The real U.S. economy

In the president’s surreal State of the Union address, delivered only
a few hours after senators were weighing his fate in the impeachment
trial, Mr. Clinton told us, “The state of our union is strong!”

Saying that our country is strong may not be one of Mr. Clinton’s
biggest lies, but it is a gross misrepresentation. It’s like looking at
a junkyard after a snowfall. It’s beautiful because the old tires,
rusted metal and piles of trash have been covered with a lovely blanket
of white. Our military is hollowed out; our trade imbalance is growing,
especially with China. The PRC is using our technology to build a new
generation of missiles and Russia is considering a partnership with
China in developing its top-secret MiG 1.42. Meanwhile, we still have
no defense against incoming intercontinental ballistic missiles. Our
schools are failing. Most of us send our children to school well
prepared. Many can read and write before they enter school but they get
further and further behind with each passing year, and the president’s
answer is more federal control.

The economy continues to hum along, but it is still one of the
weakest recoveries in our nation’s history. The budget surplus is not
really a surplus at all when you back out all the money that should be
in a Social Security trust but isn’t, and our gross public debt
increased — not decreased — over the last twelve months by a whopping
$131.3 billion. The unexpected revenue pouring into Washington and our
state houses is primarily because of windfall profits in the stock
market. If you aren’t in the stock market, your own personal economy
isn’t doing very well, because your family is giving 40 percent of its
earnings back to the government.

The stock market is propped up by the economic news, which is largely
misstated. Economist Walter J. Williams, who runs the Shadow Bureau of
Government Statistics in Hawthorne, N.J., reports that our annual
inflation is not 1.6 percent, but 4.1 percent over last year if you use
pre-Clinton methodology. Unemployment is not 4.3 percent, but over 10
percent if you back out all those people who were reclassified as
“discouraged workers” and simply eliminated from the government’s
tally. And over half of the 17.5 million new payroll jobs since Clinton
came into office are imaginary “fudge” factors.

Sooner or later the snow melts, and when it does, we will find that
our fiscal state closely parallels the moral state of our union. We
didn’t need another puff speech. We needed a hard dose of reality.