“Congratulations, Mr. Obama, sequestration has been your most successful federal program!”
That’s what some pundits are saying in response to the President’s report that our national deficit is less than half of what it was four years ago.
On the surface, this certainly would be worthy of national applause for the sequester cuts in spending.
However, not every journalist accepted the White House deficit report as truthful. Some went digging.
One of those diggers is Fiscal Times reporter Tom Blumer.
Mr. Blumer has been boring into the boring numbers of financial statements and reports for years. Here is what he found with the Obama Administration’s final Monthly Treasury Statement of fiscal 2013:
They used phony numbers in the early years to make Obama’s numbers look good.
In the world of politics, though, this isn’t considered “lying.” It’s “puffery,” even if the outcome is the same as a lie.
Let’s start with the big puff: The Obama Administration claims they cut the deficit, which is simply how much more money the federal government spends than it takes in, by over half of what it was four years ago. The current deficit is reported as 680 billion dollars.
Tom explains that while the Obama Administration is quick to remind everyone that the President “inherited” a deficit of over a trillion dollars, they also front-loaded the 2009 numbers to include over $170 billion in “phantom paper losses” and other gimmicks.
Tom writes, “Until March of 2009, the government had treated TARP monies lent or invested in financial institutions and other entities as direct outlays. In April (2013), it retroactively began accounting for those amounts, totaling over $350 billion, as investments.
Accounting for TARP as a collection of investments separate from the day-to-day operations of the rest of the government was a defensible move. What was not proper was Treasury’s arbitrary decision at the same time to record an estimated loss of $178.2 billion on those investments as an additional government “outlay.”
Since outlays are supposed to represent disbursements of cash, the unrealized TARP loss was not an “outlay” in any real sense. This non-cash accounting entry served a useful administration purpose, namely to push as much ‘bad news’ as possible into fiscal 2009 so that subsequent years might look better.”
But wait, there’s more.
Treasury then downsized the TARP losses to just $41.6 billion and the Obama administration simply ignored this and kept the larger $178.2 billion in the 2009 report.
Wow. Instant $137 billion dollar improvement in the deficit without having to actually do anything except fudge the numbers.
Treasury did enter some reductions in 2010, making it look like there was improvement.
Then, the Treasury entered a one-time payment by Fannie Mae and Freddie Mac to their bottom line. How much? $97 billion according to Blumer.
Problem is, that 97 billion dollars is not going to recur and so does not affect the deficit.
Then the Obama Administration added about 300 billion dollars more spending to the 2009 numbers, which was actually his own “stimulus” spending, not that of President Bush.
Blumer also reports the supposed $1.238 trillion Bush deficit was not even close to $1.238 trillion. Plus, spending under President Obama has increased from $2.7 trillion in 2008 to $3.3 trillion.
The deficit reduction is nowhere near half. Closer to 0% - 16%.
As for the sequester, well, that’s really a separate topic.
There were some economists who predicted early on in 2013 that the sequester cuts could throw the country back into recession. Many were recruited by the liberal activist Roger Hickey, president of Campaign for America’s Future, to even sign onto a public statement claiming it actually would.
Let’s just say that signing onto a statement about the economy written by Campaign for America’s Future sure hasn’t helped the credibility of those economists who did.
Not only did another recession not occur, most economists are now predicting more growth in 2014.
Let’s hope there is real improvement this year in the real world, not just the alternate universe of White House press releases.
Contact Rick at rick@wdel.com, or follow him on Twitter @Jensen1150WDEL.