Congressional Threat to Every Investor, Business Owner and Citizen, Part 2
May 21, 2012
We thank readers for their many observations about our piece entitled, “Congressional Threat to Every Investor, Business Owner and Citizen – Part 1”, dated May 19th. A number of serious and valid comments were raised, along with others that were stated without historical accuracy.
First, let me note that critics who said this was a partisan argument and that the business community attempted to undermine the legislation are patently wrong. They elected to take a political partisan view of the debate over funding federal statistical agencies rather than put their views above the Democrat versus Republican issue. We at Cumberland look at this as a non-partisan, common, and concurrent concern. Funding US statistical agencies is not about being a Democrat, Republican, or Independent. It is not about liking Obama or Romney. It is about having the statistical base which is vital to the interests of the entire United States population and all of their business interests. It is unfathomable to consider operating in the economic, financial and business spheres without valid, governmentally compiled and independently verifiable statistics. It is an unthinkable and inconceivable state of affairs and if the House of Representatives had its way with the legislation it passed, the unthinkable would become a reality. This is just unacceptable to any thoughtful person who considers the current economic outlook of the United States and where it fits within the world.
Now to the specific claim raised by one of our readers who attacked the business community. Here is where the reader is wrong. Let me quote directly from Executive VP for Government Affairs, US Chamber of Commerce Bruce Josten. In a letter addressed to the members of the Senate dated October 11, 2011, he wrote in the third paragraph:
The Chamber strongly urges you to fully fund the Census Bureau, and the American Community Survey (ACS) for FY2012. … The Chamber and business community remain concerned that cutting the Census Bureau’s budget at this time could have a damaging effect for quality data collection and force the Bureau to cancel the 2012 Economic Census. The Economic Census provides important statistics and is critical to the competitiveness of U.S. business and industry.
The entire letter will be reproduced at the end of this commentary. What is crucial is that the US Chamber of Commerce is clearly on record supporting the compilation and funding of the federal statistic base. Any attack on the Chamber of Commerce because it may “lean Republican” or “represent just business” is misunderstood. The proof is in this quote and the letter below.
Let me now address the Constitutional question raised by some readers.
The Constitutional question as to what Congress can authorize, how it is to be executed, and how and when to compile the statistics, is a subject worthy of serious debate. I discussed this with my friend Bob Parker, Former Chief Statistician of the Government Accountability Office. Bob agrees that the issue of protections of privacy versus collection of data, power of the Federal government, and possible abuse of power are “worthy of discussion and debate.” Bob’s critical observation was that not one word on this subject was part of the debate in the House of Representatives when this bill was passed. That is another cause for shame on the Congress. The genuine issues of privacy versus obtaining information are very valid, and there is nothing to suggest they should not be otherwise. That is what the Congress should be doing, not emasculating the funding of the statistical agencies of the United States.
Let’s get to the Constitution itself. Article 1, Section 2, Clause 3 set forth the provision for collection of statistical information in order to compile the census. The founding fathers recognized it was necessary to count the population and to know some things about it. So, the decennial census was created at the time the United States of America was in its earliest formative stage. The ability to collect those statistics, embellish and use them for broad purposes existed from inception.
Article 1, Section 2, Clause 3 of the US Constitution:
Apportionment of Representatives and taxes
Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons. The actual Enumeration shall be made within three Years after the first Meeting of the Congress of the United States, and within every subsequent Term of ten Years, in such Manner as they shall by Law direct. The number of Representatives shall not exceed one for every thirty Thousand, but each State shall have at Least one Representative; and until such enumeration shall be made, the State of New Hampshire shall be entitled to chuse three, Massachusetts eight, Rhode-Island and Providence Plantations one, Connecticut five, New-York six, New Jersey four, Pennsylvania eight, Delaware one, Maryland six, Virginia ten, North Carolina five, South Carolina five, and Georgia three.
My friend Bob Parker notes a little history here. He points out that the first census was operated under the supervision of the Secretary of State at the time, who happened to be Thomas Jefferson. Bob also notes that U.S. Federal Marshals were used in the compilation of data. There is a reason for such creation of safety at the very beginning. Read Jefferson’s writings and you will see how very concerned he is about abuse of power by the Federal government. How concerned he was about economic interests that could distort, deceive, or destroy the underlying fabric of this grand experiment called the United States of America.
We thank Bob Parker for his comments, historical knowledge, and for taking the time to share with us the benefits of his professional career as an economist who is thoroughly skilled and knowledgeable in federal statistics.
Our closing thought is simply that federal statistics cannot be executed by the private sector with integrity. It is okay for the private sector to collect its own statistics; it is a valid thing to do. We do this in our firm; we make judgments based on data. We collect statistics and information in various ways and we apply them for the benefit of our clients. We may be right; we may be wrong, and we have the freedom to do that at our own expense. So does every other economic, academic and individual entity in the United States. The greatness of this country is that freedom among the other freedoms we take too much for granted.
When it comes to assessing, deciding, allocating or altering views involving business and economic decisions or governmental decisions concerning its citizens, do we want ONLY to depend on the private sector to provide this statistical base? Is this something we are willing to say belongs only to those who will pay for it? I worry about entrusting anything of this importance to the sole goodwill and good faith of the private financial sector only. I think that would be a tragic error. Evidence of the last five years in the financial crisis continued to reveal the faults and the risks attendant to fully entrusting the private business sector.
The one thing we have in federal statistics is an independent body collecting, compiling and distributing them in formats and under legal constraints that diminish the risks that come from insider decisions and insider trading. For a “news analysis” of the legislation, see “The Beginning of the End of the Census?” By Catherine Rampell, New York Times, page 5, Review, Sunday, May 20, 2012.
Think about it for a minute. When the Bureau of Labor Statistics compiles the labor statistics, they release the employment report at 8:30 on Friday morning. It is pretty much assured that no private business, no private financial enterprise, and no journalistic influence broke the embargo and traded for their own profit before the information was released. There are harsh and extreme penalties for such actions and they are fully justified.
Consider the alternative that was proposed by readers who wanted to sponsor private collection of data by those who would pay for it. Imagine the power and influence you would have if you would front run everyone else with the information that was going to be disclosed at 8:30. If you could trade the day before, you could make a fortune at the expense of everyone else! The ultimate deception could be practiced by privatizing the statistical collection, assembly and reporting that is now jeopardized by the US Congress.
There have been allegations about threats of criminality issued to people who did not wish to fill out a census survey. Given thousands of census workers, it is quite possible that there may have been zealous workers who issued such statements. There are reports of it. An examination of the facts concerning this yields a different result. There is no evidence whatsoever that the Justice Department has prosecuted anyone for failure to comply with a survey questionnaire. There is no evidence that anyone was incarcerated or fined. There was a case in the 1960 Census of Mr. William F. Rickenbacker. See http://openjurist.org/309/f2d/462/united-states-v-f-rickenbacker for the case summary.
Rickenbacker purposefully declined to fill out the form and test the Constitutionality of the question. He was found guilty and was fined $100, along with given one day of probation and a suspended sentence. He appealed in the Federal judicial system, and his conviction was upheld. That was 50 years ago. There is no evidence of any other case since. The detractors who point to the threat of criminality are reaching without facts.
We thank readers for their comments; we encourage them to be activists on behalf of this cause. It applies to their pocketbooks and to their freedoms. This is not about Democrats or Republicans or Independents. It is about the safety of our country and the political mechanism we have in Washington to determine what we do and do not fund and why.
The full text of the US Chamber of Commerce letter follows:
CHAMBER OF COMMERCE
UNITED STATES OF AMERICA
R. BRUCE JOSTEN
EXECUTIVE VICE PRESIDENT
October 18, 2011
TO MEMBERS OF THE UNITED STATES SENATE:
As the United States Senate begins consideration of H.R. 2112, the “Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2012,” the U.S. Chamber of Commerce, the world’s largest business federation representing the interests of more than three million businesses and organizations of every size, sector, and region, urges you to consider the following recommendations.
The Chamber urges you to provide at least $146 million for qualified Manufacturing Extension Partnership (MEP) centers. The MEP program helps manufacturers become more competitive by improving their productivity, leveraging private sector investments, and assisting the U.S. industrial base to become an innovative high tech global competitor.
The Chamber strongly urges you to fully fund the Census Bureau, and the American Community Survey (ACS) for FY 2012. ACS data points are critical for business decision-making and long range planning. The business community uses census information daily to drive sound investment decisions affecting the allocation of resources throughout the country. The Chamber and business community remain concerned that cutting the Census Bureau’s budget at this time could have a damaging effect for quality data collection and force the Bureau to cancel the 2012 Economic Census. The Economic Census provides important statistics and is critical to the competitiveness of U.S. business and industry.
In addition to meeting the Census Bureau’s funding needs for the ACS, the Chamber strongly urges you to support full funding for the Department of Commerce’s Bureau of Economic Analysis (BEA). Fully funded, the BEA would continue its critical work to improve the quality and depth of important economic data, and allow the BEA to improve the accuracy of GDP estimates, speed up the release of regional statistics, and provide business investment data on an annual basis.
The Chamber strongly supported enactment of the PRO-IP Act (P.L. 110-403), which strengthened federal intellectual property (IP) laws and authorized necessary resources for federal, state, and local law enforcement to combat IP crimes. For FY 2012, the Chamber urges the continued funding of dedicated IP Federal Bureau of Investigations and federal prosecutors that were funded in FY 2010 and FY 2011, and urges the continued funding of competitive grants to state and locals to combat IP theft and counterfeiting.
On behalf of the companies and workers that we represent, we respectfully request that you commit at least $55 million to the office of the U.S. Trade Representative (USTR) for FY 2012. Given the rapidly rising workload relating to enforcement actions, the urgent need to swiftly implement the recently approved trade agreements with South Korea, Colombia, and Panama, and the need to negotiate additional market-opening trade agreements such as the Trans-Pacific Partnership, USTR will need additional resources. In recent years, even the translation budget relating to trade enforcement has been woefully inadequate, and these kinds of basic needs are only mounting. In addition, strong trade policy and enforcement would be necessary to achieve the goal of doubling exports, and USTR would need additional resources to get the job done.
In addition, the Chamber supports language that would retain current restrictions on the Legal Services Corporation’s (LSC) ability to engage in class action lawsuits.
Maintaining, modernizing and expanding America’s transportation system is important to U.S. productivity and economic competitiveness in the long run, while investment in transportation infrastructure supports jobs in the near term. The Chamber encourages the Senate to maintain overall highway, transit and aviation program levels at current service levels.
Recognizing that Congress is currently working to conclude the conference on the Federal Aviation Administration (FAA) and Airport and Airway Trust Fund (AATF) reauthorization, the Chamber urges the Senate to enable full funding of authorized amounts once the legislation is finalized, including providing essential general fund resources.
Similarly, reauthorization of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) is expected to be considered by Congress. The Chamber urges that highway, transit and safety programs be funded at current service levels. There are adequate resources in the Highway Trust Fund for maintaining current services in FY
The Chamber urges the rejection of any amendment that would prevent or impede implementation of the Pilot Program on the North American Free Trade Agreement (NAFTA) Long-Haul Trucking Provisions, including amendments that would deny. Removing the funding would halt the pilot program’s progress, leading to the immediate re-imposition of retaliatory Mexican tariffs on U.S. goods and likely U.S. jobs lost. According to a U.S. Chamber study, those tariffs, which are in the process of being removed, impacted more that $2 billion in U.S. exports and endangered more than 25,000 American jobs. It is imperative to defeat any amendment halting the Pilot Program to preserve U.S. jobs.
In these difficult budgetary times, and with uncertainty surrounding the resolution of major infrastructure authorization bills, it is critical that this appropriations bill reflect existing statutory program structures. No Highway Trust Fund (HTF) or AATF resources, or surface transportation and aviation budget authority should be diverted from infrastructure needs.
Additionally, the Chamber applauds the inclusion of provisions in the bill prohibiting the U.S. Department of Transportation from using any resources to implement changes to the Block Aircraft Registration Request (BARR) program. The BARR program allows business aircraft operators with privacy or security concerns for their operations to request that Aircraft Situation Display to Industry (ASDI) data provided to the Federal Aviation Administration be blocked from public dissemination. The Chamber is opposed to FAA’s changes that dramatically limit the program. FAA’s restrictions are an unwarranted invasion of privacy, a threat to the competitiveness of U.S. companies, and a potential risk to persons traveling on a general aviation aircraft.
The Chamber strongly opposes the addition of provisions to this appropriations bill that would dismantle the temporary agreement between the United States and Brazil regarding their World Trade Organization (WTO) cotton case. This temporary agreement was reached last year to avert trade retaliation by Brazil against the United States resulting from U.S. non-compliance with its WTO cotton-related obligations. Among the commitments, the United States agreed to the provision of temporary technical assistance and capacity building funds to Brazil until a definitive solution to the dispute could be reached in the context of the upcoming Farm Bill. If this agreement is undone, Brazil could immediately impose approximately $1 billion in WTO-sanctioned trade retaliation against U.S. exports and intellectual property rights. These sanctions would likely include tariffs against U.S. goods as high as 100% as well as the suspension of protection for U.S. copyrights and patents as authorized by the WTO. These actions could cause the loss of tens of thousands of American jobs and establish a dangerous precedent for future actions in the WTO.
The Chamber appreciates your consideration of these recommendations.
R. Bruce Josten
David R. Kotok, Chairman and Chief Investment Officer