More Amateur Hour Economic Antics From Washington, Part 3: Debt Definition Deficit, Unemployment, Greece and More

Okay, I tried to limit the bad economic news and totally inept economic managements skills of the Washington political class to two posts. However, as I wrote the two posts, the bad antics and horrible economic news continued to flow in, requiring a third day of review on how bad the trends, statistics, and economic situation has become and the inability or non-desire of the political class to do anything about the deteriorating situation:

- Last week the Labor Department reported that while the economy did create 96,000 jobs last month, which dropped the official unemployment rate down to 8.1%, the main driver in the drop was the fact that four times as many workers, 368,000 Americans, lost hope of finding a job. They stopped looking for work entirely, resulting in more frustration for American workers.

- The job creation numbers for the past two months were revised downward 41,000 jobs, based on further Labor Department analyses, contributing to further despondency.

- If the same number of people were in the labor market since January, 2009, as opposed to stopping the search for work because of frustration, the true unemployment rate would be 11.2%. This estimate kind of debunks the administration's claim that unemployment would go as high as 8% if the disastrous $800 billion economic stimulus program was not implemented.

- August represented the 42nd consecutive month that unemployment was above 8%, a continuing all time record.

- According to a September 12, 2012 Associated Press report:

• The Census Bureau reported that the number of people falling below the Federal government's poverty line still stands at a record 15%.
• The Census estimates that 46.2 million people remained below the poverty line in 2011, unchanged from 2010.
• The figure is the highest in more than half a century, exceeding the level during the throes of the Great Recession.

- According to the Federal Bureau Of Labor Statistics, for 38 straight months, the percentage of Americans who have a job has been lower than the percentage of Americans who were employed during the recession. The lowest point for employment during the recession was 59.4 percent, while the high-water mark for employment during the "recovery" has been 59.3 percent. Think about that statement: when it comes to estimating the percentage of Americans who are employed, every month of the "recovery" has been worse than any month of the recession. As a reference point, during the Bush years, the percentage of Americans who were employed was never below 60%, every month for eight years.

This is another piece of very distressing news: the recovery is in many ways worse than the recession. This data shows that employment is worse during the recovery than the recession, those living below the poverty line is higher than the past 50 years, and recent data shows that household income dropped more during the so-called recovery than during the Great Recession. Very disturbing. 

- New data from the Congressional Budget Office (CBO), as analyzed by James Harrigan of Utah State University and Antony Davies of Duquesne University, forecast that by 2021 the U.S. Federal government national debt load might rise to Greece’s dangerous and unsustainable level:

• The analysis indicates U.S. debt may climb to almost 150 percent of gross domestic product nine years from now, about the same as Greece’s is today.
• The CBO puts our national debt level at $25 trillion by 2021, up from $16 trillion now. As a side note, this estimate is much higher than the overly optimistic projections from the Obama administration.
• However, according to Harrigan and Davies, over the past 15 years, CBO forecasts of national debt levels  five or more years into the future have under estimated by an average of 40%.
• A 40% under forecast would result an actual debt level of $35 trillion in 2021.
• The analysts found that the CBO has an accurate  track record predicting GDP which they say will be about $24 trillion for 2021.
• Dividing $35 trillion of national debt by a an economy sized to $24 trillion results in the Greece-like 146% a debt-to GDP ratio.

We we all know what is happening to Greece at this level of debt to economic activity.

- Interesting and simple analysis from the Real Clear Markets website on September 10, 2012. They calculated that, based on current views of Federal government spending and expenses in 2012, the Federal government will spend all of its expected tax and fee revenue by September 10 this year. This means that for the remaining 110 days of 2012, the Federal government will have to borrow $10 MILLION DOLLARS A DAY to continue to operate. This will result in a 2012 deficit of over $1 TRILLION.

In 2011, the Federal government had to use borrowed money to pay for 132 days of government operations.  In the last ten years, the Federal government had to borrow money to keep itself in operation for a grand total of 1,061 days or almost three full years of government operations, and waste.

Our children and grandchildren will have to pay for these three years of our over spending in addition to paying for whatever the government does in their future. It's a devastating burden to their economic freedom and their future welfare.

- A story in USA Today after the Democratic National Convention contained some very distressing news. Rather than have me try and explain the distress, allow me to reference some remarks from Gretchen Hamel, executive director of the Public Notice organization. She issued the following statement in response to reports that an essay signed by President Obama in the official program for the Democratic National Convention actually confuses the terms “debt” and “deficit”:

"Today’s report that the president doesn’t understand the difference between our national debt and our annual deficit is frightening. But for an administration that has overseen wasteful spending projects such as Solyndra and whose lack of responsible oversight allowed federal employees to party in the GSA, this lack of attention to detail isn’t surprising. Responsible budgeting isn’t glamorous or fun, but it is a necessary, core function of government. For reference, our national debt is at a historic high of $16 trillion and our annual deficit is about $1.2 trillion, exceeding the trillion dollar mark for the fourth straight year. Additionally, Congress has failed to pass a budget into law for the past three years. President Obama may be hoping the American people award him an “incomplete,” but on his understanding of budgetary issues he’s clearly failing."

Truly scary if those responsible for solving our skyrocketing debt problem, the same people that caused it to rise about 50% (over $5 TRILLION) in just the past four years or so, do not understand the simple differences between "deficit" and "debt" then we are truly screwed from an economic and financial security perspective. The antics of the political class, as documented today and the past two days, can lead to no other conclusion.

As we discussed last week in a recent blog post:

http://www.loathemygovernment.blogspot.com/2012/09/fun-with-math-part-3-turning-tide-to.html 

there is a way to solve our outrageous and dangerous debt problem. We laid out the plan that would take $9 TRILLION of debt out of our fiscal future with minimal impact on most Americans. That plan, combined with the following three steps could save us from Washington:

1. Step 39 from "Love My Country, Loathe My Government" would immediately implement term limits for every single Federal politician. Their antics have proven beyond a shadow of a doubt that the cannot solve the economic problems that they created.
2. A short term step relative to Step 39 is to vote all incumbents out of office on November 6. How much worst could it get if we replaced every incumbent politician in November? Declining household income, record high deficit spending, record high poverty levels, 42 consecutive months with unemployment over 8%, hundreds of billions of dollars wasted every year from incompetence, criminal fraud, and inefficiency. Again, how much worse could it get with a new set of people sitting in Congress and the White House.
3. Step 36 would require every Washington politician to take and pass a course on basic economic concepts, thoughts, and history. Without such training you can see what a problem they have created for all of us.

Antics are not solutions. Incumbents are not solutions either.

We invite all readers of this blog to visit our new website, "The United States Of Purple," at:

http://www.unitedstatesofpurple.com/

The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.

The United States Of Purple's website also provides you the formal opportunity to sign a petition to begin the process of implementing a Constitutional amendment to impose fixed term limits on all Federally elected politicians. Only by turning out the existing political class can we have a chance of addressing and finally resolving the major issues of or times.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.
Please visit the following sites for freedom:

http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment