Posted on 09/21/2018 7:49:09 AM PDT by SeekAndFind
In recently released numbers, the Treasury Department announced the government, after accounting for some scheduling quirks, ran a $152 billion deficit in August. The budget deficit was $107.7 billion in August 2017, 41-percent less than the newest data.
These numbers are startling, but the reality is that the nation’s debt load is actually much, much worse.
Washington uses an outdated, inaccurate accounting system that contributes greatly to America’s fiscal irresponsibility. The quality of financial reporting practiced by the U.S. would make Enron blush. The U.S. government is using accounting practices that I would not allow in a first-year business school class.
Washington’s cash-based accounting system records revenues when money is received and records expenses when they are paid.
This method produces a highly inaccurate budget number that doesn’t acknowledge bills that we know we must pay in the future like tax cuts, increases in benefits payable to federal employees or new obligations incurred due to promised Social Security, Medicare and Medicaid.
If the federal government was honest with the public and followed accrual accounting in its annual budget, which would recognize the increase in future obligations, there is little doubt that politicians would have found a way to deal with the looming financial crisis on our hands.
To put this another way, the Treasury bills owed by the U.S. — or the debt number often referred to in casual conversations — stands at around $20 trillion. But if you look at what the nation really owes, especially related to Social Security, Medicare and Medicaid, that liability number is pushed closer to $80 trillion.
No publicly traded firm would survive if it reported or acknowledged anything resembling a 300-percent increase in its public debt holdings.
(Excerpt) Read more at thehill.com ...
I could have missed them but I don’t remember reading articles such as these during Obummer’s drunken-sailor spending sprees where the Treasury printed IOUs like they were going out of fashion.
What is “owed” vs. what eventually gets paid are two different things. In other words, some of this is not real debt, but vague promises to pay out money for various reasons to buy votes. The reality of what eventually gets paid will be far different. Think “blood from a turnip”.
Republicans care about the debt only when Democrats are in the White House and Democrats only care about the debt when Republicans are in the White House.
The more accurate observation is this -— NEITHER PARTY CARES ABOUT THE DEBT OR SPENDING.
Since 2016, we have ta Republican upper/lower house and the Presidency, did we see spending or debt go any lower?
“Unfunded liabilities” like Social Security and Medicare are not liabilities — just as “tax revenue projections” are not assets.
RE: “Unfunded liabilities” like Social Security and Medicare are not liabilities
So, what should be the more accurate term for this?
Also, how do businesses account for "planned, but not contractually required" expenses? Social Security, Medicare and Medicaid could be reduced or even canceled tomorrow with no legal repercussions. They are not contractual obligations.
If you’re going to recognize the future obligations of Social Security, Medicare, and Medicaid, shouldn’t you also recognize the future tax receipts for these programs?
These programs are commitments, but they do come with revenue streams. And unlike a loan, that you would show on a balance sheet. They’re more like auto insurance. Yeah, you know you’re going to pay auto insurance for the next 20 years. But you don’t record it as a liability. Any more than you record your future salaries as a benefit.
“This method produces a highly inaccurate budget number that doesn’t acknowledge bills that we know we must pay in the future like tax cuts”
I stopped taking this seriously when the author said we have to “pay” for “tax cuts”.
The author assumes that all money is the government’s and that if they are in a magnanimous mood, us peons will be allowed to get some of their money.
Oh, yes. We were talking about this yesterday. How close is the U.S. to going socialist? I’d say FDR and LBJ already took us there through social security, medicare and the war on poverty. And Obamacare is the cherry on top.
-—If the federal government was honest with the public and followed accrual accounting in its annual budget..., there is little doubt that politicians would have found a way to deal with the looming financial crisis on our hands.
No they wouldn’t!
The Congress knows now and has always known what the real numbers are. From Budget Director David Stockman on to today’s Mick Mulvaney.
The political will was never there inside the Beltway, and the electorate was passionate about a balanced budget - as long as their ox didn’t get gored.
The system of accounting is not the problem.
Stock up on non perishables, ammo, silver coins and any other items of importance that can be bartable. Stock pile your dollar bills to make a nice fire when it gets cold out. Because that is where we are headed.
I,my parents and In-laws, have lived in THE BEST of TIMES.
My children and their kids,,,, I fear for their future more than what problems I have had to deal with in my lifetime...I ,sorry to say, don’t see an good answer for what is to come.
As long as the government doesn’t get shut down, who cares? A couple generations cashed in on the backs of future generations.
Congress can change the law tomorrow on any of these matters -- so why would anyone make long-term projections on them?
The reality is that since the money we use as a 'medium of exchange' isn't backed by anything of 'hard value' the Fed will merely print more.
The money we use is provided by a quasi-private corporation that is supposedly backed by the 'full faith' of the U.S. Govt. But, even at that the only value it has is what it can buy.
Since the U.S. went off the gold standard, the money has lost nearly 90% of its buying power.
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