Saturday, September 29, 2012

How Obama and Allies Are Suppressing News of Economic Disaster Ahead

by Arnold Ahlert  

On May 7th, it was revealed that the Obama administration spent $8.35 billion on a “demonstration project” designed to postpone the vast majority of Obamacare’s Medicare Advantage cuts until after the election. On July 31st, it was revealed that the Labor Department warned defense contractors against notifying workers of impending layoffs before the election as well, despite the fact that it would require violating the law to do so. On September 21, it was revealed that a report on the Greek bailout will also be postponed until after the U.S. election. On September 13th, Fed Chief Ben Bernanke announced that he will be pursuing a third round of Quantitative Easing (QE3), once again under the auspices of “stimulating” the economy. The over-arching theme here is clear: anything that constitutes an “inconvenient reality” for this president, especially with respect to economics, will be delayed until after the election.

Thus, the president can continue to campaign on the “heartless” cuts a Romney administration will administer to healthcare in general, and seniors’ healthcare in particular, even as those same seniors remain oblivious to the reality that $7.4 billion will be cut from the Medicare Advantage program in 2013. As a result, enrollees will lose an average of $515 in benefits. Americans remain equally oblivious to the reality that family health insurance premiums have gone up by an average $2,730, despite a 2008 promise Obama made to lower premiums by $2500 by the end of his first term.

With respect to layoffs of employees who work in the defense industry, the Worker Adjustment and Retraining Notification (WARN) Act is quite clear: employers are required to give employees 60 days notice before mass layoffs take place. As a result of the failure of the congressional super-committee to reach a budget deal during the debt ceiling negotiations last August, automatic cuts in defense spending, aka sequestration, are scheduled to kick in on January 2nd. If the WARN Act were enforced, thousands of defense employees would receive their layoff notices on November 3rd–three days before the election.

Enter the Labor Department, which released new “guidelines” on July 30th, in which the rationale for delaying the notices is the idea that “[A]lthough it is currently known that sequestration may occur, it is also known that efforts are being made to avoid sequestration. Thus even the occurrence of sequestration is not necessary foreseeable.” As a result it “would be inappropriate” to notify the affected workers. That would be the same Department of Labor which previously concluded it had “no administrative or enforcement responsibility under [the WARN Act]” and “cannot provide specific advice or guidance with respect to individual situations.” Apparently when there’s an election at stake, anything is possible, even if the rule of law is tossed aside in the process.

With respect to Greece and the rest of the European Union, keeping the welfare state scheme from imploding is a task becoming more daunting with each passing day. The Daily Mail reveals that Greece’s debt is double what that nation had previously claimed, standing at a staggering $25 billion. Greece denied the report, and the resulting disagreement had the desired effect: despite the European Commission wanting a final decision on a Greek bailout to take place at the next EU summit on October 18th and 19th, Germany insists that reliable figures needed to determine the next move won’t be available “until November.” Undoubtedly that means November 7th at the earliest.

Yet Greece is not the only EU nation that could upset the economic apple cart. Spain is on the verge of needing a bailout of its own, even as Prime Minister Mariano Rajoy continues to insist that austerity programs contained in that country’s 2013 budget will be sufficient to weather the storm. What is being downplayed is the inconvenient reality that Spain’s 17 individual regions are not only awash in debt of their own, but that Catalonia, the nation’s richest region, wants to secede. Ironically, their reason for doing so mirrors the reason for current crisis: the wealthier EU nations (read: Germany) are reaching the point of exhaustion with respect to bailing out their profligate neighbors, despite the reality that the European Union will disintegrate without such bailouts.

That such bailouts are mathematically unsustainable in the long run? As long as the chaos, including violent strikes and riots taking place in both Greece and Spain can be contained until after November 6th, all is well. Unfortunately for Obama, an unnamed EU official revealed the subterfuge. “The Obama administration doesn’t want anything on a macroeconomic scale that is going to rock the global economy before November 6,” he said. “As far as European leaders are concerned, they don’t want Romney, so they’re probably willing to do anything to help Obama’s chances.”

So it is with respect to the most pernicious effort to delay economic reality, namely the third round of Quantitative Easing (QE3) engineered by Fed Chief Ben Bernanke. If the legions of Americans with little grasp of economic fundamentals (courtesy of the educational decline of our public schools) had even the faintest idea of what is really occurring here, Barack Obama wouldn’t stand a chance of being re-elected. In short, the Fed is now financing the government’s entire deficit by printing more money. This currency debasement–as in literally pushing the American dollar itself towards worthlessness–is the primary driver of higher prices Americans are experiencing, especially with respect to food and fuel. Yet thankfully for Obama, most Americans remain utterly oblivious to the distinction between rising prices and a falling dollar. Thus they can be demagogued into believing, for example, that higher gas prices are the result of “corporate greed” as opposed to the historic malfeasance being perpetrated by the Federal Reserve.

Yet while reality can be postponed, it cannot be denied. Even now, the occasional “brown shoot” rears its ugly head. Once again, economic growth estimates for the last quarter were revised downward, from the 1.7 percent originally reported, to 1.3 percent. Such numbers stand in stark contrast to the president’s promise of 3.2 percent growth  in 2010, 4.0 percent in 2011, 4.6 percent in 2012. Even worse, durable goods orders plummeted 13.2 percent, representing the largest drop since January 2009. The growth numbers for July were revised downward as well, from 4.1 percent to 3.3 percent. And in a stunning development that portends where this nation is likely headed, 55 percent of business owners and manufacturers revealed they would not have stared their businesses in today’s economy. Sixty-nine percent of them cited President Obama’s executive branch and regulatory policies as the chief culprits for that reticence.

That’s today’s economy. Virtually every economic indicator shows that tomorrow’s economy–the one Americans will be faced with after the presidential election–will be far worse. Yet as long as it tanks after the election, Barack Obama can continue to peddle his economic, class-warfare snake oil to a public largely unaware how close to economic disaster America truly is. For an administration that can lie unabashedly about the terrorist execution of four Americans in Libya–even as a corrupt mainstream media take each “revision” in stride–keeping the true nature of the economy largely under wraps is a piece of cake.

Arnold Ahlert  


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