America’s economy made a brief appearance in the headlines Wednesday, jostling for space on the newscasts with illegal immigrants, the latest gun-grabbing frenzy, and some predictable anti-homosexual aspersions cast during the pre-Super Bowl hype. The news was that the economy shrank by a tenth of a percentage point in the last three months of the past year, which is bad, so the media will likely let the matter drop soon.
It’s the kind of news that demands some brief acknowledgement from even the most reluctant reporters, though, so most of the press organizations immediately began spelunking for some heartening information that might be hidden inside in the dark cavern of the Commerce Department’s grim report. The decline was a “surprise” according to the headline writers, who always seem surprised when anything bad happens in the age of Obama, and the lead stories were quick to mention that it all means the Fed will continue to keep the money-printers working overtime. Most reports were also happy to prominently feature the Democrats’ view that this was the “best-looking contraction in U.S. GDP you’ll ever see.”
A fellow named Paul Ashworth, the chief economist for Capital Economics, was able to make that claim without giggling because the report indicated that most of the decline was attributable to cuts in the defense budget and a decline in inventories. Both of these are a “one-off,” Ashworth contends, and thus the economy should soon be roaring back to its previously sluggish pace. The appointment of Chuck Hagel as Secretary of Defense is just the latest indicator that we haven’t seen the last of cuts to the defense budget, the drops in inventory investments and exports can’t easily be explained by any temporary circumstances, and the phenomenal 85.2 percent increase in dividend income that kept the decline from being much worse is also a “one-off” caused by investors trying to get ahead of the coming economy-slowing tax hikes, but Ashworth and his many re-Tweeters can be forgiven their incurable optimism.
If you’re not convinced by such happy talk, the Democrats have a back-up argument that it’s all the Republicans’ fault. White House press secretary Jay Carney helpfully explained that investors were frightened by the appalling spectacle of Republicans in the House of Representatives balking at the president’s prudent plan of massive tax hikes and endless deficit spending during the recent “fiscal cliff” negotiations, and he even blamed the defense cuts on those notoriously anti-military Republicans. The reason the Republicans insist on such shenanigans, Carney further explained, is to make sure that “tax loopholes remain in place for corporate jet owners.”
Carney was not asked to explain why Obama’s never-ending stimulus is still needed if the latest report indicates that the private sector continued to chug along despite a purported decrease in government spending, which is a shame, because we would have enjoyed hearing it. We’ll likely have to settle for more illegal immigrants, gun-grabbing, and Super Bowl hyperbole, and none of it will be quite so much fun.
— Bud Norman