Obamanomics - Playing with Numbers

Releasing the “great news” that the “recession is over” just weeks before the 2010 mid-term elections does not come as a surprise to veteran political observers – we knew Obama and the Democrats were bound to try something, ANYTHING, to hold back the anti-incumbent tide that is sweeping the country.

But wait, we have unemployment at 10% (with the real number closer to 17%), the Stock Market is down 40% from its peak in 2007, housing foreclosures are at record levels, and millions more Americans are “under water” with their home loans. So how is it that the “experts” can claim with a straight face that “the recession ended in April of 2009”- let alone expect any sane American to believe them?

The reason is that the basic definition of a recession is 2 consecutive quarters of “negative growth” – declining GDP. And conversely, when the GDP shows an increase, one can technically claim that the economy is “growing” again. Simple, right?

The problem is that most folks don’t realize what constitutes GDP – it is calculated as C+I+G  (Consumer Spending plus Investment plus Government Spending).  Ideally, a healthy economy would be composed mostly of Investment and Consumer Spending, with Government Spending being the smallest portion (because remember that ALL government spending is ultimately paid for by the private sector).

Thus, by ignoring the private sector and instead increasing Government Spending (especially drastically increasing it as Obama and the Democrats have), they can get the GNP to actually show an increase, allowing Obama to claim, at least technically, that the “recession is over” – even if the more important elements of Consumer Spending and Investment are actually declining!

What we should have been doing all along is to cut government spending (and taxes) drastically, because even though we might see a temporary drop in the “official” GDP, at the same time we would encourage real growth in business investment and private sector jobs, along with increases in personal and business income, leading of course, to more consumer spending, all of which would, ironically, also provide more tax revenue to the government than would have been obtained by raising taxes.

And permanently extending the so-called “Bush tax cuts” would help enormously. But naturally, Obama and the ever more socialist leaning Democrats in Congress want to do so only if they can exclude the top 2% of tax-payers – most of whom are small business owners, the very people who are most responsible for creating the majority of new jobs!

Rather than taking such proven methods of stimulating the economy, Obama and the Democrats continue to focus on massive Federal spending, creating more government jobs (unemployment among government workers is only 5%), and taxing the hell out of the most successful Americans in order to redistribute their hard-earned income to those whom they hope will continue to be Democrat voters.

And now they try to tell us that their socialist insanity is actually working?

Thankfully, Americans don’t seem to be buying this economic sleight-of-hand – polls show that most people trust their own day to day experience more than they do the bogus numbers coming out of Washington. Let’s hope that this latest propaganda campaign from the Democrats is no more successful than their disastrous “stimulus” has been.

John Caile