Going back to "a nigger in the woodpile," I heard it used a a kid (1940's). It seemed to mean a hidden problem, like sneaky clauses in the fine print of a contract, or some unpleasant or tricky factor that was being covered up, that wasn't right out in plain sight. Something to watch out for. Or hidden treachery, say on the part of a used car salesman. The image is that if this guy is hidden, he's up to no good.

But that's not how it's used in the quote at the top. There it's more like an unpleasant fact that is revealing itself, that can't be hidden or ignored in spite of efforts to hide it.