The American Political Class – Still Clueless About The Future But Still Prediciting It

I really get a kick out of our politicians when they try to make predictions of any sort. They keep trying and they keep getting them wrong but they continue to show the fortitude to go on with more fruitless predictions. Before reviewing the latest prediction from Harry Reid, let’s quickly review the recent past history of politicians’ predictions:

- In the run up to the invasion of Iraq, I vaguely remember Bush predicting that the military effort would cost less than $ 100 billion. I do not remember the exact number, $ 60 billion sounds familiar, but it was less than $ 100 billion. Well, many years later we know he missed that prediction by hundreds and hundreds of billions of dollars in ongoing expense before you even count the long term expenses of continuing care for our wounded and the interest on the debt that was incurred to finance the invasion. In all probability, the true cost of the invasion will exceed at least a trillion dollars, conservatively at least ten times higher than the original Bush prediction.

- When the Obama administration was hyping its economic stimulus package, the threat was if the package was not passed, unemployment could get as high as 8%. The economic stimulus package was passed and implemented. In hindsight, it is obvious the Obama administration would welcome 8% today since the unemployment rate zoomed right past 8% and has hovered just under 10% for a long time. Missed that prediction by just a little bit.

- It is also funny, and pathetic, when looking at another economic stimulus prediction, one that involved changing the rules as time progressed. The original intent of the stimulus package was to create a couple of million permanent jobs. However, as the stimulus money got spent, nowhere near a couple of million permanent jobs got created. That was when the prediction was changed from jobs created to jobs created and jobs saved. When that definition did not work, the prediction was changed from jobs created and saved to include jobs touched. Somewhere along the line the criteria for a job being permanent was relaxed to any job, permanent or temporary. Even with all of these definitional changes, this prediction still has not come true, given the much higher than expected unemployment rate.

- The bank bailout prediction was also pretty funny. Think back to the end of the Bush administration and how Bush and Treasury Secretary Paulson were claiming that unless there was a massive taxpayer bailout of the U.S. banking system, the financial system of the world would crash and we would see the coming of the next Depression. Nice prediction but apparently way off base as far as being accurate. The bailout bill did get passed and signed and by November, 2009, the first “failing” banks were receiving their TARP bailout money.

However, one of the criteria for receiving the money was that severe restrictions were placed on the wage levels of bank executives. All of a sudden, many of these banks were scrambling to give back the TARP money, so much so that a mere seven months after the first TARP checks were cut, many of the banks had already returned their bailout money.

But let’s reason this one out. If the banks that received the money were in such dire financial shape, how were so many of them able to return the money so quickly? Couldn’t they have muddled through these few months somehow by slashing costs, issuing more stock, selling off assets, or taken any number of actions to get them through this short period of time? Or were these banks never really in trouble in the first place and just wanted a free lunch from the taxpayers via the political class and government? We could not have been that close to a Depression if the majority of the banks returned their TARP funds so quickly, mere months, so that their executive pay levels would not suffer.

- And now to the latest grand prediction, this one from Harry Reid, majority leader in the Senate. In a recent Associated Press article, Mr. Reid was extolling the Senate’s passage of the bill that would extend the Bush tax cuts on January 1, 2011 as well as do a number of other things. Mr. Reid is quoted in the article as predicting that passage of the legislation would result in the creation of two million jobs.

If this was such a good idea and will actually create two million much needed jobs, why was this legislation not passed long ago? Wouldn’t the Obama administration and the Democrats in Congress wanted this passed before they got whooped on election night?

Also, with the exception of decreasing the Social Security tax for one year and adjusting the estate tax numbers, isn’t the vast bulk of this legislation designed to keep the status quo? If the status quo so far has not generated two million incremental jobs, what makes Harry think that it will now? For a family with a breadwinner making $ 50,000 a year, their Social Security savings will be about $ 20 a week, hardly enough to create demand for 2 million new jobs.

Thus, I have no idea how Mr. Reid comes up with two million more jobs by keeping the status quo and giving American families back $ 20 a week. It makes you wonder how these people come up with these numbers. Just as the two million job number makes no sense, neither did the Bush Iraq number, the TARP prediction, the unemployment estimate, etc.

These constantly poor predictions of government actions raises a four part question:

- Do our politicians really believe the numbers they spout out?

- Do our politicians even understand the derivation and the logic behind the numbers they spout out?

- Are they ever embarrassed when the reality comes nowhere close to the numbers they so confidently predicted?

- Are they aware up front that the numbers are bogus and use them just to get their way or legislation passed? If this is the case, then we have a more serious integrity issue with our politicians then we thought we did.

The bottom line is their track record, and thus their credibility, is horrendous when it comes to predicting numbers and results and we would all be better off if we ignored future predictions from the political class. It is a waste of their time and credibility and usually a waste of our tax dollars. They should follow that old saying that goes something like this: “Better to remain silent and thought ignorant than to speak up and remove all doubt.” Or in this case: “Better to not give a prediction and thought clueless of the future than to speak up and remove all doubt.”