Skip to comments.Government Spending the Madoff Way: Deficits with no Debt!
Posted on 09/11/2013 4:23:50 AM PDT by Kaslin
Thats it. Ive made up my mind: I now like President Obamas Treasury Secretary, Jack Lew. In fact, I cant stress enough how much I would like him to run my household expenses. Apparently the Federal Government ran a $146 billion deficit in the month of August and a $98 billion deficit in July without adding a single dollar to the total National Debt. I know Its a kinda cool trick!
According to reports released from the Treasury Department, the Federal Governments total debt has remained at $16,699,396,000,000.00 since May 17th. . . That means our National Debt has remained just under the legal limit since spring, despite running deficits for multiple months.
If youre having trouble grasping this concept, dont worry. . . Thats why I want Jack Lew to run my household finances. This man is an accounting genius, apparently. Although, I cant help but imagine that the IRS would be mildly irritated if I attempted similar financial accounting gimmicks in my check book.
The absurd notion that the government can run deficits without adding to its total debt burden is made possible (on paper) by the overly complicated manner used to account for federal debt obligations. According to Lew, the Treasury Department has taken a number of extraordinary steps to keep the debt from climbing over the limit set by congress.
According to CNSnews:
Among the extraordinary measures Lew said he could take to create this headroom under the debt limit were: 1) not investing new money from the Civil Service Retirement and Disability Fund (CSRDF) in U.S. Treasury securities, 2) not reinvesting $58 billion ion Treasury Securities held by the CSRDF that would be maturing and not reinvesting $16 billion in interest owed to the fund, 3) suspending the routine daily reinvestment of $160 billion in special Treasury securities held by the Federal Employees Retirement System Thrift Savings Plan, and 4) suspending the routine daily reinvestment of Treasury securities held by the governments own Exchange Stabilization Fund.
Let me translate: Hes running similar accounting schemes that would land a CEO or an investment banker in the crosshairs of every financial regulatory body under the sun. Oh, not to mention that the IRS doesnt really like it when personal expenses are juggled in such a way to hide income or debts in accounting ledgers. But, its OK. . . Because its the government. They get to do a lot of things no-one else gets to do; like borrow IOUs from one account to pay back deficits from another account without having to reimburse their borrowed IOUs with anything other than more IOUs.
The maneuver is little more than accounting shenanigans dressed up as extraordinary measures. Moreover, the steps taken by Treasury indicate the addiction DC has to overspending. Limits on the debt are set to force a negotiation of Federal fiscal obligations and spending priorities by - this might seem strange to DC folk - limiting spending. Yet, rather than succumb to the realities of fiscal restraint, our government feels it necessary to shift expenses in such a way that allows for deficit spending without breaking the letter of the law in regards to the debt limit.
Of course, what can you expect from an Administration that believes welfare spending is an economic stimulus? (If that were true, our economy would be humming along by now.) Keep in mind, this is the same Federal Government that thinks teachers should praise wrong answers, like 3x4=11. Call it the Liberals New Math.
The moves also highlight the absurdity of Washington DC mathematics. Really? No increase in the National Debt after two months of deficit spending? But I bet those unemployment numbers, inflation numbers, jobs reports, and GDP numbers are all on the level. . . Right?
Of course, this ability to manipulate numbers in a way that allows political expediency is what accounts for my sudden admiration of Jack Lew. If I can learn how to apply DC accounting standards to my personal life, I might be able to eliminate those pesky credit bills while maintaining my unsustainable life style. . .
. . . Or I might go to prison, where Bernie Madoff can explain to me how Social Security works.
The national debt has been stopped in its tracks!
We don't even NEED to raise the debt limit!
Good post, Kaslin. There will be no place safe from the mayhem when the $hit hits the fan.