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Obama Obfuscates His “Prairie Fire of Debt”

Democracy and Power 108:  Obfuscation

Wherever politics intrudes upon economic life, political success is readily attained by saying what people like to hear rather than what is demonstrably true. Instead of safeguarding truth and honesty, the state then tends to become a major source of insincerity and mendacity. – Hans F. Sennholz

Seeking a favorable image, the politician talks in generalities, exaggerates and obfuscates. 

Obama Obfuscates His “Prairie Fire of Debt”

At a campaign event in Iowa, President Obama scoffs at Romney ‘s assertion of a “prairie fire of debt.”  The Wall Street Journal quotes the President: 

Mitt Romney "warned about a 'prairie fire of debt.' That's what he said," Mr. Obama said on the Des Moines fairgrounds on Thursday, as if he couldn't believe it either. "He left out some facts. His speech was more like a cow pie of distortion," Mr. Obama continued, with the finely shaded eloquence for which he is known. "What my opponent didn't tell you was that federal spending since I took office has risen at the slowest pace of any President in almost 60 years."

This is classic political obfuscation – failing to differentiate between debt and spending.  They are not the same – period.  Worse, as to his spending rate - slowest pace of any President in almost 60 years - the President used an article published in Market Watch, which manipulated the baseline and disregarded standard accounting methods.  

Following the President’s obfuscation, White House Press Secretary Jay Carney continued the subterfuge by totally ignoring the dangerous debt and alluding to “spending and fiscal constraint.’  Again, the Wall Street Journal quotes Carney scolding and imploring the White House press corps to ignore America’s debt:

"…buy into the B.S. that you hear about spending and fiscal constraint with regard to this Administration. I think doing so is a sign of sloth and laziness."

Government debt is the curse of almost every democracy – Greece, California, Spain, Illinois and hundreds more.  The national debts – Greece, Italy, Ireland, Spain, Portugal and more - are the crux of the financial crisis in Europe.  Likewise, government debt imperils many American governments – federal, state and municipal.  Under Obama, the percentage of national debt went from 40% of GDP to 74% and will continue to accelerate:  Again, the WSJ:

As for that prairie fire of debt, Mr. Obama can fairly blame $1 trillion or so of the $5 trillion debt increase of the last four years on Mr. Bush. But what about the other $4 trillion? Debt held by the public now stands at 74.2% of the economy, up from 40.5% at the end of 2008—and rising rapidly.

The obfuscation and mendacity committed by President Obama and Press Secretary Carney is a continuation of intentionally mislabeling and concealing the actual debt – long perpetrated by political power players - Republicans and Democrats. 

What is the actual national debt?  It is much more than the politicians’ statements of $15 or $16 trillion. Laurence Kotlikoff, an economist at Boston University, estimates the debt (fiscal gap) to be over $200 trillion.  To eliminate the labeling and accounting manipulations, Kotlikoff measures the project tax revenue versus the government promises to infinity – called the fiscal gap. 

For our exceptional nation to excel, all politicians must honestly and directly reveal the magnitude and dangers of our government debt to We the People. As stated in previous posts, politicians have not truthfully accounted for government obligations for at least 30 years.  Sixteen months ago, I warned of the dangerous debt, condemned the mendacity of political elites and made a plea for honesty.  [Read:]

… politicians manipulate the labels to obscure the actual debt. Clinton, Bush and now Obama are all guilty.

Kotlikoff estimates the real debt (fiscal gap) is $202 trillion.  In terms "We the People "can grasp:  government must tax or cut spending at 12% of the annual GDP forever.  As a comparison the FICA tax paid by employers and employees for Social Security and Medicare is presently at 5% of GDP.

Kotlikoff has personally witnessed the political conniving and mendacity.  In 1993, Kotlikoff and other economists were asked by Alice Rivlin of the Office of Management and Budget to analyze the fiscal gap.  After months of study, the report exposed rapidly increasing debt. However, the report was never published. 

It was squashed by the Clinton Administration, which didn’t like the negative repercussions.  The next attempt was by Treasury Secretary Paul O’Neill in 2002.  O’Neill and the report were annihilated in favor of pushing tax decreases and prescription drugs.  Now, the Obama Administration is claiming the 12% fiscal gap is only a 1.8% deficit.  This is mainly because in 2014 the Independent Payment Advisory Board will adjust the payments of Medicare and Medicaid.  A reduction that has no historical precedent, and even the Medicare’s chief actuary, Richard Foster, said:

“The financial projections shown in this report for Medicare do not represent a reasonable expectation…in either the short range…or the long range.”

Presently, the deceit by President Obama and Carney is not mere campaign puffery.  It is a continuation of political mendacity and must be stopped.  Again, my 2011 post:

Dear fellow Americans, we have a momentous problem.   America’s elected elites have willfully, wrongfully and harmfully damaged America.  These political power addicts - Republicans, Democrats, progressives, liberals, and conservatives - all seek the immediate gratification of power over long-term, good policy.  Over the last three elections, Americans have peacefully rebelled by voting out incumbents.  Continuing the peaceful rejection of this deceit and mendacity is the only hope for saving freedom, peace and democracy.  We the People, the hoi polloi, are the only safeguard in our present system of government from being overwhelmed by the greed and avarice of the political plunderers.

Unfortunately, America’s “prairie fire of debt” is managed and controlled by the political equivalents of pyromaniacs that continue to manipulate and distribute false information to We the People.  Meanwhile the expanding “prairie fire of debt” threatens our great civilization.