Smoke obscures precipice
The re-election of President Obama and most members of Congress left the nation's political balance relatively unchanged, at least on the surface.
But the bickering between Republicans and Democrats will have to be put aside to avoid driving the American economy over the so-called “fiscal cliff” of about $600 billion in tax increases and government spending cuts Congress has set to go into effect on Jan. 1. The potential of a new recession has Wall Street jittery with concern.
The problem is this cliff's end is clouded by the smoke of misleading statistics. Incorrect information points to bad decisions and severe problems for Americans.
Throughout history, reliable information has been the foundation for good decision-making for generals, business executives and politicians alike.
During the Clinton administration, steps were taken to change the nature of government statistical reporting. Under the guise of “modernization,” major changes were made to underlying assumptions and methodology. For example: if the price of beef rose, its proportional content in the inflation index was reduced as consumers were “assumed” to have switched more to the cheaper chicken, whose index quota was increased.
While consumers still paid more for the same products, official inflation rates were reduced. This saved the government billions of dollars in inflation-adjusted Social Security payments. Again, consumers suffered while politicians retained votes.
The same happened with that other political hot potato: unemployment. Excluded from the figure now reportedly publicly as the unemployment rate are the long-term unemployed, those accepting part-time jobs and those who had given up job searching for 28 days. Again, politicians gained at the expense of the jobless.
Finally, the Gross National Product (GNP) economic measure was changed to Gross Domestic Product (GDP), which included the production of foreign companies located within the United States.
Basking in this world of make-believe, politicians maintained that all was well. Stock markets boomed. Any correction was camouflaged with huge injections of cash by the Federal Reserve.
Walter J. Williams, a scholar at Dartmouth University, has continued to calculate government statistics based on the old methodology. Publications by his 30-year-old company, “Shadow Government Statistics” (SGS), are deeply concerning.
The official unemployment rate is 7.9 percent. According to SGS, the actual unemployment rate with all people in the above categories included is 22.9 percent, which accounts more reasonably for the 23 million U.S. unemployed.
The economy is not growing but really contracting. Perhaps this is why, despite the Federal Reserve's injection of trillions of dollars into the economy, unemployment remains a scourge with 47 millions American being fed, on food stamps, by the remaining 260 million citizens.
This glimpse through the smoke of government statistics suggests that pressure for reform of entitlements becomes paramount while cuts and tax hikes on small business owners threaten catastrophe for job creation and the economy.
John Browne, a former member of Britain's Parliament, is a financial and economics columnist for Trib Total Media. Email him at firstname.lastname@example.org.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Friend reaches out to help Burrell Township family
- Gaming proceeds fund emergency units
- Consumer comes to the rescue as companies step back
- AmeriCorps coming to Lenape Technical in Manor
- Rooney says Pittsburgh is ‘good place’ for next northern Super Bowl
- wintry wrath on the Horizon
- Penguins finally break through, defeat Devils at Prudential Center
- UPMC researcher who died of cyanide poisoning committed suicide
- Penguins notebook: Bennett a healthy scratch
- 2 arrested in drug raid at Arnold home
- HOF finalist Bettis ‘behind everything’ in 2005 Super Bowl run