Bleak deficit picture in Treasury report concerns lawmakers (HolyShit!)

[Whoa_Nelly]

http://www.govexec.com/dailyfed/0306/030206cdam2.htm

A little-noticed Treasury Department report sent to congressional leaders in December paints a bleaker picture of the nation's finances than is widely accepted and is beginning to attract attention as lawmakers prepare for election-year budget battles.

According to the 158-page report, the fiscal 2005 federal deficit on an accrual basis was $760 billion, using generally accepted accounting principles that private businesses must use to present their finances.


That is an increase of $144 billion, or 23 percent, over the previous year's deficit of $616 billion. The cost to operate the federal government, including accrued benefits, was $2.95 trillion, versus $2.19 trillion in total revenues, resulting in the $760 billion net operating cost.


These figures are in stark contrast to the $319 billion deficit reported by Treasury for fiscal 2005, which uses the government's accepted barometer of cash outlays versus revenues. That number represents a $93 billion decrease from the previous year's deficit of $412 billion, which Republicans trumpeted as a vindication of their fiscal policies.


Much more at link...

[converted_democrat]

1. K&R.......n/t

[On the Road]

2. That's Disturbing, But...

the federal government has never used an accrual basis. So to compare these numbers to previous deficits is comparing apples and oranges.

What I'm concerned about is the off-budget items, particularly Iraq funding. I would have thought those would be included, and gave made more of a difference.

[Lasher]

17. Has anyone re-calculated the deficit to include off-budget items?

Is King George II the first president to keep some expenses off-budget, or has this been done in the past?

I share your concern about the apples-and-oranges scenario. It is noteworthy about this calculation that includes accrued benefits, but we need to be careful not to cite these numbers in comparison with prior deficits that did not take them into account. Unlike the pukes, the truth is good enough for us Democrats.

Here is a good chart that provides historical dificits. I keep it handy, and haul it out when I start thinking about deficits and unemployment.

http://ibew.org/legislative/Rev042304-JustFacts.pdf

[On the Road]

19. That's What I'm Concerned With

The accruals I don't care as much about because they're not comparable, and because we already know that Bush is committing us to future expenses that will have to be paid.

But there was no mention in the article of the huge expenditures that are not officially part of the budget. You never see that number.

(I like that chart too -- I even have a similar one on a coffee cup.)

[mom cat]

3. What a perfect time to give the rich a tax break ... NOT!

[Hekate]

4. They should be beaten about the head and shoulders with the Tax Code...

...for having given Bush everything he asked for on the way to wrecking our country.

This news CONCERNS them?! They should be laying awake nights in a cold sweat, sick to their stomachs. Like so many other Americans already do.

Hekate

[RobertSeattle]

5. Today's Debt to the Penny...

Doing a Heckuva Job Bush, Cheney, and GOP Congress!

[slaveplanet]

9. Nice Try

you're only about $35,000,000,000,000.00 off...and that was 2003


On Friday, May 16, the word was out. A $350 billion tax cut was a done deal.

So why did the stock market sink that day? Why did it plunge the following Monday, losing 2.5% of its value?One possible explanation is Treasury Secretary John Snow and his comments on the dollar. Another is concern about new terrorist attacks. But let me suggest a third possibility: In spite of efforts to suppress it, word is getting around we can't afford a tax cut.
The story starts one night in January, only days after Treasury Secretary Snow had replaced Paul O'Neill.

Two men were leaving a restaurant in Santa Fe, N.M. A cell phone rang. The caller told Boston University economist Laurence J. Kotlikoff that six months of work by two economists was going to be deleted from the president's budget. The budget was due to be published in February. I know this happened, because I was the second man: Professor Kotlikoff was in Santa Fe working on a book project with me.The material to be deleted from the budget document was an updating of generational accounting. Former Treasury Secretary O'Neill had requested an estimate of the true, long-term obligations of the U.S. government.The estimate would include the formal debt of the U.S. Treasury plus equally serious government promises to provide retirement income and medical care. (Readers who think promises of Social Security and Medicare aren't as serious as U.S. Treasury bond promises should visit the nearest elderly person.)

The resulting information might easily have been lost in a document whose online girth is measured in megabytes.

Except for one thing.

The new accounting shows the United States is broke.

Buried, but not forgotten
The study shows the true obligations of government were 10 times larger than Treasury debt held by the public. It shows the present value of these unfunded obligations is a mind-numbing $43 trillion.In a recent telephone conversation I asked one of the project economists, Jagadeesh Gokhale, why he thought his work was cut. Dr. Gokhale, a senior economist for the Federal Reserve Bank of Cleveland, was circumspect. He suggested the figures were a surprise to the new Treasury secretary.

Here's another interpretation: Treasury Secretary Snow's first task was to sell the president's tax cut. The sales job would be awkward if an official government document announced we were already $43 trillion in the hole. (The Federal Reserve, by the way, recently put the net worth of all households at $39 trillion. This problem goes way beyond taxing the rich, the poor or the middle class.)

So the generational accounting figures disappeared from the budget.

http://moneycentral.msn.com/content/Taxes/P49070.asp

[corporate_mike]

29. What's "generational accounting" ?

[ProfessorGAC]

6. Well Look Who Just Caught Up

Now the legislators are alarmed? Now? They didn't notice they were borrowing $300 billion per year? They didn't notice that the tax cuts were reducing revenue while they spending like drunken sailors on leave? And now some "little known" report gets their attention?

Fire them all!
The Professor

[hunter]

7. When I first started to notice these things...

the entire national debt was something like $300 billion.

That's much less than a single year's deficit now.

It all began in 1983, during the Reagan administration.

[90-percent]

8. Question

What Nobel Prize Winning Economist said:

"Reagan proved deficits don't matter!"

-85% Jimmy

[Joanne98]

10. 23%? What the Hell are they doing?

[file83]

25. They are robbing us. ALL of us. Once the money is all gone, our country

will fold. Poof.

Isn't it obvious? They are selling all of us taxpayers (America) off piece by piece. Once our government can no longer payback the loans, our country is FINISHED. Whomever we owe money to (China/Saudi Arabia) will then, by default, OWN our country and they will do whatever they want with it.

Meanwhile, all the people that "borrowed" the money and paid the Defense Contractors with it (hence, themselves) will chill out on their yaughts and white sandy beaches sipping on mai-tais while we are all shipped off to Chinese/Saudi slave labor camps and forced to "pay back" what is owed to them.

I'm not joking. I'm serious. Paranoid? Hell yes.

I'd love it if someone had a better "explanation" as to why these bastards are putting us into a blackhole of debt.

[Yupster]

28. It's not all that bad

Not to belittle the debt which is horrendous, and demographically is coming at a bad time, but two things...

1. If you owe a million dollars to the bank, the bank owns you. If you owe 100 million to the bank, then you own the bank. When the debt gets completely huge, the borrower actually has more power to the lender. The borrower can say, you need to do these five things and I will be able to start repaying the debt. If you don't do those five things, I'll just default on the debt and be done with it.

2. My guess is the answer to the huge debt is a healthy dose of inflation down the road. If we have 100 % inflation over a few years, then presto, our debt load has just been cut in half. Disastrous for investors, but that's my guess on how it's eventually solved.

[European Socialist]

11. Fuzzy math a required couse at University of Dumya.

[savemefromdumbya]

12. Ah but they left this out of this year's budget report - it was scrubbed

however, we are talking about trillions in reality. Didn't the last treasury chief resign? The present one wants to hide everything under the carpet.

[Nothing Without Hope]

13. K & R - this is IMPORTANT. n/t

[Festivito]

14. This is MORE THAN a 35% tax increase. TAX INCREASE!

For every dollar of fed tax you send, Bush borrows another 35 cents, that's 35% extra tax money.
Couple years ago it was 25% extra.

We not only pay for this tax increase, but, NOT INCLUDED, BEYOND THE ACCRUAL, is the INTEREST.

So, it's MORE THAN A 35% tax increase.

[Festivito]

15. And, does this include a separate war request?

Not only Iraq, but Iran also?

Super yikes.

When bancruptcy hits us, the rich will also get SS also.

[kentuck]

16. They pretend they can take hundreds of billions off the book...

and it doesn't matter. No sweat, we can spend another 70 Billion in Iraq. No need to pay for it.

[Tierra_y_Libertad]

18. The credit card is over it's limit.

Time to foreclose on the property.

[leftchick]

20. what about the forever wars cost?

that is not included. Add another trillion.

[Igel]

21. I read the article; it said pretty much what I thought it would

say, not stressing out over the numerical details. (I wonder what the numbers would be like if they included depreciation on capital improvements? The organization I was involved with for a few years had to do that, and provided for a balance sheet with a large positive number while the budgets were consistenly in the red!)

There are two problems, though. First, let's assume that the liabilities aren't unfunded. We're socking away hundreds of billions of $ each year to cover them. After a few years, we're talking a trillion $. What to do with it. I know: put it in a bank. Ah, but the choice of bank would be political, and greatly increase some investors' dividends, no doubt, and that bank's portfolio. Invest it? Through what company? A government investment company? And how to keep the investments from being targeted by politicos, right and left? "Disinvest from that company, invest in this one." Talk about the potential for scandal.

So, we don't do it that way. We assume that unfunded liabilities will just be taken as a routine part of the budget, precisely like we do now. Then we have the problem of less and less money available for discretionary spending; then we can increase taxes or reduce spending on discretionary items. That'll be a fun choice.

Gee, you know, these are the same two issues that arise with (1) Social Security and (2) Medicare/aid.

[Up2Late]

22. Let's not forget, these are the same guy's that though ENRON was...

...no big thing! I knew these guy's were cooking the books, I mean, we hit $400 Billion in about 2003, and have they cut spending or increased revenue? NO! :banghead:

I knew it was just a matter of time till someone finally figured out how they were cooking the books.

[Mr_Jefferson_24]

23. "...a bleaker picture...

of the nation's finances than is widely accepted..."

I thought widely accepted was, broke and in debt up to our eyeballs. What's bleaker than that?

[Mr_Jefferson_24]

24. Here's Dubya's role in...

our national financial troubles:

[bluerum]

26. Yeah. The economy is rockin. A house of credit cards. eom

[lovuian]

27. Americans salaries go down then nobody can pay the deficit

cause we all know the corporations don't pay any of it...

plus add a war and you get this Republican disgrace...