Obama’s Bogus Math and the Downgrade
Led by a constant campaign of misinformation coming from government sources (primarily Democrats) and their Big Media parrots, most of the nation has long been ignorant to the scope of the mess that Washington has us in.
With the protracted battle over the debt ceiling, directly followed by Standard & Poor’s downgrade of the U.S. Government’s AAA rating, a greater number of Americans are finally becoming attuned to the fact that the nation has a genuine debt problem. In this sense, the downgrade and similar moves that are likely to follow are long overdue.
The central government’s spending addiction has finally grown so severe that it can no longer be obscured by double-talk, smoke and mirrors, or promises that spending will be cut someday in the distant future.
The issue is more than some political football. It is not a game, it is real, and it is time for an intervention of some sort. S&Ps downgrade may serve as a first step to breaking the cycle of denial.
Unfortunately, the junkies in the Obama Administration are persisting in their destructive behavior. Rather than owning up to the problem, they are desperately flailing about in attempts to excuse away the loss of our prized credit rating.
On Saturday, John Bellows, the Treasury Department employee who found S&P’s $2 trillion calculating error, used his employer’s U.S. Government website to blast away at the rating agency. In what appears a rather overt effort by the White House to “control the message”, the Obama gang appears to have floated a story highlighting Mr. Bellows noble efforts.
Though their objections did not seem to garner much mileage, the Daily Beast led the way with the rhetoric, shaping a storyline that presents Bellows as an unsung hero battling a rating agency which acted out of some irrational political bias. As it turned out, S&P determined that even with the $2 trillion correction, the debt situation remained so severe that its decision to downgrade was still the correct call.
Before attacking S&P, one would be wise to give Obama’s own numbers a cursory glance. As dire as the debt crisis may seem, anyone willing to examine the administration’s projections will find the situation is actually a good bit worse. The math is so simple, even The Daily Beast could follow along.
Upon visiting the White House’s Office of Management and Budget website, one is immediately greeted with a message from the POTUS himself. There, Obama informs us that, “Rather than fight the same old battles that have dominated Washington for decades, it’s time to try something new. Let’s invest in our people without leaving them a mountain of debt.”
Ah, but a mountain of debt is precisely what he has granted us, not only present day Americans but generations yet to come. Worse yet, he is not finished.
During Obama’s hay-day in 2009, the OMB projected 2011 government receipts at $2.685 trillion. Two years later that estimate has been severely downgraded to $2.173 trillion, reflecting a whopping 19% error in projecting revenue growth.
Though Obama’s original stellar economic team of Orzag, Romer, Summers and company all jumped ship, perhaps due to the lack of success reflected in the numbers above, we won’t find the feds boasting about it on taxpayer funded websites. Nor does the press have much inclination to offer any scrutiny.
As for The Treasury Department, while Bellows argued that, “The magnitude of this mistake – and the haste with which S&P changed its principal rationale for action…raise fundamental questions about the credibility and integrity of S&P’s ratings action”, they seem unable to locate any fundamental questions about the credibility and integrity of their Obama cohorts.
At present, though the economy is in the tank and teetering towards a double-dip recession Obama’s OMB is at it again, projecting an unrealistic 17% jump in tax receipts for 2012. This tactic allows for a relatively modest deficit forecast of $1.1 trillion for next year.
Either the Obama Administration is offering up completely bogus revenue projections or in the next few months they are planning on implementing the largest tax increase in American history and just haven’t bothered to tell anyone. It is one or the other.
While I am no economist, could it be that S&P is on to the mathematical sophistry routinely deployed by the Obama White House?
Beyond 2012, the OMB’s current projections anticipate 12% revenue growth in 2013, followed by 10% in 2014, 7% in 2015 and 6% in 2016. In sum, over the next five years, Obama’s current band of economic geniuses is speculating a staggering 43% growth rate in tax receipts to over $3.8 trillion.
What if they are wrong? If the OMB is incorrect in forecasting revenues for 2012 to the tune of 19%, as they were two years ago, even assuming their rather questionable growth rates for the following four years prove accurate, the unfortunate reality of compounding takes hold.
Again, using the government’s own numbers, this one potential “error” would result in Obama’s accumulated deficit projections for the next five years of $3.77 trillion almost doubling to an alarming $7.22 trillion. In sum, in five short years, Obama’s plans could add nearly 50% to today’s insurmountable debt of almost $15 trillion.
After two and a half years of experience, objective observations can only conclude that there is little reason to trust anything the Obama Administration offers, not in words, nor written proclamation. Standard and Poor’s seems to have caught on.