Posted on 02/20/2002 7:04:55 AM PST by Podkayne
With all the hand-wringing over Enron Corp.'s alleged loosey-goosey accounting methods, you'd think more great minds would make the connection with how similar Enron's number-crunching approach was to Uncle Sam's.
When it comes to duplicitous accounting practices, the federal government takes a back seat to nobody, whether it's the private sector or public sector. This especially is so when it comes to accounting for surplus Social Security revenues and how they're used to create a "trust" fund, even though the money is either spent or used to pay down the public part of the national debt.
The joke for years among those who understand the federal accounting process is that if corporate execs tried what Washington has been doing with Social Security, they would go to jail. Well, it's no longer a joke, which is why a lot of Enron execs are taking the Fifth Amendment when called upon by Congress to explain their actions.
One of the sins Enron is being called upon to account for is imaginative use of accounting legerdemain to hide much of its humongous debt. If only the citizenry were as concerned about the government accounting practices that transform debt into what's characterized as "assets" for future Social Security beneficiaries.
It works like this: Social Security tax revenue not needed to finance benefits cannot be saved. There is no legal mechanism allowing the federal government to save or invest its extra money. Thus, when substantial Social Security tax increases implemented in the mid 1980s began throwing off huge windfalls of surplus funds, it was a bonanza for Congress.
The system allowed Washington to spend excess Social Security revenues on general budget outlays, and the Social Security trust fund was credited with a like amount in the form of a nonmarketable Treasury security. "Nonmarketable" means it has no market value and therefore cannot be considered a financial asset in the accepted sense of the term.
In essence, this accounting sleight of hand created a situation in which a dollar spent was a dollar saved. And even though the credit to the trust fund creates an unfunded liability the federal government must someday honor, it's still sold to the public as an asset.
Consider: Washington claims to having achieved over a half trillion dollars in budget surpluses over the past four years. Even so, the national debt still rose and now its legal limit must be raised. Why? The federal government's accounting system allows it to spend more money than it is taking in and simultaneously claim budget surpluses.
What is the difference between Uncle Sam and Enron? Government has the power to decide what's legal and what's not for itself. If Congress allows for a dollar of federal outlays to be transformed into a dollar's worth of Social Security trust fund assets, so be it.
It doesn't mean the trust fund has a real cache of money on which to draw when benefits begin to outstrip tax revenues. It merely means that nobody responsible will be held criminally liable for creating this accounting sham.
Execs with private companies, on the other hand, don't have the power to create special laws to protect themselves and put themselves above the dictates of generally accepted accounting principles.
But was there no one to warn us that the US economy was similar to an Enron bubble based on trading and swapping job plus factories for cheap sneakers and was about to tank? Hell, we might have to import the steel we need to build war arnaments from Korea or China.
Consider: Washington claims to having achieved over a half trillion dollars in budget surpluses over the past four years. Even so, the national debt still rose and now its legal limit must be raised.All, One of the apologists for raising the debt "legal" limit is posted at "Debt Ogre". The Treasury Dept's "Debt to the penny" below. Clinton's in red. But, if the "debt don't mean nuthin'." as some aver, then just throw it out. We don't need it. Peace and love, George.
Current Amount
02/19/2002 $5,973,692,189,581.81
Current
Month
02/15/2002 $5,971,883,709,164.78
02/14/2002 $5,945,006,500,796.26
02/13/2002 $5,931,016,018,914.50
02/12/2002 $5,933,095,708,171.14
02/11/2002 $5,929,986,106,157.65
02/08/2002 $5,930,243,480,686.36
02/07/2002 $5,927,706,526,358.33
02/06/2002 $5,919,541,743,268.34
02/05/2002 $5,921,591,683,471.62
02/04/2002 $5,916,230,964,734.03
02/01/2002 $5,910,983,893,779.23
Prior
Months
01/31/2002 $5,937,228,743,476.27
12/31/2001 $5,943,438,563,436.13
11/30/2001 $5,888,896,887,571.34
10/31/2001 $5,815,983,290,402.24
Prior Fiscal
Years
09/28/2001 $5,807,463,412,200.06
09/29/2000 $5,674,178,209,886.86 Clinton
09/30/1999 $5,656,270,901,615.43
09/30/1998 $5,526,193,008,897.62 Years
09/30/1997 $5,413,146,011,397.34
09/30/1996 $5,224,810,939,135.73 In
09/29/1995 $4,973,982,900,709.39
09/30/1994 $4,692,749,910,013.32 RED
09/30/1993 $4,411,488,883,139.38
09/30/1992 $4,064,620,655,521.66
09/30/1991 $3,665,303,351,697.03
Exactly!
DR, When they do "get serious", the "retirement" they "saved" for millions of folks who will have to recieve social security will be in the same shape as Enron's investors and workers. The BIG LIE is that the "budget" is balanced, and/or we have a "surplus". Even a 10th grade dropout knows better than that. but, the "experts" continually speak and write of a balanced budget, and/or a budget surplus. ALL while the debt has gone higher. Is there a better word than evil to describe this sham? Peace and love, George.
There's no difference between the Gov't and the Cosa Nostra and they go after them too!
Fannie Mae Enron?
Source: Wall Street Journal; Published: February 20, 2002"We were reading President Bush's budget the other day (we know, get a life), when we came across an unusual mention of our all-time favorite companies -- Fannie Mae and Freddie Mac. What we found is a tale we think taxpayers and investors should want to hear.It seems that Fan and Fred, two "government-sponsored enterprises" that hold the majority of all home mortgages in the U.S., have been growing their debt at an annual rate of 25%. They now have about $2.6 trillion in debt outstanding, a big number in any case, but really big considering that taxpayers are on the hook for it. The budgeteers also expressed some anxiety about Fan and Fred's increasing dependence on derivatives..........."
Read P.A.Sarokin's 'Crisis of Our Age' & see the changes that are soo easy to find throughout history-purly idealogical ( religous ) based culture evolves to material & back. The transition is the rough spot.
T II, Shortly, they are going to run out of "enough of us". Then they will raise taxes on the remainder working, and on and on. It's a sham. Peace and love, George.
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