Austerity? Who Does Obama Think He’s Kidding? by Jeff D. Opdyke, The Sovereign Investor
Finally, America is moving past the austerity.
Now, my bet is that, having read that sentence, you have one of two thoughts: Yes, we are moving past all this austerity! Or you thought: What austerity?
I’ll tell you now it’s the latter; we’ve had no austerity or budget cuts in America, just rampant government spending and an absurd budget deficit. But that’s not the point.
The point is the way that politicians manipulate how it is they want you and me to perceive our world, and the risks you face not only in that, but in unknowingly allowing the media to shape your views in how they objectively report “the facts” or the analysis they provide.
To back up a step or two, President Obama released his budget proposal in late January. It’s an obese, $4 trillion spending plan — the largest in American history — that blows past spending caps and pursues all sorts of budgetary nefariousness. But, again, slightly off topic. What’s important here is that, by my count, Obama used the word “austerity” six times in the first several pages of his budget proposal … as in, his budget “finishes the job of reversing mindless austerity” in America.
The Los Angeles Times, which I once held in high regard, reported that the budget “completes Obama’s shift from years of grim economic forecasts and austerity cuts” as though that were a factual statement. (Spoiler alert: It’s not. It’s journalist sloth passing for conventional wisdom that, apparently, needs no fact-checking because, clearly, the president must be right since he used the term “austerity” six times.)
Not sure about you, but I never felt or saw any notable austerity in America in recent years. So, I went to the source itself — the White House documents that show the history of America’s budget. Here are the numbers (2015 and 2016 estimates based on what’s likely to be spent by the time fiscal 2015 ends in September and, for 2016, Obama’s proposal).
By the way, with the Total Outlays you need to add six zeros, so that 2007, for instance, is $2.7 trillion:
How much austerity do you see?
Wow! Between 2011 and 2013 we slightly trimmed spending by the combined equivalent of $4.12 on a $100 meal — and that was part of the big sequestration battles in D.C. that trimmed a little here and a little there. The military didn’t get a few airplanes. NASA and the National Science Foundation lost a bit of funding. And the State Department had to scale back some of its diplomatic functions … oh, the austere pain in serving lobster rather than caviar to the Crown Prince of the Moldovanian Republic of Wherever.
Austerity, Mr. President? Look at how much government spending has actually ramped up. Based on where we will likely end fiscal 2015, D.C. is spending 30% more than it was pre-crisis. So go ahead and lie to middle-class America (again) that cutting $4.12 qualifies as austerity when Americans:
- Have seen median incomes drop on average 1.3% a year since 2007, according to Census numbers. That’s a cumulative decline exceeding 7%, which necessitates an even sharper drop in family spending (without the benefit of unfettered access to debt and money printing that our government has);
- Have seen the highest percentage of Americans ever (more than one in every three of us) join the welfare rolls, according to Health and Human Services data;
- Are losing decent-paying, if not high-paying jobs, as shown in Bureau of Labor Statistics data, and are finding the only jobs available in large number are low-wage service-industry jobs;
- And have begun drawing tens of billions of dollars from their 401(k) and IRAs, as IRS data shows, simply to make ends meet in modern America … meaning they’ll have little, maybe even nothing saved when retirement arrives.
The Media Spin
Government austerity never existed. Intrusive government overreach into business and the economy, however, has certainly existed and explains much of those four bullet points above.
The insignificant cutbacks that happened in D.C. between 2011 and 2013 — the supposed austerity — certainly caused no pain (except, maybe, for State Department diplomats forced to scale back some social excesses). Still, the minions who bend over like harlots in front of Keynesian theory seek to misshape public opinion to the contrary. They fabricate “facts” from whole cloth to scare us into a perspective that is wholly inaccurate.
The New York Times’ resident Keynesian, Paul Krugman, warned the “austerity” of 2013 would result in 700,000 lost jobs, while the perennially inaccurate International Monetary Fund said it would lower U.S. projected GDP growth to 1.5% for 2013 because of these cuts. For the record, the U.S. job market, as crappy as many of those jobs were, grew by more than 2.3 million in 2013, and the U.S. economy expanded by 3.4%.
So be aware of the spin that politicians and the media throw your way. Listening to them slowly and insidiously warps your beliefs. Without ever realizing it, you come to base perceptions of the economy, your own life and the investment decisions you make — maybe even your vote — on a reality that never existed.
Until next time, stay Sovereign,
Jeff D. Opdyke
Editor, Profit Seeker