17 May 2009 07:00 PM PDT
The current administration has been spinning — er, working — hard to convince everyone that our economic troubles are more-or-less behind us.
Like other politicians before them, they have relied on the propaganda technique of repeating fantasies and outright falsehoods over and over again in the hope that they are eventually accepted by the masses as reality.
In “Obama Budget Chief: Economy Nearly Bottomed,” the Associated Press details the latest such example:
The worst seems to be over, President Barack Obama’s budget director said Sunday. But he also warned against taking signs of economic recovery as a reason to celebrate or delay changes in health care policy.
Peter Orszag said the nation’s economy appears to have bottomed out, even as the White House prepared to revise its budget projections to reflect higher-than-expected unemployment. He said an improving economy and changes to how the United States provides health care would help narrow federal deficits. (See TIME’s photos from the recession: Stores that are no more)
“I think what happened is the free-fall in the economy seems to have stopped and we’re — I guess the analogy (is) there are some glimmers of sun shining through the trees, but we’re not out of the woods yet,” said Orszag, the director of the Office of Management and Budget. “We do have more work ahead.”
Work, Orszag said on CNN’s “State of the Union,” that would include passing this year Obama’s health care plans despite the economic crisis.
>”Let’s be very clear. We’ve always said health care reform has to be deficit neutral over a five- or 10-year window and much better than that over the long term,” said Orszag, whose knowledge of health policy has strengthened his Cabinet-level position. “So we are committed to making sure health care reform is self-financing and also brings down costs over time, both for families and for the federal government.”
The administration, however, faces serious challenges. Some 1.3 million jobs have been lost since February and the auto and financial industries are in precarious positions.
Obama’s Democratic allies have been reluctant to endorse the White House’s health proposals while Republicans have vowed to stop them; Republican National Committee chairman Michael Steele told NBC’s “Meet the Press” that he doesn’t think health care will pass this year.
Meanwhile, Orszag said the administration would update its budget numbers in the coming months.
“You have to remember the deficit is very sensitive to the state of the economy,” said Orszag, noting that officials always planned to revise those figures. “As the economy starts to recover the deficit comes down quickly.”
To achieve the desired results, of course, everybody has to be “on message.” Unfortunately for those who are orchestrating the compaign, some of those who should be talking the “green shoots” talk apparently did not get the memo, as suggested by yesterday’s Agence France-Presse report, “U.S. Uptick Doesn’t Mean Crisis Is Over, Says Top Economist”:
A few recent glimmers of economic hope emerging in the United States do not mean the global crisis is over, a top economist who advises US President Barack Obama said Saturday.
The crisis “is certainly the worst that I have seen in my career,” Martin Feldstein, a 69-year-old Harvard economist and member of Obama’s Economic Recovery Advisory Board told a world tourism conference in Brazil.
“The evidence simply doesn’t support” the conclusion that the United States is on its way to a sustained recovery, said the academic, who also served as an advisor under former presidents Ronald Reagan and George W. Bush.
He added that Europe’s economy is “equally bad if not worse than in the US,” and “Japan has been hit even harder.”
While some US observers and media in recent weeks have struck an optimistic tone on the back of a rebound in the stock market and positive results from big US banks, Feldstein said that was “temporary” because the bad news far outweighed the good.
He stressed that a “one-time rise in GDP due to the stimulus package” implemented by Obama’s administration was being extrapolated across the rest of the year.
But he said that stimulus package, headlined as an 800-billion-dollar initiative spread over two or more years, in fact equated to just 300 billion dollars for this year.
That, Feldstein said, was less than half the 750 billion he estimated had been sliced out of the US economy by dramatic stock market losses, home price declines and a drop in residential construction caused by the crisis.
The package “is not strong enough, not targeted enough, to deal with these problems,” he stated.
Feldstein noted that one-third of all mortgaged US homes were now worth less than the value of their loans, suggesting more owners would simply walk away and the rate of foreclosures would rise, further depressing house prices and causing a spiral.
“It is a very dangerous situation,” Feldstein said.
A recovery was possible in 2010, the professor advanced, but added: “Frankly, that is just a hope.”
He also warned of an impending slide in the value of the US dollar after the crisis because of the massive US trade deficit, a scenario that would drive up the trade-weighted value of the euro, making European exports more expensive.
In the past three weeks, the bad news has piled up in the United States.
Official data showed the economy shrank 6.1 percent in the first quarter of 2009, with unemployment climbing towards what analysts predicted would be nearly 10 percent by year’s end.
Auto giants General Motors and Chrysler are in distress, and US airlines have reported a seven-percent drop in travel for the summer vacation period.
US industrial production continued to fall in April, by 0.5 percent, after a 1.7 percent decline in March. US consumer prices dipped on an annual basis at the steepest pace in nearly 54 years.
http://www.financialarmageddon.com/2009/05/didnt-get-the-green-shoots-memo.html
