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Monday, March 3, 2014

By Michael Mccune: The Rant (US Government auditor for 16 years In Cheyenne, WY. -Economist Irrelevance, Part II (( to Have Michael send you the Rant to your Email contact Him Here (( mccrant@gmail.com))

Economist Irrelevance, Part II
(Last Friday the economist profession was assaulted by the Rant. As noted, the federal government bureaucracy is loaded with economists who deliver staggering, mind-numbing loads of numbers that have no real meaning. Today the Rant explores the faulty number-crunchers further.)
 
Congressional Budget Office Director Doug Elmendorf dutifully trotted to the Congressional hearings on Obamacare last week to explain the CBO's contention the health care debacle would cost America 2.5 million jobs. Instead of explaining the position to any listener's satisfaction--such as the projected number came from this data here or from this data here, he weaseled his agency's statement.
 
"We projected the drop based on a reduced number of hours worked, not because this number of jobs would disappear," replied Elmendorf to a question.
"Taken together the reduced number of hours worked equated to about a 2.5 million job-loss."
 
Elmendorf did not explain if the hours worked were comparable to full-time jobs or part-time jobs---and nobody saw fit to ask him. Elmendorf did not explain why the number of work hours required would drop---and nobody asked that question. Elmendorf did not explain how the CBO arrived at the number of lost work hours other than to state the effect of Obamacare would "allow people greater choice"---and nobody asked how that would be possible either in a struggling economy.
 
What good is a hearing if you don't ask important questions? Worst of all, Elmendorf made a statement about the relative size of the national debt---and nobody followed up on that ridiculous mathematical error either.
 
About the $17.3 trillion debt already rung up by the country Elmendorf said, "...and that figure is just below 70% of our GDP. It will become a more serious problem as it approaches 100%."
 
Is he serious? If $17.3 trillion is only 70% of GDP that means our current GDP must be over $24.7 trillion. That is just more than 50% more than the highest ever recorded for the U.S. Yet not one of the "Honorables" sitting there apparently listening to and assessing his remarks even blinked.
 
To find out where or how the government figures its debt to GDP ratios, a researcher must resort to using General Accountability Office numbers and statements, not those presented by the CBO as its' scope is limited. According to the GAO, in its "Overview of Federal Debt" which reads pretty straightforward, until you understand this is not the current budget year being referred to in its opening but 1998's! The GAO has not changed its on-site wording since it began doing budget audits in 1998.
 
The clincher comes in Statement 12: "Balancing the budget would not reduce the amount of debt because the government DOES NOT RETIRE A PORTION OF ITS PRINCIPAL EACH YEAR, as individuals do with a typical home mortgage; (13) rather, it pays only the interest costs on its debt." (Emphasis added.)
 
Revisit 1998. President Bill Clinton, you remember the man because he had a Lewinsky problem, said he was going to balance the federal budget. He "borrowed" $330 billion from the Social Security Permanent Trust Fund and balanced the budget. All the documents produced at the time demonstrated a reduction in the federal debt. Based on the previous statement how is that possible? The ugly answer is it can't be.
 
The GAO admitted, without anyone ever questioning the factual basis, it doesn't matter how much revenue is collected from the taxpayers or how deep the spending cuts. the national debt will never, ever be reduced from the paltry $5.4 trillion it had accumulated through 1997.
 
So the hearings being held on Capitol Hill, the dog-and-pony shows called filibusters put on at various times and all those campaign speeches you hear every two years are all bluster when it comes to the common theme of dollars and cents. Despite what you believe you've been told, the reason things don't (or worse can't) change is because the very foundation of the country's wealth is not treated the same by the cavalier government as it is by the individual taxpayers.
 
What the economists provide is window dressing so this or that politician or political party can solemnly state: I will get this change through when nobody else can and you will benefit.
 
It is a sham we have been buying into probably since before the Civil War. It is a sham that is apparently tacitly acknowledged on Capitol Hill by the shills we have voted in and explains why there is no meat to the questions they ask when they are "trying to get at the truth."
 
One final note on the GAO economic projections included in the 1998 report. Statement 18 reads: soon after 2013, when social security's tax revenues no longer exceed social security benefit payments, the budget will turn from surplus to deficit, without additional action by policy makers, the (federal) deficits will reemerge leading to higher debt levels and higher interest expenditures."
 
Does one laugh or weep? How incompetent to leave a 15-year-old statement that is so profoundly self-condemning in the public domain yet how well they foresaw the problem with Social Security when the Boomers retired. They didn't see the weird actions by the Fed for the past six years, they didn't see the manipulation of the interest rates or the monetization of the debt that reduced the interest levels that would have been crippling. They didn't foresee a 3-fold increase in the debt either.
 
But maybe under the barrage of worthless assessments there was a nugget that even the blind-hog economists of the bureaucracy couldn't miss--everybody ages, every day.
 
I take solace in the rationale even the economists cannot mess with that law-of-nature aging fact, no matter how much garbage they have thrown at us in other regards. Maybe they just haven't been able to work out alternatives for aging yet in their manipulated equations.
 
"I have sworn on the altar of God eternal hostility to every form of tyranny over the mind of man."--Thomas Jefferson
 
 

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