RUSH: I also this morning received a note that, I must confess, it was intriguing, it was exciting. I got a note from a guy that said, “Hey, Rush, you know, these January numbers –” because I spent a lot of time last week on the raw unemployment numbers. Oh, speaking of that, if you were here last Friday and Thursday, remember we focused not on the 243,000 jobs that were gained or reportedly gained, but rather on the raw numbers, the 2.5 million fewer jobs there were between December of last year, January of this year, just the raw numbers, 2.5 million fewer jobs. And of that 2.5 million, 1.2 million were simply erased by the government, simply erased. They no longer exist. Labor force participation rate.
Two things happened today. David Stockman tells a story that back in the Reagan years an unemployment report came out and Reagan saw a story in Human Events magazine about the same thing we were talking about Thursday and Friday, the raw numbers versus the seasonally adjusted numbers, and the raw numbers, jobs lost or gained, I forget which it was at this point in the Reagan administration, differed dramatically from the seasonally adjusted numbers. According to David Stockman, or who tells the story, it was actually Human Events, the magazine, Reagan saw the Human Events magazine story and at a meeting of his economic advisers said he wanted to focus on the raw numbers. He said that’s what we ought to be looking at here. And according to David Stockman, Martin Feldstein who was the chairman of the Council of Economic Advisors at the time, panicked and said, “No, you don’t want to look at the raw numbers,” and did his best to talk Reagan out of that and looking at seasonally adjusted.
Now, the point of the story is that the raw numbers differ dramatically, every report, from the seasonally adjusted numbers. And that the seasonal adjustment number has been devised as a way of softening the blow, mitigating the impact of the real unemployment news, and it’s something that’s been going on a long time. I wanted to stress last Thursday and Friday, this is not new to the Obama administration. What I was confused about was the dramatic difference in losing 2.5 million jobs from December to January and having the government say “but with our statistical analysis and our seasonal adjustment we’ve actually added 243,000.” So remembering all of that I got a flash e-mail today from a guy, “Hey, Rush, hey, Rush, take a look at this,” and it was a piece from a financial adviser, blogger by the name of Larry Levin, and it was about withholding tax receipts collected by the government through 2011.
The note that I got said January’s withholding numbers, the withholding taxes that were sent to Washington, would be a great indication of employment, would it not, were also down. I said, “Whoa, this could blow the lid if this is true.” But I, El Rushbo, do not ever trust anything that just comes in over the transom. I do not trust anything even from I a single blogger or supposed financial whiz. So I farmed this out to some people. It took me about an hour to track all this down because I was in the midst of the rest of show prep and I’m trying to tell people to look this up for me, what I want, and it took a little bit longer, but I finally found out this. Through the year 2011 and its Fiscal Year…
One of the points of confusion in the original e-mail was the government Fiscal Year is not the Calendar Year.
The Fiscal Year begins in October. So January begins the second quarter of the government Fiscal Year. Well, I was concerned about the Calendar Year: December of last year to January of this year. I wanted to see what the collection of withholding taxes was. Well, I don’t really have that data yet, but we did find out that during the course of 2011, that the withholding taxes — the employment taxes — collected by the government were far lower than even the jobs numbers that were reported to have been lost. You would figure that if you’re losing jobs, the government’s also losing revenue via withholding.
You’d also figure that if jobs are being created, as we’re told that they were from December to January, that the government’s withholding tax revenue would also go up. So we’re desperately here trying to find out what actually happened in January on withholding. It looks like it is up, but I’m not sure yet. Still trying to track it down. But we did find that through 2011 it was… In fact, that’s not entirely true. This is so intricately woven, this web of deceit that you can actually take these numbers (if I wanted to) and I could show you where withholding numbers revenue is actually down a little bit for the information so far that we have for January.
So, anyway, we’ll try to make some sense out of that as the program unfolds. But regardless the employment situation in the country is nowhere near as robust and rosy. And in fact one of the things you have to consider when looking at withholding tax revenue is what kind of jobs are being created. If they’re low-wage jobs now and then of course the withholding number is gonna be much less. Tax receipts from beholding are gonna be much less because the wages are much less. It’s all intricately woven, but even I, El Rushbo, failed to grasp this within the amount of allotted time I have during show prep. We’re still working on this. I want to get to the bottom of it. I’m still struck by the difference in that raw number of 2.5 million jobs loss and the government telling us 243,000 were created.
The bottom line is this in a nutshell. The withholding tax receipts number doesn’t line up with employment. It doesn’t line up. The withholding doesn’t line up with the employment numbers, or if you want to cast it as the unemployment numbers. They just don’t add up. It’s still very confusing. And so games are being played. It’s an election year. This Catholic Church is the same thing. Obama is monkeying the numbers here, jimmying around with things in an election year designed to make things look better than they are, projected to be better than they are.
RUSH: Now, I want to wrap up some things. I mentioned in the first hour of the program that we’ve been tracking, as best we can, the amount of money that the Treasury department is collecting in payroll tax withholding. Because they had this major discrepancy in the raw data. From December to January, we lost 2.5 million jobs. We lost 2.5 million jobs December to January, and 1.2 million of those the regime just erased. They no longer exist. That’s the labor force participation rate. So I saw something that said the Treasury department had collected less money in payroll tax beholding. Okay, well, if that’s true then it would argue against any new jobs. How can you take in less money on payroll tax withholding if you’ve got brand-new jobs?
So here’s where this ended up, as best we could determine: “[T]he US Treasury collected $310 million more in tax withholdings in the first 4 months of fiscal 2011 than in the first 4 months of fiscal 2012.” The first four months is October through January. And this year they collected $310 million less than last year, so would argue, okay, there’s fewer people paying. Maybe not. You could have an increase in employment, but with low-wage jobs and smaller amounts of withholding. Regardless, what does not add up is federal tax withholding on payroll tax withholding is not up commensurately with 243,000 jobs created in December. And if you just look at calendar year 2011, the tax receipts from federal withholding collected by Treasury do not jibe with the unemployment numbers that we got.
We were losing jobs throughout. But toward the end of the calendar year, remember they started saying, “Oooh, we got fewer applications unemployment! We got more people working!” That was not reflected. And this data is hard — or these data are hard. Whatever. But for calendar year 2011, payroll tax withholding, the dollars that businesses withhold and send to the government in tax revenue far, far less than what it couldn’t be given the unemployment picture. So the bottom line is these numbers are still being monkeyed around with and jimmied and (I think) made up, manipulated, or what have you. Can’t trust them.