committees came to the same conclusion, but at times. BLS would

secure the required approval tor its part of the work while the Census request was turned down.
or vive versa, In our system. statistical agencies in each Department must deal not only with
their own subject-matter and appropriations Committees and Subcommittees. but also with a

number of Committees with broader jurisdiction concerned with paperwork reduction. general

‘vernment operations, and individual agency oversight. Under such circumstances, itis difficult,
iE not impossible. for the Congress to consider such broad and important issues as data
Iniegration, research needs. and data requirements for the system as a whole, In these days of

serious budget reduction, we cannot afford efficiencies of that kind.

Tam especially pleased to be here this moming because the bill betore this Committee is,

in my view, a constructive etort by the Congress to look at how the system operates and how its


158

you have noted. The environment in which they are functioning. I
think those are the more compelling and driving than whether or
not they are co-located or better coordinated, I would say.

Mr. Horn. OK. If the staff does not have any more questions,
and the staff will be sending you some, then we will just reserve
for that, not to take your time here; although, we will miss the fol-
lowup. We might send you some followup questions.

If you would take the time to answer them, we would appreciate
it. We will not try to overburden you. Obviously, you are still under
oath, not that you can do too much in statistics, except for Mark
Twain’s famous phrase. That is what they were thinking of “an
oath” in this committee, but we do it for everybody.

Let me just thank those that have prepared this hearing. I have
learned a lot. I appreciate it, because I would not have learned
without all of you coming with all your rich experience: Our Staff
Director J. Russell George is over there watching what we are
doing, staff director and counsel. To my left is Council Nedd, the
professional staff member, who specifically was assigned and did,

think, a terrific job in setting up this hearing.

Anna Miller has been here, the financial expert on the sub-
committee. Andrew Richardson, our clerk is usually around doing
good deeds. Then Jennifer Williams of the Congressional Research

‘ervice, like the GAO, Congress’ own. They do a superb job of back-
ing us up on research. Joy D’Asaro, the subcommittee assistant. I
do not see her in the room now. Minority staff, David McMillen and
Mark Stephenson, professional staff members. Our faithful re-
corder and official reporter Oveda Hancock. Thank you all. With
that this meeting and hearing is adjourned.

(Whereupon, at 1:15 p.m., the subcommittee was adjourned.]

1e)


125

to establish an Interagency Council on Statistical Policy to
advise and assist the Director. It also provides authority to
the OMB Director to “coordinate the activities of the Federal
statistical system ..." and to “ensure that budget proposals of
agencies are consistent with system-wide priorities for
maintaining and improving the quality of Federal statistics ..

I believe the PRA authorities provide the framework in which
greater coordination and efficiency can be achieved. In our
judgement, the Paperwork Reduction Act, together with actions to
Strengthen confidentiality protections and new legislation
allowing data sharing which I will discuss later, would build
upon the strengths of the existing statistical system.
Furthermore, modern information technology has greatly reduced
the communication barriers that may have previously inhibited
interagency collaboration and cooperation.

Current and Planned Initiatives

As noted, I believe we have a statistical system that has
served us well. Its decentralized character has distinct
advantages. But its efficiency could be strengthened by further
cooperation and collaboration. ‘The concerns that have been
raised about the structure of the U.S. statistical system are
real, but, as I will now discuss, they can be addressed through
improved coordination among agencies pursuant to initiatives
already authorized and underway. Taking each in turn, I first
set out the concern (accepting for present purposes the validity
of the complaint) and then our proposed solution.

CONCERN: PRIORITIES SHOULD BE SET AND COORDINATION STRENGTHENED
FOR CROSS-CUTTING DATA AND CONCEPTS

By examining each agency’s programs in isolation, without
looking at how the system as a whole is serving its customers, we
have not undertaken sufficient research or implemented enough
changes to adapt the system to economic and demographic shifts in
the Nation, This failure greatly limits the statistical systen’s
apility to produce high quality data to inform public and private
decisions.

To remain competitive in the dynamic global economy and
relevant to the needs of our people, the United States needs to
accelerate and facilitate the statistical agencies’ efforts to
address the shortcomings of Federal statistics. ‘These changes
must focus on rapidly changing areas of the economy and society,
and must take account of how globalization, technological change,
and demographic shifts affect our Nation. ‘For example:

© The United States should continue to move rapidly to adopt
the international standards for a System of National
Accounts. In addition, satellite accounts in areas such as

5


100

NABE Membership Survey for a Statistics Action Plan

August 1995

‘A questionnaire on economic data quality and possible approaches to the improvement of
government statistics was mailed to NABE members in late July. 394 questionnaire had been
returned by the cutoff date of August 22. This was a 13% response rate for U.S. members
The tabulation below reflects these questionnaires, Over 400 questionnaires were received in
total

2. Which data are most important to you in your work?
45.9% U.S. Macro Indicators
23.9 Regional
13.2 Industry except Agriculture and Energy
1.3 Agriculture
a. nergy
n4 Demographic

2. How do you view the quality of data you ranked #1

for accuracy?

Total Macro Regional Industry Agr Energy Demographic

Excellent 14,0 14.4 10.6 6 0.0 25.0 24.2

4 44.2 46.4 40-4 5S 20.0 56.3 55.2
Acceptable 33.0 33.7 34.0 5 80.0 18.8 Fiery
Poor 14 5.0 az 16 0.0 0.0 34

-- for timeliness?

Total Macro Regional Industry Agr Energy Demographic

Excellent 11.9 19.3. 2.2 9.6 20.0 12.5 6.9
Good 35.0 46.4 19.2 25.0 0,031.3 3405
Acceptable 35.5 27.6 45.7 44.2 60.0 50.0 44.8
Poor * 1700 6231.8 21.2 20.0 6.3 33.8

-- for coverage?

Total Macro Regional Industry Agr Energy Demographic

xcellent 15.0 16.0 9.6 5.8 0.0 25.0 37.2
Good 40.4 44. 35.1 25.0 40.0 50.0 ana
Acceptable 30.7 28.2 38.3 $1.9 40.0 18.8 31.0
Poor 312.9 9.914. 9 17.3 20.00 6.3 10.3


41

was on the organization, the location, authority, and functions of
the Office of the Chief Statistician.

For various reasons, our legislation did not make it through Con-
gress. I was then a strong proponent, and I remain convinced of
many of the advantages of a decentralized statistical system.

However, after decades of failure, in many ways, despite their ef-
forts in both the executive and legislative branch to provide the re-
sources necessary to achieve a strong coordination of a highly de-
centralized system as well as in many cases the authority, one is
forced to consider alternatives.

Thus, I support the basic idea of moving Census, BLS, and BEA
into a common independent agency framework, if done with care.
I have many of the same concerns that Janet has expressed. The
fact is that the alternative future for governance of the Federal sta-
tistical system are, broadly speaking, only two.

We can build a strong statistical policy coordination and stand-
ards unit, directed by the chief statistician, to coordinate the
world’s largest, most decentralized statistical system, or we can
centralize the system in some major degree, creating an integrating
core of these multipurpose agencies presided over by the Chief
Statistician with responsibility for coordinating the entire system.
Those are the polar extremes, it seems to me.

The purpose served by moving BLS, Census, and BEA into a sin-
gle administrative structure is not governmentwide coordination,
as I see it, but the development and integration of the major mul-
tiple-purpose statistics so critical today for national level policy de-
cisions, public and private. What Janet calls “general Purpose” I
have turned “multiple use” because the clientele are so broad.

Most of the statistics produced by these three agencies are used
not just in their own Cabinet agency, but across the entire Govern-
ment and very widely outside in many different venues and for
many different purposes.

In addition, they are dependent on each other for data, for con-
tracted surveys and for processing and other services. No other
major statistical agencies have the same level of obligation to so
broad a range of multiple-purpose users.

As Janet pointed out, the organizational cultures of these three
agencies are very different, so this can be done only slowly and
carefully and with good statistical leadership. All three would still
be responsible to support Commerce and Labor Department needs
for statistical information. That raises some interesting questions.

Any potential budget savings I think would come very slowly; al-
though, obviously there are some in the long-run. I have several
specific comments on H.R. 2521. One of them is that the Title II
should provide, I think, for longer fixed terms of 7 or 8 years for
the administrator and deputy administrator because of the nature
of the statistical production process. If you don’t preside over it for
a sustained period, you can’t have too much of an impact, and you
don’t want leadership coming and going too fast.

The Administrator, it seems to me, should have a voice in select-
ing the deputy and the directors; that is, there has got to be com-
patibility between the leadership. I have some observations on the
authority and composition of the Council on Statistical Policy es-
tablished in Title II. First, the responsibility for governmentwide