Don’t overly politicize the Federal Reserve

It is impossible to divorce politics entirely from the Federal Reserve Board of Governors.

It’s not enough that President Trump and his advisers have been arguing for years that official government data is bad, untrustworthy, phony, manipulated for political gain.

Now they are working to lend credence to these conspiracy theories — by making them true.

Unless, that is, the Supreme Court intervenes.

During the Obama administration, Trump repeatedly claimed that official numbers released by our independent federal statistical agencies — such as the unemployment rate — were fake. Legions of career civil servants were all cooking the books to make Democrats look better, he claimed. Trump’s economic advisers and boosters (including Stephen Moore and Herman Cain, whom Trump now plans to nominate for the Federal Reserve Board) joined in the baseless conspiracy theorizing.

Troublingly, it turns out a lot of other Americans are on board with this numerical nihilism. In a poll last fall from Marketplace and Edison Research, about 4 in 10 Americans said they either completely or somewhat distrust data about the economy reported by the federal government.

And since Trump has taken office, he has worked to justify such distrust by actively degrading the quality of data — specifically, by seeking to make the 2020 Census less accurate.

The Trump administration wants to add, at the last minute, a new question to the census. I say “last minute” because usually new survey questions go through years of research, field-testing and public comment, as required by law and federal regulations.

The question the administration wants to shoehorn in without this process turns out to be particularly disruptive: It asks about citizenship.

Given rising levels of government distrust among immigrant and ethnic minority populations, the question could be reasonably expected to depress response rates among these groups and lead to significant undercounts or otherwise inaccurate data.

In fact, in unrelated survey testing in 2017, respondents told census workers that they fear how their data might be used against them or their loved ones. They expressed concerns about the “Muslim ban,” anxiety over “registering” household members and the dissolution of the Deferred Action for Childhood Arrivals program. Some falsified their names, birth dates and other demographic information.

Three federal courts have so far blocked the question, finding that the administration violated administrative law.

Two of those courts also found it violated the Constitution. Next week, the issue heads to the Supreme Court.

So what happens if the Supreme Court sides with the Trump administration instead?

In the near term, the consequences could be severe. Hundreds of billions of dollars are allocated annually based on the decennial census. Congressional seats are apportioned, and districts are redrawn.

The decennial census data is also the baseline against which virtually all other surveys are calibrated.

Which means that whatever its motives, the administration’s innumeracy is likely to skew all sorts of other critical information that government agencies use to evaluate economic trends and health epidemics; that businesses rely on to decide how much to invest and hire and where; and that workers and families use to determine where to live, what to study, how much to spend on a home.

Even giving the public reason to believe the numbers have been either manipulated or mismanaged will cause people and businesses to make worse choices. Just like the Fed, our statistical agencies must be free of political influence both in practice and perception to be useful.

And that’s the longer-term risk here. One basis of a democracy is good official statistics so that the people and their representatives can make informed decisions.

By throwing the numbers into doubt, the administration jeopardizes our democratic and economic health, not only today, but for many years to come.