Numbers Are What You Make Of Them

Since he's been in office, Mr. Obama has been wildly throwing numbers around like pancakes at a Church breakfast bazaar. Or, like the bets at a roulette table!

Just recently, in his joint address to Congress, Obama said that his people (and, he does have people!) have already identified nearly $2 trillion in cuts against Federal spending. In that case, he is talking about a 10-year number. The real cut number is probably well south of $200 billion a year. Then, that number is floated upwards by applying some very optimistic assumptions on the time value of money to get to that final $2 trillion number. Those assumptions include some optimal inflation and economic growth influences that would have been applied if that spending had remained in effect over a 10-year period. The problem with that is that politicians always love to use the best case scenario. In presenting their numbers to the public, they generally assume that inflation will be contained; that the Gross Domestic Product (GDP) will grow at better than historical averages; the recession will be over in short order; and, that Congress won't balk at any of the spending cuts that Obama is proposing.

Projecting 10 years of economic activity is like trying to predict the exact point of landfall for a hurricane when it is still 3 weeks out from shore. A perfect example of how imprecise this exercise can be, came on Friday. Just a month ago, the GDP growth for this country was pegged at a negative 3.8% for the Fourth Quarter. This take at the GDP of this country was called the "initial" number. The secondary "look-see" (the "preliminary" number) was release on Friday and the GDP growth number was revised substantially downwards to a negative 6.2% (See Full Story: "Meltdown 101: Why would a GDP revision be so huge?"). My guess is that the "final" number, to be released a month from now, will be even worse.

The reason that Obama used a 10 year, $2 trillion number was because, I think, he knew that he would be unloading a $1.75 trillion deficit number for this year. The $1.75 trillion number is somewhat psychologically tempered if people are inclined to remember the $2 trillion in cuts from his speech of two days prior.

Then, as part of that same budget presentation on Thursday, he says he will cut deficit spending (note: not the deficit) in half by 2013. 2013 is four years from now. I think he used that number for a variety of political and less-than-transparent reasons. The first deception has to do with what year of deficit spending he's talking about. His "deficit spending-in-half projection" uses the baseline of last year's deficit; which is already known to be about one trillion dollars. It completely ignores the new deficit projection of $1.75 trillion; a much higher number to halve. Second, 2013 is a budget year that is a full year past his first term in office. I think that Team Obama intentionally picked that particular date in the future because Obama will be able to sidestep from being pinned down on it as a campaign issue during his 2011-2012 run for reelection. Third, he uses that date in time because, by his own people's calculations, the deficit will start to rise, again, in the years beyond 2013 when the full effect of his spending plans start to kick in.

For a guy who constantly preaches transparency, this is just a lot political B.S. He uses apples and oranges comparisons; and, in doing so, tries to hide things. When it is convenient, he will use a one year number. Another time, he'll throw out an optimistic 10-year number. Then, again, he will hide a much greater 10 year deficit number, by saying he'll halve the deficit in 4 years; when, just 6 years later, the deficit will be even higher than it is today. To the people who can't see through this or don't understand the accounting that is being used, he is able to use these numbers on unquestioned basis. And, our national media is so into bed with him that they neglect to do their job in picking things apart.

This is the same kind of B.S. that his team was able to pull off with the Stimulus Package. All you have to do is go to www.recovery.gov to see the deception. On that site there is a bar chart which gives the false impression that tax cuts make up the bulk of the Stimulus Package. However, nothing could have been further from the truth. In reality, tax cuts are outweighed in that bill by a factor of two to one. Tax cuts are only a third of the entire bill.

The same deception took place throughout the Obama campaign when our prince of transparency claimed that 95 percent of Americans would get a tax cut under his tax plan. That too was a kind of it-depends-on-the-definition-of-what-is-is lie, because he, once again, bundled apples and oranges buy claiming that FICA tax (the payroll tax for Social Security) was the same as income tax. Further, he never took into consideration that 5 percent of America, at that time, was out of work and pays no FICA taxes at all.

Other than the last year in office when the deficit ballooned as a result of all those bailouts funds, the Bush Administration was always pessimistic about reducing the deficits of post 9/11. However, time and time, again, the numbers always came in better than projected. In the case of Obama, I think all the numbers are a sham and are being excessively overstated. He is playing fast and loose with his calculations in order to sell an extremely expanded role of government. Those who have looked at his recent deficit projections don't see any way he will cut the deficit by half by 2013. Even if you took all the income away from the top 5 percent of wage earners in this country and, then, applied the $200 billion that is his claimed spending cuts, you can't reduce the deficit in half. It is impossible even under the best of circumstances.

I think that Team Obama is front loading all these programs by using deceptive numbers, so that when the truth finally does come out, the framework for the complete socialization of this country will be so set in concrete that any retreat from that inevitability will be totally impossible. It is an ever narrowing road that started with FDR's using of the cover of Depression to lay the first bricks. Then, LBJ used the cover of racial turmoil and the division over the Vietnam war to lay down even more bricks in our trek towards socialism. And, finally, the very liberal agenda of the Obama Administration is now set to use the current economic turmoil to slam the final door on what was once a true capitalistic society. Just my opinion.

Image by John Wardell (Netinho)'s photostream on Flickr with Creative Commons Licensing. Some rights retained. (Click to View Other Works).