Washington uses Enron accounting, deficit has actually increased!

[originalpckelly]

This was written about a month ago:
http://www.msnbc.msn.com/id/14756403/site/newsweek/

"Sept. 18, 2006 issue - Next month the White House and its congressional allies will be taking victory laps when the deficit for fiscal 2006 is announced. The stated deficit for the year, which ends Sept. 30, will be $260 billion or so. That will be down $58 billion from 2005 and a whopping $77 billion below what the nonpartisan Congressional Budget Office predicted in January. The White House says this is happening largely because tax revenues have surged—which they have. It sure sounds great.

But let me share a dirty little secret with you: the real federal deficit isn't $260 billion. It's more than double that. And when you calculate what I consider the real deficit—hold on to your hats, it's $558 billion—you come out with slightly more than last year's real deficit, which I put at $551 billion. Revenue surge, shmevenue surge. Things are getting worse, not better.

To be sure, that $558 billion is better than the $635 billion implied by January's CBO numbers. But it's nothing to crow about, considering that not long from now, baby boomers will begin to retire en masse and put huge pressure on the budget.

SNIP

Here's the deal. The stated deficit is the difference between the cash that the government takes in and the cash it spends. That's $260 billion—the number most analysts use to measure the deficit. But Uncle Sam will also borrow almost $300 billion from federal trust funds: $177 billion from Social Security, and an additional $121 billion from "other government accounts" such as federal-employee pension funds. Some $78 billion of this total comes from the Treasury's taking Social Security's cash surplus this year and spending it. Most of the rest comes from the government's paying what it owes the trust funds—primarily for interest on their $3.6 trillion of Treasury securities—with I.O.U.s, not cash. (All my numbers, by the way, are based on public budget documents.)"

So as you can see Bush is blowing smoke, but he isn't alone. Even the Washington Democrats have been blowing smoke, because there was NEVER a surplus. Clinton used the same dirty trick to deceive America of its real financial situation. We the people are going to have to stand up to Washington, D.C. and make them tell us the truth about the finances of America, if we don't we damn ourselves and our children to the hopeless hell of sky high debt.

[originalpckelly]

1. Another DUer posted this when it was first published...

but I thought we could all use a reminder of our lying politicians.

[ProfessorGAC]

2. Had Me, Had Me, Lost Me

While i agree with the article in great degree, the Clinton statement is inaccurate. The surpluses were always stated as projected based upon revenue minus expenses. The fact was, however, that they were NOT borrowing against the SS surplus and were paying the interest in cash. As surpluses projected materialized, those interests payments would have been less than new cash, so prior IOU's would have been paid down. As those are paid, interest payments fall, so more IOU's get paid down. And so on, and so on.

So, there was greater transparency in Clinton's Treasury department, and the surpluses would have reduced the overall internal debt, so it wasn't the same sort of voodooo that we are hearing about today.
The Professor

[KoKo]

3. Thanks for that clarification. We have no idea what the Bushies have

done with accounting practices, but with Clinton at least some transparency. They've gotten much more "clever" in "cooking books" since Clinton left.

[ProfessorGAC]

4. All Administrations Do Creative Accounting

On that point, i agree with the author, wholeheartedly.

But, with the Clinton folks, they were quite clear that the surpluses were projections based upon incoming revenues rooted in current taxation levels and economic standing, and that the surpluses would be used to pay interest and pay down debt. They never actually stated the CASH existed yet. The unwarranted tax cuts screwed up the projections, so the surpluses never materialized, and the debt was never reduced, and the interest payments were never made in cash, only more IOU's.

I don't think the accounting is any "dirtier". Just that the advertising is using snapshot views, and not long range projections. If one uses the same view now as the Clinton administration used, the view would be far less rosy than what we're hearing today.

Like i said, the author had me with him. He just fell off the beam with that comparison between the two.
The Professor

[Supersedeas]

5. thanks PGAC - good stuff

[survivor999]

6. Obvious to everybody.

This "economy is great" crap is not gonna be taken too well by all those people who are struggling to make ends meet and all. He may even backfire because it's insulting to our intelligence.

[spanone]

7. People NEED to know that bush* wars are NOT included in his budgets.