The "Falsehoods & Lies" of Todays US Policy

Presently, the US statistical system confronts fresh challenges that threaten the unbiased and objective data essential for assessing the economy and fiscal conditions and the performance of public officials. While alternative facts might work in politics, they will eventually be exposed as "falsehoods and lies" in today's data-transparent world.

First, Howard Lutnick, the Commerce Secretary, recently stated that "governments have interfered with GDP" measurements and is considering removing government spending from the overall GDP calculation. Mr. Lutnick is mistaken and does not understand the direct and indirect effects of government spending on GDP statistics. The United Nations Statistical Committee, rather than politicians, determines GDP. Moreover, any reduction in government spending will be reflected in other GDP components, making it impossible to hide the complete impact.

Second, Senator Mike Crapo, a Republican from Idaho and chairman of the Senate Finance tax-writing committee, aims to use the "current policy" method to evaluate the extension of the 2017 tax cut. This approach misleadingly suggests that continuing the current tax law does not lead to increased deficits and higher federal borrowing needs. This is false for two reasons. First, the bipartisan Congressional Budget Committee will assess any tax law changes against its baseline estimates, which show that extending the tax law costs over $4 trillion. Second, the US Treasury will be obligated to disclose the truth when it announces its funding requirements, making it impossible to conceal the truth in budget policy.

Third, the Trump team contends that tariffs do not lead to increased prices and inflation. However, tariffs are essentially a tax on products. Surveys show 80% of people believe tariffs will increase inflation. If tariffs don't cause price increases, why are numerous US companies announcing that product prices will rise, while others seek exemptions from the tariff policy?

On numerous fronts, the US is encountering challenges, which heightens the temptation to alter the numbers for political advantage. Yet, in today's transparent world, with continuous data flow from various sources, hiding the truth will be impossible.

Herb Stein, famous US economist, said, "economists are very good saying something cannot go on forever, but not so good saying when it will stop." Has the US now arrived at the stage where the "major falsehoods and lies" of current policy have been exposed, and continuing to ignore or hide the truth will lead to greater harm? The financial markets are signaling that the US is approaching that critical moment.