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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