Sunday, November 26, 2017

Say No to HR 4174, Part 1

Welcome back.

We start off with a Congressional bill that could have major implications for the current and, especially, future independence of Wyoming as a state. The bill in question, HR 4174, could make it much more difficult for us to carry out necessary reforms to Medicaid, K-12 education and other federally sponsored programs. 

The proof is in the pudding. Superficially, HR 4174 looks like a bureaucratic bill that has few if any policy implications. However, a closer look reveals that HR 4174 is much more than that. It actually lays the cornerstones for the statistical infrastructure that the federal government would need if it wanted to create big, new entitlement programs. 

Put bluntly:
this bill could provide the operational infrastructure for federal funds for single-payer health care, general income security (we know it as "paid family leave") and universal child care. These programs, which complete the edifice known as the egalitarian welfare state, would all be mandatory for taxpayers to pay for, and for all families to participate in. For that purpose, government needs much more data on our earnings and our families.

It would be wise for Wyoming legislators, and gubernatorial candidates, to pay close attention to this bill. Based on the Congressional HR 4174, I have a couple of recommendations for the upcoming legislative session. 

More on that later.

At first glance, HR 4174 seems reasonable, even welcome. It wants to move the federal government closer to "evidence-based policy making", which would improve efficiency and give taxpayers more for their money. Who does not want a more efficient government?

For example, HR 4174 proposes:
The Director [of the Office of Management and Budget] shall consolidate the plans submitted under section 312 in a unified evidence-building plan. The Director shall notify agency heads of potentially overlapping or unnecessarily duplicative data acquisition plans and facilitate interagency evidence gathering and sharing. The head of an agency may incorporate the results of any interagency coordination by updating the plan required under section 312. The Director shall incorporate any such agency update in the unified evidence-building plan.
This sounds good, and if this were the sole purpose of the bill, there would not be anything for us here in Wyoming to talk about. In fact, even as we look at the content of HR 4174, its purpose is to lay the groundwork for a major overhaul of the production of statistics by the federal government. 

So far, so good. The problems with this bill show up once we put it in the context of the report, upon which it is based. Now, all of a sudden, HR 4174 takes on a new, and somewhat sinister purpose. It delivers more than just some efficiency-improving reforms to the operation of Uncle Sam's bureaucracy. 

For example, HR 4174 paves the way for a new, federal statistical agency called the National Secure Data Service. The implementation of this new agency, explained on pages 2 and 3 in the report from the Commission on Evidence-Based Policy Making, is carefully laid out in HR 4174. Once up and running, this new agency is going to be the hub of processing and application of all federal statistical databases. 

Even if we disregard the broader implications of HR 4174, we have already stumbled upon a significant problem. The federal government does not need a new statistical clearing house, let alone a new production agency for statistics. The OMB can already serve the function of streamlining, enhancing and improving the efficiency of the production and application of statistics in the current federal government. The Census Bureau has taken on the role of clearing house, as well as producer of many statistical products. The Bureau of Labor Statistics and the Bureau of Economic Analysis also produce large amounts of excellent products. 

All that this new agency does is set the federal government up for another data breach like the hacking of the Office of Personnel Management. With all the extra data that the NSDS is supposed to collect and process, this alone is a reason not to pass HR 4174.

The next reason for saying no to this bill is the very collection of new data. According to the aforementioned commission report, the goal of the reforms initiated by HR 4174 are for the NSDS to:
Review and, where needed, revise laws authorizing Federal data collection and use to ensure that limited access to administrative and survey data is possible to return benefts [sic] to the public through improved programs and policies, but only under strict privacy controls. 

Ensure state-collected quarterly earnings data are available for statistical purposes, including to support the many evidence-building activities for which earnings are an important outcome. 
Make additional state-collected data about Federal programs available for evidence building. Where appropriate, states that administer programs with substantial Federal investment should in return provide the data necessary for evidence building.
The first point, about revision of laws that authorize federal data collection, is entirely unnecessary - unless the goal is to massively expand federal data collection. Why would the federal government want to do that? 

Officially, the reason is to provide more comprehensive data as foundation for government decision-making. However, as someone with a doctorate and close to 20 years post-graduate experience in a quantitative social science, I can safely say that the federal government has, basically, all the data it needs in publicly available databases from the Census Bureau, the BEA, the BLS, the Office of Management and Budget, the Department of Health and Human Services, the Department of Education, as well as independent statistical producers such as the Kaiser Foundation, the National Association of State Budget Officers, and even the Social Security Administration and the Internal Revenue Service.

Sure, there are bits and pieces of data production that could be improved. There are time series products that could be more consistent in production and updated more regularly, but overall, the United States government has pretty much all it needs to be able to operate its entitlement programs - and its administration - with efficiency and purpose. 

So, what is the purpose behind this big, new agency? The story is buried in the two other points in the quote above: "ensure state-collected quarterly earnings data" and "make additional state-collected data about federal programs available". 

Earnings data already exists. The Bureau of Economic Analysis already produces state-level earnings data by quarter, and the Bureau of Labor Statistics offers similar statistical products on a monthly basis. If the goal is to see how federal programs affect income at the state level, then all that is needed is a faster update process for existing statistical products from the BEA and the BLS. All that Congress would have to do is appropriate more money for these two agencies, with the specific purpose of speeding up statistical production. 

In other words, the need for more detailed income data at the state level has little do to with the current operation and reform of existing entitlement programs. The purpose behind expanded income is instead a preamble to the roll-out of new entitlement programs: in order to create a general income security program, based on paid family leave but much bigger in scope, and copied from European welfare states, the federal government will have to have detailed knowledge of household income. This data, which will have to be current in a way that comparable, existing statistical products are not, must be household-based. 

This, in turn, breaks new ground in federal data collection. The only way to collect this data on a basis that is current enough for the operation of a general income security program, is if it is collected frequently - the evidence-based policy making report suggests quarterly - from your employer. In other words, four times a year, your employer will supply a federal statistical agency with your individual income data. The collecting agency could be the new National Secure Data Service, or the IRS, based on requests from the NSDS.

The next reason why this household income database is needed, is the universal child-care program that the federal government will roll out at some point in a not-too-distant future. You will be paying both taxes and individualized fees to have your kid in child care, sponsored and regulated by the federal government but operated by the states. The fees will be tiered based on your income; to be able to place you in the right fee, and make sure that the fee is up to date with your income, government needs to have current access to your earnings. 

It is entirely possible that the same database is necessary for a future single-payer health care system. Even though the deductibles and fees people pay for health care in such systems tend to be fixed, they could easily be based on your income. 

In other words, the need for frequently updated, detailed, income data points squarely at a long-term purpose: the federal government is beginning to create the statistical infrastructure needed for the "missing pieces" of a Swedish, egalitarian welfare state: general income security, universal child care and single-payer health care. 

When the commission report says that the federal government also needs "additional state-collected data" about programs that receive federal funds, they acknowledge that income data is not all they need. For the universal child-care program, they obviously need data on how your child is performing in child care; for further federal "investment" in K-12, they would - at least in theory - need a national database of how our kids do in school; for a single-payer system they would need a national database of all our health records. 

There is much more to be said about this, and I will get back this issue in a few days with my recommendations for our state lawmakers and those aspiring to be our next governor. For now, let me finish up with repeating that HR 4174 in itself does nothing more than the legislative mechanics to create the National Secure Data Service. Whatever comes after that, has - to the best of my knowledge - not yet been turned into legislative bill language. So far, it only exists in the report from the Commission on Evidenced-Based Policy Making

That said, since the first step toward implementing the recommendations from the commission would be to create the NSDS, it is logical to assume that all the other recommendations from the commission report will also show up in bills in Congress, once HR 4174 has been signed by President Trump. 

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