Dark Skinny

From the above chart it appears that - after the Carter administration - the Republicans in majority just love to spend and accumulate debt. And the Bush family seem particularly adept at spending freely. While the Democrats in power always worked to pay back the debt. It seems the Republicans follow the Keynesian and Chicago Economic School tenets of Debt and Consumerism is a good thing in a strong economy. However, the Democrats seem to follow Hayek’s principles from the sterner Austrian School of Economics - whose main precept is that a strong, rich country can only be measured from its Savings and Productivity. I’ll leave it up to you to decide which of these economic methods is madness and which is sensible in the current US economy.

In my research for this article, I really found it hard to find believable figures from the US government websites. They just didn’t seem right. Then I stumbled across a website called shadowstats.com and saw the real figures and charts. This site is run by John Williams, who writes most of the articles. Mr Williams is quite simply dedicated to accuracy, he is logical and painfully meticulous in his interpretation of the charts, he even describes the history of biased government reporting of statistics - President by President from Kennedy right up until Bush Jnr. From his article “Government Economic Reports: Things You’ve Suspected but were Afraid to Ask!”,  John Williams says this:

· During the Kennedy administration, unemployment was redefined with the concept of “discouraged workers” so as to reduce the popularly followed unemployment rate.

· If Lyndon Johnson didn’t like the growth that was going to be reported in the GNP, he sent it back to the Commerce Department, and he kept doing so until Commerce got it right. The Johnson administration also was responsible for gimmicking the accounting that hides most of the federal deficit.

· Richard Nixon had a highly publicized war with the Bureau of Labor Statistics on the unemployment data. Nixon wanted to report the unemployment rate as the lower of the seasonally adjusted or unadjusted number, at any given time, but not specify same to the public. While that approach was unconscionable at the time and never used, basically the same methodology was introduced in 2004 as “state-of-the-art” by the current Bush administration.

· The Carter administration was caught deliberately understating inflation.

· Systemic changes were introduced during the Reagan administration to boost reported GNP/GDP growth on a regular basis. The wildest manipulations, however, happened at the time of the 1987 liquidity panic. In addition to intervention in the futures markets by the New York Fed to help prop the stock market after the October 19th crash, direct and heavy manipulation of the trade deficit data, under the direction of the Federal Reserve and U.S. Treasury, was used in conjunction with massive currency intervention to help bottom the dollar and to contain the currency panic at year-end 1987.

· The first Bush Administration began efforts at the systematic reduction of the reported rate of CPI inflation, and worked an outside-the-system GDP manipulation aimed at helping with the failed 1992 reelection bid.

· As former Labor Secretary Bob Reich explained in his memoirs, the Clinton administration had found in its public polling that if the government inflated economic reporting, enough people would believe it to swing a close election. Accordingly, whatever integrity had survived in the economic reporting system disappeared during the Clinton years. Unemployment was redefined to eliminate five million discouraged workers and to lower the unemployment rate; methodologies were changed to reduce poverty reporting, to reduce reported CPI inflation, to inflate reported GDP growth, among others.

· The current Bush administration has expanded upon the Clinton era initiatives, particularly in setting the stage for the adoption of a new and lower-inflation CPI and in further redefining the GDP and the concept of seasonal adjustment.

As a result of the systemic manipulations, if the GDP methodology of 1980 were applied to today’s data, the second quarter’s annualized inflation-adjusted GDP growth of 3.0% would be roughly three percent lower (effectively netting to zero percent or below). In like manner, current annual CPI inflation is understated by about 2.7% against the pre-Clinton CPI methodology (would be about 5.7%), and the unemployment rate is understated by about seven percent against its original design and what many people would consider to be actual unemployment (would be about 12.5%).

As to the financial results of federal operations, the application of accrual accounting and generally accepted accounting principles to federal operations shows an actual fiscal year 2003 deficit of $3.7 trillion, as reported by the U.S. Treasury, versus the reported cash-basis $374 billion.

When you read conclusive evidence that virtually every US President since the early ’60s has lied to their trusting electorate, what hope is there ? And if you trust Obama or McCain blindly to be honest in reporting dire economic figures correctly, I urge you to think again carefully. The fact is, nothing will change - the US political status quo will continue, undisturbed, uncaring and rotten to the core, and these economic lies will always flow and persist - unchallenged.

References

All charts are borrowed from WhiteHouse.gov or ShadowStats.Com