Tuesday, May 29, 2007

Cooking The National Books

By Cernig

According to USA Today, the United States is broke by any normal standard.
The federal government recorded a $1.3 trillion loss last year — far more than the official $248 billion deficit — when corporate-style accounting standards are used, a USA TODAY analysis shows.

The loss reflects a continued deterioration in the finances of Social Security and government retirement programs for civil servants and military personnel. The loss — equal to $11,434 per household — is more than Americans paid in income taxes in 2006.

"We're on an unsustainable path and doing a great disservice to future generations," says Chris Chocola, a former Republican member of Congress from Indiana and corporate chief executive who is pushing for more accurate federal accounting.

Modern accounting requires that corporations, state governments and local governments count expenses immediately when a transaction occurs, even if the payment will be made later.

The federal government does not follow the rule, so promises for Social Security and Medicare don't show up when the government reports its financial condition.

Bottom line: Taxpayers are now on the hook for a record $59.1 trillion in liabilities, a 2.3% increase from 2006. That amount is equal to $516,348 for every U.S. household. By comparison, U.S. households owe an average of $112,043 for mortgages, car loans, credit cards and all other debt combined.
Cue the the inevitable right/left arguments over how to approach such a massive real deficit - I would argue that a true universal healthcare system would actually cost less than the current system, for example, and that current military expenditure is unrealistic at more than the rest of the world put together. I would likewise argue that medical care and social security for the citizenry are an imperative while brand-new stealth fighters designed to meet a threat that no longer exists aren't. I realize that conservatives will disagree with me.

Leaving aside such discussions, though, it's difficult to argue with John Hawkins assessment:
Do you know want to know why the "White House and the Congressional Budget Office" don't want the real numbers used? Because those numbers would scare the American people to death and they'd demand changes when they realized what we're doing is unsustainable.

...These spending issues are endemic to our political system, so much so that the politicians don't even want people to know how much we're overspending. That's why I'm convinced that the only long-term fix for our spending woes is a Balanced Budget Amendment. Unless these politicians are required to keep the budget under control by the force of law, they will spend this country right into the ground one day -- and when they do, they'll find a way to blame the other guy -- but that won't put any more money in our kid's pockets when they get the bill for the money we've squandered.

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