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.
“Unfunded liabilities” like Social Security and Medicare are not liabilities — just as “tax revenue projections” are not assets.
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.
-—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.
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.
These unbacked currencies are a scam and are a driver of Big Governments, wars, and welfare worldwide.
The USD is the scam at the top of the heap. The USA scams the rest of the world with its fraud.
I keep waiting for faith in the USD to collapse, but since other global fiat currencies are even worse, confidence in the USD scam is maintained.
Entitlement promises are not made to be kept - they are made to win the next election.
In any event, I figure the total debt of the USA gov’t is now on the order of $250T to $300T. But what do any of us really know?
I seem to remember a time in the late-70s or early-80s when the great Arthur Anderson CPA firm did an independent estimate of the total debt of the USA Federal government. Once all the promises to pay were taken into account the conclusion was that the country was $100 trillion UNDER WATER.
And this stuff isn’t like rewards points, or unused gift cards where one can say - well, if the restaurant goes out of business the customer won’t get to eat for free.
My understanding is that the gov’t has made all sorts of promises to pay for stuff - interest on gov’t debt; contracts to build stuff; they agree to pay pensions to employees (current and retired); and they have accumulated HYOOOOJ liabilities in the form of guarantees to all kinds of groups. As for Social Security and Medicare and Medicaid - a promise to pay $100 billion dollars a year (for example) can be calculated to a net present value. This is similar to what happens when one borrows money to buy a car or house. Conversely if one wants to receive an annuity, there is a know way to calculate how much money must be paid NOW to support those future cash flows.
Some of the big differences with the gov’t are:
* They can “print money”, by raising tax rates; however, there might be a limit to what voters allow in this regard
* They may be able to change the laws regarding some of the unfunded liabilities
* Oh, and one more thing - they have more powerful means of enforcing their will than most of us would want to face.
.