If The Government Used Real Accounting....

[Night Strike]

If the government actually followed the rules they make businesses follow, last year's federal deficit would have been nearly 4 times larger than the actual number reported. How can we afford more of the same policies without major restructuring in the federal government? According to the article, every single family would have to pay almost all of their income to simply cover the deficit (not even counting the money already paid in).

The typical American household would have paid nearly all of its income in taxes last year to balance the budget if the government used standard accounting rules to compute the deficit, a USA TODAY analysis finds.

Under those accounting practices, the government ran red ink last year equal to $42,054 per household — nearly four times the official number reported under unique rules set by Congress.

A U.S. household's median income is $49,445, the Census reports.

The big difference between the official deficit and standard accounting: Congress exempts itself from including the cost of promised retirement benefits. Yet companies, states and local governments must include retirement commitments in financial statements, as required by federal law and private boards that set accounting rules.

The deficit was $5 trillion last year under those rules. The official number was $1.3 trillion. Liabilities for Social Security, Medicare and other retirement programs rose by $3.7 trillion in 2011, according to government actuaries, but the amount was not registered on the government's books.

Deficits are a major issue in this year's presidential campaign, but USA TODAY has calculated federal finances under accounting rules since 2004 and found no correlation between fluctuations in the deficit and which party ran Congress or the White House.

Key findings:

•Social Security had the biggest financial slide. The government would need $22.2 trillion today, set aside and earning interest, to cover benefits promised to current workers and retirees beyond what taxes will cover. That's $9.5 trillion more than was needed in 2004.

•Deficits from 2004 to 2011 would be six times the official total of $5.6 trillion reported.

•Federal debt and retiree commitments equal $561,254 per household. By contrast, an average household owes a combined $116,057 for mortgages, car loans and other debts.

"By law, the federal government can't tell the truth," says accountant Sheila Weinberg of the Chicago-based Institute for Truth in Accounting.

Jim Horney, a former Senate budget staff expert now at the liberal Center on Budget and Policy Priorities, says retirement programs should not count as part of the deficit because, unlike a business, Congress can change what it owes by cutting benefits or lifting taxes.

"It's not easy, but it can be done. Retirement programs are not legal obligations," he says.

http://www.usatoday.com/news/washington/story/2012-05-18/federal-deficit-accounting/55179748/1

[Timminz]

A few thoughts:

the government ran red ink last year equal to $42,054 per household — nearly four times the official number reported...

...Deficits from 2004 to 2011 would be six times the official total of $5.6 trillion reported.

According to the above quotes from the article, this problem is actually lessening under the current administration.

the government ran red ink last year equal to $42,054 per household ...

...A U.S. household's median income is $49,445, the Census reports.

That's not a valid comparison. They should be using mean household income (which is at least 40% higher than the median) for accurate comparability.

...the Chicago-based Institute for Truth in Accounting...

... the liberal Center on Budget and Policy Priorities...

I find it odd that, even though both of these organizations are officially "non-partisan", the one that's critical of the current government is labelled "Chicago-based", while the one that argued against the premise of the report was labelled as "liberal".

Also regarding these two "think tanks" (since I'd never heard of either of them before), does anyone know where I can find some third-party info on the Institute for Truth in Accounting? I sometimes have trouble taking an organization seriously when they don't even have a Wikipedia page.




In general, I think holding governmental organizations to the exact same accounting standards as private enterprises is silly (they are fundamentally, very different types of organizations), although I'd like to read more about the accounting methods from both sides before making a judgment on this particular issue. Ignoring vested future pension expenses entirely is stupid, but somehow I suspect the report that article was based on (because of how much like a "hit piece" it reads) was using a larger figure for that than necessary.

[Woodruff]

If the government actually followed the rules they make businesses follow, last year's federal deficit would have been nearly 4 times larger than the actual number reported. How can we afford more of the same policies without major restructuring in the federal government?

Yes, I remember how upset you were about this exact issue during the Bush Administration. But I tried to find that post, and I didn't see it anywhere...I wonder why.

[aad0906]

Real accounting rules? I guess that means the government would have to put it's assets on the balance sheet too, hmm? And who in the government has a definded benefit pension plan? Because social security isn't a defined benefit plan.

[Night Strike]

If the government actually followed the rules they make businesses follow, last year's federal deficit would have been nearly 4 times larger than the actual number reported. How can we afford more of the same policies without major restructuring in the federal government?

Yes, I remember how upset you were about this exact issue during the Bush Administration. But I tried to find that post, and I didn't see it anywhere...I wonder why.

Oh yey, because I didn't speak about every single issue under Bush, it means that everything that is currently going on must be ignored.

[Timminz]

This particular issue was worse under Bush. The reasons you have for pointing it out now are pretty transparent.

[Woodruff]

If the government actually followed the rules they make businesses follow, last year's federal deficit would have been nearly 4 times larger than the actual number reported. How can we afford more of the same policies without major restructuring in the federal government?

Yes, I remember how upset you were about this exact issue during the Bush Administration. But I tried to find that post, and I didn't see it anywhere...I wonder why.

Oh yey, because I didn't speak about every single issue under Bush, it means that everything that is currently going on must be ignored.

Are you trying to ignore that the situation has improved since Bush left, or is that just eyewash to you?

This particular issue was worse under Bush. The reasons you have for pointing it out now are pretty transparent.

Precisely.

[nietzsche]

I'm very dumb and don't understand all you guys say, but I try to make it easy for my brain to understand and come up with some interesting conclusions to stir the debate:

If every country is spending more than they make, except China, then it's clear that they don't think the current system will stay for long time. They are waiting for something to happen. For instance, the US might be thinking that it'll come down to war pretty soon, so they can balance out their bills.

Other countries might be guessing that that's whats going to happen, and think, what the heck, I'm not gonna be boring and save if everything is going to go down the drain in 15 years.

[Night Strike]

If the government actually followed the rules they make businesses follow, last year's federal deficit would have been nearly 4 times larger than the actual number reported. How can we afford more of the same policies without major restructuring in the federal government?

Yes, I remember how upset you were about this exact issue during the Bush Administration. But I tried to find that post, and I didn't see it anywhere...I wonder why.

Oh yey, because I didn't speak about every single issue under Bush, it means that everything that is currently going on must be ignored.

Are you trying to ignore that the situation has improved since Bush left, or is that just eyewash to you?

This particular issue was worse under Bush. The reasons you have for pointing it out now are pretty transparent.

Precisely.

$5.6 trillion X 6 = $33.6 trillion

2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011 = 8 years

Assuming the total deficit was exactly the same every single year: $33.6 trillion / 8 years = $4.2 trillion per year

2012 total deficit: $5 trillion

So precisely which situation is getting better?

[Phatscotty]

If the government used real accounting, we would become aware that we are slaves to debt, forever forced to make ever increasing payments on a balance that only rises exponentially faster.

[Army of GOD]

If amazes me that something as important as the budget of the most powerful country in the world is ignored as much as it is by the US, regardless of partisanship.

[Phatscotty]

If amazes me that something as important as the budget of the most powerful country in the world is ignored as much as it is by the US, regardless of partisanship.

It amazes me that when someone finally did try to address it (the Tea Party last summer) they were called terrorists...

[Timminz]

If the government actually followed the rules they make businesses follow, last year's federal deficit would have been nearly 4 times larger than the actual number reported. How can we afford more of the same policies without major restructuring in the federal government?

Yes, I remember how upset you were about this exact issue during the Bush Administration. But I tried to find that post, and I didn't see it anywhere...I wonder why.

Oh yey, because I didn't speak about every single issue under Bush, it means that everything that is currently going on must be ignored.

Are you trying to ignore that the situation has improved since Bush left, or is that just eyewash to you?

This particular issue was worse under Bush. The reasons you have for pointing it out now are pretty transparent.

Precisely.

$5.6 trillion X 6 = $33.6 trillion

2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011 = 8 years

Assuming the total deficit was exactly the same every single year: $33.6 trillion / 8 years = $4.2 trillion per year

2012 total deficit: $5 trillion

So precisely which situation is getting better?

The situation of the "actual" deficit being greater than the reported deficit. You know, the situation the article you posted is about.

Yes, the deficit is larger now than the average of those 8 years, but that's not the topic of the article that we're discussing. You know, the article you posted to create this thread.

[Night Strike]

The situation of the "actual" deficit being greater than the reported deficit. You know, the situation the article you posted is about.

Yes, the deficit is larger now than the average of those 8 years, but that's not the topic of the article that we're discussing. You know, the article you posted to create this thread.

Then what are we discussing? You stated that the situation was lessening and I showed that it wasn't. The government needs to first be honest about their spending problem and then figure out how they're going to cut spending to pay only what can be afforded.

[Woodruff]

The situation of the "actual" deficit being greater than the reported deficit. You know, the situation the article you posted is about.

Yes, the deficit is larger now than the average of those 8 years, but that's not the topic of the article that we're discussing. You know, the article you posted to create this thread.

Then what are we discussing? You stated that the situation was lessening and I showed that it wasn't.

No, you didn't. And he explained why you didn't.

[Night Strike]

The situation of the "actual" deficit being greater than the reported deficit. You know, the situation the article you posted is about.

Yes, the deficit is larger now than the average of those 8 years, but that's not the topic of the article that we're discussing. You know, the article you posted to create this thread.

Then what are we discussing? You stated that the situation was lessening and I showed that it wasn't.

No, you didn't. And he explained why you didn't.

So when the numbers say that the deficit is getting worse, you claim that you never stated it was getting better. The article did not provide the specific numbers for every single year, so I obviously couldn't base my calculations on every single year. However, we do know that the published deficit has been increasing every year, so it would be consistent to believe that the unpublished deficit has also been increasing every year.

[BigBallinStalin]

Maybe these help?

US Federal Deficits in the 20th Century






http://www.usgovernmentdebt.us/

[Timminz]

The situation of the "actual" deficit being greater than the reported deficit. You know, the situation the article you posted is about.

Yes, the deficit is larger now than the average of those 8 years, but that's not the topic of the article that we're discussing. You know, the article you posted to create this thread.

Then what are we discussing? You stated that the situation was lessening and I showed that it wasn't. The government needs to first be honest about their spending problem and then figure out how they're going to cut spending to pay only what can be afforded.

I pointed out that the situation was lessening (the situation that the article was actually about), and you started talking about a different (only somewhat related) issue.

We are not on the same page. You opened the book to this page, and when I responded to the issues on the page you flipped back to an earlier chapter.

Like two ships passing in the night...

[Night Strike]

The situation of the "actual" deficit being greater than the reported deficit. You know, the situation the article you posted is about.

Yes, the deficit is larger now than the average of those 8 years, but that's not the topic of the article that we're discussing. You know, the article you posted to create this thread.

Then what are we discussing? You stated that the situation was lessening and I showed that it wasn't. The government needs to first be honest about their spending problem and then figure out how they're going to cut spending to pay only what can be afforded.

I pointed out that the situation was lessening (the situation that the article was actually about), and you started talking about a different (only somewhat related) issue.

We are not on the same page. You opened the book to this page, and when I responded to the issues on the page you flipped back to an earlier chapter.

Like two ships passing in the night...

So you're saying the problem lessened because the un-published deficit was 6 times the total and is now 4 times the one year amount?