Chicago Republicans

The latest economic news has been impressive: over 150,000 jobs were "saved or created" last month; banks are starting to repay the TARP money, even at a "profit"; congressional spending will be on a "pay-go" basis. These statements are misleading at best yet the media is reporting them as signs of a desperately wished for recovery. How the White House reports on the economy is exactly how I report on my spending at home. I am the spender and my husband is the saver. Let me reveal a home budget secret - whenever I spend money outside of our budget, I don't tell my husband how much I spent, I tell him how much I saved! Even he is impressed by my ability to find a bargain, but holds firm that I am still spending By my budget rules, I can then put that savings into my "income" line. I am still trying to convince my husband of all the money I have "earned" over the years. Why are Americans willing to believe this administration's explanations? Let's look first at the latest job report. It is virtually impossible to measure how many jobs are actually saved and yet all Obama has to do is say that since job loss predictions were higher than actual losses, these jobs are saved and therefore can be counted on the plus side. Claiming that this is the worst financial crises since the Depression helps inflate the dire predictions in the first place. However, Obama promised that the stimulus would keep unemployment at 8% but the numbers are now topping 9.4%. Yet, he is arguing that this is proof the stimulus is working and we should wave the wand and ramp up the stimulus so we can "save" 600,000 more jobs. I use that same logic when I defend my budget-breaking based on all the great deals I can get now, alleging long run gains while ignoring the cost of spending money that isn't there. I am thankful that my husband understands the concepts of debt and interest.

The real magic comes when we can turn our "savings" into income. Ten banks announced they are paying back TARP funds, in large part to relieve themselves of the administration's controls. The administration has gone so far as to claim that these returns on the government's investment are turning a "profit", as if the rate of return wasn't already calculated in the original loan. Given that there is still an additional $650 billion outstanding, I don't see the profit part unless these repayments, although less than accounted for, were more than expected. The real illusion is that the repayments are not going to repay the American taxpayer, they are now going to fund the Treasury Department which will continue to administer funds and control banks. By this accounting, in my home budget, I should take what I saved, call it income and, Abracadabra! put it into a special Starbucks fund. This is all being done to convince taxpayers (voters) that the administration's plans are working.

This ability to convert "lower than expected losses" into "gains" has greater ramifications than merely being a shell game. Polls show that Americans are beginning to resist the government's insistence on increased spending and are making it clear that now is not the time to overhaul health care, let alone nationalize it. To appease these concerns, Obama announced that the stimulus budget will be based on "pay as you go" - no dollar goes out unless there is one coming in. This all sounds very responsible, if not fiscally conservative, yet it is not really about reducing spending. The trick is that as long as you can "add" income, you can argue you have more to spend. There are two ways we can appear to add income - increase taxes and other revenue or, by my own home budget magic, count savings. Presto! Changeo! now there are funds for national health care. Even I have not mastered that trick.